What was the over all cause of the Great depression

WRellim said:
BTW... I know it seems an odd suggestion (with the internet and all) but go to a used bookstore and buy a set (or two) of old used Encyclopedia -- preferably different "brands" from slightly different years (or decades). You get a significantly different view when reading Encyclopedia Britannica from say circa 1968 (in my opinion, the PEAK QUALITY of the editions) -- and a "Comptons" or "Americana" from circa 1950's or the 70's or 80's.
Click to expand...

WOOT! I still have my old FULL SET of Encyclopedia Americana from 78-79! With an 80 and an 81 yearbook!
 
kombayn said:
Wow, truly impressive. One of the best posts I've read today.:cool:
Click to expand...


Scary thing is that it came straight out of my head.

Not sure if that deserves a :eek:

Or a :o

Or (maybe) a :cool: (but in a nerdy way.)



The main thing I had to go digging for was the chart. (I would have liked (graphics aid understanding and retention) to have included a charts on the pre-WWII military buildup, another on the increasing Federal debt at the time, and a third on the Federal Budget vs % of GDP pre & post FDR... but came up empty.) Even the internet has it's limits for "canned" graphics (and I didn't want to spend the time making up a graphic from scratch... too much data digging to do that versus making the simple statement in the text).
:(
 
The best simple explanation I have seen was by Greenspan in the essay, "Gold and Economic Freedom" which can be found in Ayn Rands collection of essays, "Capiitalism:The Unknown Ideal" Which has many great essays like Anti Trust by Greenspan. Also Roots of War, Nature of Man, Anatomy of Compromise, etc. by Ayn Rand.

Greenspan in his younger years was an Austrian. But as so many have learned absolute power corrupts absolutely!
 
bucfish said:
The best simple explanation I have seen was by Greenspan in the essay, "Gold and Economic Freedom" which can be found in Ayn Rands collection of essays, "Capiitalism:The Unknown Ideal" Which has many great essays like Anti Trust by Greenspan. Also Roots of War, Nature of Man, Anatomy of Compromise, etc. by Ayn Rand.

Greenspan in his younger years was an Austrian. But as so many have learned absolute power corrupts absolutely!
Click to expand...

Gold and Economic Freedom by Alan Greenspan

http://www.usagold.com/gildedopinion/greenspan.html
 
WRellim said:
The "Great Depression" was NOT a singular thing; but rather multiple things in succession (each with their own root causes, as well as aggravating factors).

The root cause was the creation of the Federal Reserve in 1913.

The crash of 1929 was undoubtedly caused by the Fed and the credit expansion of the late 1920's -- the speculative "boom" created to AVOID the recession (i.e. there SHOULD have been a minor "recessionary" correction in the mid 20's to correct for the post-war expansion -- the fact that the recession was delayed by a false inflation created the "bubble" with then burst). BTW Bernanke acknowledges that the Fed itself WAS the cause of this (indeed it's his academic "claim to fame" in economics).


The recession that followed in the early 30's was in part caused by the "reaction" of the Hoover "interventionist" administration -- including Fed policies as well as the Smoot-Hawley tarriffs, which were passed in mid June of 1930 (i.e. Ben Stein and others are being disingenuous when they "imply" that Smoot-Hawley caused the 29 crash).

The DEEPENING of the depression in 1933-34 and the years following can be laid directly at the feet of FDR, and his asinine "populist/fascist" demogogery against "capitalists" and "hoarders." His actions (illegal, unconstitutional, and unprecedented) in temporarily closing banks, confiscating gold, and then (almost immediately... within 6 months) ***DEVALUING the currency by 69% (the change in the "fixed" exchange rate from 1 0z Gold = $20 to 1 0z Gold = $35) caused a lot of people to pull back even further.


Note: The "BIG Boost" in the GDP during the 1934..37 era shown in most charts and attributed to the "New Deal" programs like TVA and NRA, etc. was actually the result of accounting fraud -- most of the charts do NOT normally adjust for the devaluation (and NONE of the charts and numbers produced by FDR's administration did -- "accounting for inflation" was not considered relevant at the time); those modern charts that do account for it (like the one below) digress from previous accepted practice by including government expenditures (prior to the "Keynsesians" government expenditures were NOT considered part of GDP). if you remove GOVERNMENT SPENDING from the various "New Deal" programs, the GDP actually went down significantly; as would be expected with the institution of socialist/fascist wage & price control schemes.

The "New Deal" had effectively failed by 1937 & 1938 (unemployment rates were at 14.3% in 1937 and reached 19.0% in 1938 -- and keep in mind this was PRE-feminest era, at that time unemployment really only meant ADULT MEN, nearly 1/2 of our "modern workforce" being stay-at-home wives and mothers).

Gdp20-40.jpg


The subsequent "boomlet" in the 1938..1940 era was mainly as a result of increased government spending -- FDR's only remaining option was War (and he knew it) --so the Lend-Lease act and the extensive pre-war military buildup (literally HUNDREDS of warships were built pre-1941, and the draft was instituted in September of 1940 ... but that is simply not taught in US Government schools... nor indeed is it even "spoken of" despite the plethora of evidence -- at least by not anyone other than Pat Buchanan; it sort of spoils the whole "Greatest Generation" BS).

In other words, FDR not only caused the "Great" part of the great depression, but essentially "cooked the books" and prepared the ground for war to cover his tracks and in an attempt to salvage himself and his administration. (Asimov's quote "Violence is the last refuge of the incompetent" seems apropos).

The United States actually BECAME a progressively more "fascist" state during the New Deal, pre-war and WWII era. (Few people are truly aware of the extent to which the government under FDR literally "seized control" over factories, farms, etc. Virtually everything was put on a "war footing" with nearly all production -- in a mirror to Germany & Britain -- aimed at producing government spec'd and purchased goods. Many, indeed most "consumer goods" were eliminated or minimized, and then rationed by government fiat.)

On a psychological level, the population endured this forced deprivation out of a sense of patriotic fervor, which was fed by immense amounts of propaganda (Hollywood did "its part" in preparing peoples' psyche's ...even pre-war).

This "enforced deprivation" (and thus enforced savings and "hoarding" of currency -- the very thing FDR had despised just half a decade earlier) eventually created what is called a "pent up demand" (for everything from clothing to housing to automobiles and appliances) that later fueled the post-war boom.

Since FDR himself had died, he was unable to oversee the final phase of his "socialist/fascist dream" (we have only the writings of Elanor concerning the "plan" to keep conscription as an ongoing tool, but with draftees forced to serve terms in something like the current "AmeriCorps" -- but with a much larger and wider mission).

With the "boom" a quasi-natural form of inflation set in (over 6% in a single month in 1946) -- this was really simply a delayed implementation of the debt-financing that had taken place during the war years (and SHOULD have been expected). Significant strikes set in (including the nationwide railway strikes, plus the later coal mining strikes, etc) as a direct consequence, and Truman acted in a unilateral and fascist manner (in the end resorting to military force against citizens).

In opposition to Truman, the Taft faction of the Republican party was able to bring a small measure of sanity by instituting significant tax cuts, and removing the debilitating price and wage controls (but also unfortunately, via FDR-like unconstitutional expansion of Federal Government powers -- creation of NLRB, expansion of Federal Judicial oversight, etc -- but in favor of corporations versus the labor unions favored by FDR's socialism/populism.)

The economy grew (in part financed via government debt), but with the private sector utilizing the "surplus" of large-scale industrial machinery infrastructure leftover from the war-created to good advantage in creating peacetime equipment. (Much as in post devolution Russia, Ukraine and the Balkans, private industry has "salvaged" and reallocated a lot of the poorly-managed industrial infrastructure built up during the Soviet years).

The nation began paying off the debt from WWII, and was even able to handle the debt from the subsequent "military-industrial complex" and the Korean and Vietnam conflicts... but when LBJ added his own debt-financed "Great Society" (the "guns & butter" debates) the financial system began to fracture.

The dollar was being held to an artificially high fixed exchange rate versus Gold, and much of the world began to see this, causing foreign investors and governments to "do a run" on the American currency (called the "Balance of Payments Crisis") -- which forced a choice on Nixon: either have the Federal Government "fess-up" to reality and as a result, dramatically CUT government spending (military AND social) and reduce the size and scope of the Federal Government... or declare bankruptcy (in essence).

Nixon chose the latter -- and (via yet another unconstitutional and illegal FDR-like "Executive Order") he "temporarily suspended" redemption of the dollar into gold, and gave us the full-blown FIAT dollar system we have today.

...and that basically set the stage for where we have been ever since. During the 37 years since Nixon's unilateral "temporary" suspension of the gold-standard (done without ANY legislation, much less constitutional amendment) -- the dollar has tumbled to (approximately) less than 1/30 (perhaps less) of it's "fixed" value in mid 1971.

And along the way that FIAT currency has been the root and sole cause of the various "crises" -- like the "inflation crisis" and the "energy crisis" in the mid 1970's -- and allowing the various administrations (whether Republicrat or Demopublican) to repeat FDR's sleight-of-hand "cooking of the books" and engage in blame-shifting onto whoever is convenient -- whether those "nasty greedy OPEC Arabs" or those "cunning Japanese" -- or soon those "craft Chinese and Indians."

Sure people are now "aware" of inflation... but it is seen as some type of "naturally occurring phenomenon" -- as witness Bernanke's recent euphemistic testimony before Congress -- the blame still gets shifted elsewhere.

*** Personally I think the psychological effect on the populace (or at least that frugal portion that saved/invested) of that confiscation and SIGNIFICANT devaluation is severely UNDER-estimated (in fact it is wholly IGNORED in nearly all of the academic literature regarding the Depression).

Think of how the change in the CURRENT populations spending habits was affected "psychologically" by both the BOOM in housing values and it's current BUST...

Now consider the effect on a population where such a DEFINITE and SIGNIFICANT, unilateral and totally unexpected "devaluation of wealth" (effects of which included individual's savings, PLUS previous contracted wage agreements, landlord's rental contracts, and the HUGE number of business' contracts) -- with the remote possibility that it will be REPEATED in a similar fashion, again by the "arbitrary" decision of the government; how willing would YOU be to sign any contracts denominated in dollars?

In essence, the populations' "confidence" in the economy was gone. Like turtles, they retracted into their shells. Is it any wonder that it took YEARS for recovery to happen? Especially with a "chaotic" government passing a helter-skelter varioety of "alphabet soup" agencies that change emphasis from one month to the next?

To understand HOW DEBILITATING any devaluation of a currency can be to a society, one simply need to look at those countries that have undergone hyperinflation (how it affects businesses is nicely encapsulated in the "Hyperinflation Survival Guide" by Gerald Swanson -- the only book of its kind that I know of.) Note that the logic of our modern era "just-in-time"/"zero-inventory" is the opposite and indeed the WORST set of practices for a hyperinflation (or devaluation-prone) currency environment; hence the boom in "commodities" the antithesis of J-I-T thinking.[/indent]
Click to expand...

Just quoting you because it's a fantastic post, thanks!
 
RJB said:
I watched that movie just now and it goes against RPs push for the gold standard (because the US has no gold). Anyone care to debate this? I'm getting a little confused.
Click to expand...
The US has gold, we just don't know exactly how much. Ron is a for a gold standard, but while campaigning he was more for "legalizing the constitution" meaning, letting both gold and silver circulate in the economy as money. Ideally, we wouldn't need government telling us what money to use. The market should decide.

From what I understand, the two guys who made that video are monetarists. Most monetarists hate gold.
 
I'd love to hear WRellim's take on the Panic of 1837 if you have one. I mean, don't suck hours out of your day for research etc; but from what I have seen the Panic of 1837 has a lot more corollary to our current situation, and since you seem to be very strong on economic history, I'd be curious to hear your take.
 
I've said it before and I'll say it again. the Fed, our 4th branch of government, is the most insidious redistributor of wealth ever. Their existence and their policies constitute the single largest federal entitlement program ever. Maybe not as direct as taxes and subsidies, but the results are what counts. Of course, they also encourage debt, especially corporate debt which leads to tax funded bailouts, all of which people like Greenspan, Bernacke and the entire system of government will blame on the "irrational exuberance" of Ma and Pa Retiree and free markets and in unison call for more government intervention.

1913 was the beginning of the end for free market America. It was the beginning of our vast welfare state.
 
Paulitician said:
Ideally, we wouldn't need government telling us what money to use. The market should decide.
Click to expand...

Ok. I feel like the Revolution has sharpened my wits unimaginably, but my 9 (nearly 10) years in the public school system has left me uneducated on how multiple currencies could circulate. It sounds interesting, but I honestly have no idea where to even start thinking about that concept. Could somebody help me here?
 
priest_of_syrinx said:
Ok. I feel like the Revolution has sharpened my wits unimaginably, but my 9 (nearly 10) years in the public school system has left me uneducated on how multiple currencies could circulate. It sounds interesting, but I honestly have no idea where to even start thinking about that concept. Could somebody help me here?
Click to expand...

The use of multiple currencies is far more common outside the US where stores in a lot of counties also (or at least, used to) take dollars. All you need is a live exchange rate at time of sale. The seller chooses which currency to price their good in (in our case, either dollars or milligrams of gold) and those who choose the 'other' currency will purchase at the then-current exchange rate.

My personal suggestion would be pricing items in milligrams of gold, with a large LCD screen or even LED banner, displaying the current exchange rate to dollars.
 
priest_of_syrinx said:
Ok. I feel like the Revolution has sharpened my wits unimaginably, but my 9 (nearly 10) years in the public school system has left me uneducated on how multiple currencies could circulate. It sounds interesting, but I honestly have no idea where to even start thinking about that concept. Could somebody help me here?
Click to expand...
First, let's define money. Money is payment for goods and services, having three functions: being an exchange medium, a unit of account, and a store of value (although some currencies don't serve this last function). Now, let's establish how money arrises. In primitive economies, what people did was exchange certain goods/services for other goods/services, i.e. they bartered. This is highly inefficient and cumbersome as you might infer. (A barter system could not possibly support any economy as large scale and complex as the US). It's much easier to trade something common and what people valuable. Enter commodity money. It's somewhat like barter because people are exchanging one good for another (say, metals, or minerals, or food etc.), but people tacitly agree and accept usually a few or eventually one form of payment through their (inter)actions in the economy. In other words, it's an indirect way of exchanging goods. Also, the follwing four qualities help establish money in an economy: durability, divisibility, portability, and noncounterfeitability.

So, that's what I mean by "letting the market decide" what money to use, the market consisting of all of us (since that's ultimately where money and its value arrises). Not being told which money to use in a top-down approach by government fiat. There are many reasons to want this. Let's relate it to our current situation. Right now, the government is "printing money," borrowing, and spending which are all inflationary. Inflation destroys the value of your money. So instead of using and holding Federal Reserve Notes, I could instead say, "forget that, I'm using gold from now on." There is no guarentee that gold will come out as money (although, given its 5000+ years of money, and it still being valuable, there is little doubt), but other types of money and currency could arrise with our modern and very technological society that has never been used before. You might wonder, "but don't we need just one type of money/currency?" The answer is no, as evidenced by the fact that there are many currencies internationally. It is easier and more convenient to have just one currency I would agree, but it should still be brought about by the market in my opinion.
 
AND the income tax, at the same time, to pay the Fed's interest. :p

BOTH are planks in the Communist Manifesto, BTW.

My, what a very strange "sheer coincidence"? :rolleyes:
 
Last edited:
GunnyFreedom said:
My personal suggestion would be pricing items in milligrams of gold, with a large LCD screen or even LED banner, displaying the current exchange rate to dollars.
Click to expand...

Heaven forbid that happen! Are you actually suggesting we put a price comparison up? MY GOSH MAN! People might actually see that gold buys the same every week (or more, when the market increases in efficiency) and that their dollar buys less....how dare you suggest such a practical and common sense idea that would stabilize the economy!

What's next? Are you going to talk of making fractional-reserve banking illegal as well? Even more common sense, what heresy![/sarcasm]

I agree with you 100% on this one...and I'm glad you've suggested "gold grams" instead of "dollars" again--as Murray Rothbard pointed out, when a currency is given a name it seems to always develop into a status and people think of it as something special, rather than a defined weight (or even worse, they think it's real money)--if you go with gold or silver grams, that wouldn't happen.

Truth Warrior said:
AND the income tax, at the same time, to pay the Fed's interest. :p

BOTH are planks in the Communist Manifesto, BTW.

My, what a very strange "sheer coincidence"? :rolleyes:
Click to expand...

Oh yes, definitely a coincidence, and so was the sinking of the Lusitania and the attack on Pearl Harbor as well...all just coincidences![/sarcasm].

Sorry guys, I'm feeling very facetious today :p
 
Last edited:
World War 2 did help end the depression. That's because we cranked up factories to sell the world weapons. When you aren't in the war yourself but selling weapons to the countries involved in the war, it is good for your economy. It's bad for the participants. When you are in the war yourself, all it does is cost you money. The gun store owner makes money by selling guns. Not by getting into gun battles.
 
priest_of_syrinx said:
Ok. I feel like the Revolution has sharpened my wits unimaginably, but my 9 (nearly 10) years in the public school system has left me uneducated on how multiple currencies could circulate. It sounds interesting, but I honestly have no idea where to even start thinking about that concept. Could somebody help me here?
Click to expand...

How does someone from Europe pay for something in America on their credit card? Currency transactions take all of 2 seconds in this day and age. You could have a million competing currencies without a problem.
 
You must log in or register to reply here.

Similar threads

PAF
With Its Latest Rate Cut, the Fed Serves Wall Street and the Regime
Replies
0
Views
81
PAF
PAF
PAF
Half of June’s Job Growth Was in Government. Manufacturing Jobs Fall.
Replies
13
Views
99
Voluntarist
Voluntarist
Brian4Liberty
Who Needs the Fed?
Replies
1
Views
966
pmbug
pmbug
PAF
The Great Retreat: How Trump and Harris Are Looking Backward
Replies
2
Views
3K
CCTelander
C
ClaytonB
It’s Time to Bust the Myth of Fed Omnipotence
Replies
0
Views
365
ClaytonB
ClaytonB
Back
Top