What was the over all cause of the Great depression

[aravoth]

Actpulsa is partly correct. There are many, many factors...

Of course the economic liberals will turn to Rothbard and Mises to explain away what was ultimately a failure of wealth distribution attributed to unregulated markets.

The truth is, Keynesian models and the war saved this country, and failure after failure of attempts to get the private sector to help in both England and the U.S. failed... it was the massive government spending that eventually boosted us to stability.

Yeah fucking looks like doesn't it Kade! Stability? Is that what you call this clusterfuck?

 

[ARealConservative]

I won't flame you.

And there are no "econ majors" here... only krazy kaju and his fresh new Comparative Economics 101 course at Kettering University, or similar toolshed institute in Michigan.

You are amazingly resilient, I'll give you that much.

It was a bloodbath watching you in that debate and you can actually walk away thinking your dignity was left in tact

You were asked for a single example and you failed miserably. Th example you did provide was so pathetic it's beyond words.

 

[RJB]

Actpulsa is partly correct. There are many, many factors...

Of course the economic liberals will turn to Rothbard and Mises to explain away what was ultimately a failure of wealth distribution attributed to unregulated markets.

The truth is, Keynesian models and the war saved this country, and failure after failure of attempts to get the private sector to help in both England and the U.S. failed... it was the massive government spending that eventually boosted us to stability.
.

How did WWII (or any war) bring prosperity to a nation? War tends drains a nation of resources-- as with Iraq today. I believe the propaganda that war brings wealth is the deadliest of all lies.

Granted, war does enrich bankers, contractors and congressmen.

As to Keynesian theory, where are you ever going to find a government honest enough to follow the tenents of it? When have they ever reduced spending during a wealthy time?

BTW with government spending and war, it took fifteen years to make it through the depression. Although production went up, everyone was told to sacrifice. My grandmother said the war years were the toughest

 

[Kade]

All three of you seem to have missed the point. No matter how hard your kick and cry government spending bailed us out of the Depression. Sorry.

ARealConservative, please explain to us again why the DRAM cartel was not an example of price fixing.

I want to believe.

 

[Kade]

How did WWII (or any war) bring prosperity to a nation? War tends drains a nation of resources-- as with Iraq today. I believe the propaganda that war brings wealth is the deadliest of all lies.

Granted, war does enrich bankers, contractors and congressmen.

As to Keynesian theory, where are you ever going to find a government honest enough to follow the tenents of it? When have they ever reduced spending during a wealthy time?

BTW with government spending and war, it took fifteen years to make it through the depression. Although production went up, everyone was told to sacrifice. My grandmother said the war years were the toughest

I didn't advocate the war... I merely said that it helped end the Depression...notably by ending unemployment.

 

[RJB]

All three of you seem to have missed the point. No matter how hard your kick and cry government spending bailed us out of the Depression. Sorry.
]

How?

 

[tmosley]

If government spending could take us out of a depression, why didn't the 10 years of WPA and other runaway government spending do the trick?

More likely it was the one way trade that occurred during and after the war. We sold arms by the boatload under FDR's "Cash and Carry" policies, as well as supplying the allies with food and manufactured goods while their industrial based was burning to the ground.

 

[acptulsa]

How?

Helped ensure half the people didn't starve, mainly. He didn't say it helped bring it to a close any earlier. Sometimes bailing out simply keeps one's head above water long enough for a real rescue to be mounted.

Look at Rancher89's post. Those were real people and the situation was beyond bleak.

 

[RJB]

I didn't advocate the war... I merely said that it helped end the Depression...notably by ending unemployment.

Which leads us to where we are now. The U.S. has a very high employment rate, but skyrocketing inflation. War is never good.

Full employment is not all that great either if you look at totalitarian regimes. Especially the one that used up their wealth in monument building such as Egypt, China, etc. Instead of monuments, we build war.

This may be the requiem for our country:


Ozymandias

I met a traveller from an antique land
Who said - Two vast and trunkless legs of stone
Stand in the desert. Near them on the sand,
Half sunk a shattered visage lies, whose from
And wrinkled lip and sneer of cold command
Tell that it's sculptor well those passions read
Which yet survive, stamp'd on these lifeless things,
The hand that mock'd them, and the heart that fed;
And on the pedestal these words appear:
"My name is Ozymadias king of kings:
Look on my works, ye Mighty, and despair!"
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare,
The lone and level sands stretch far away

Percy Bysshe Shelley

 

[RJB]

Helped ensure half the people didn't starve, mainly. He didn't say it helped bring it to a close any earlier. Sometimes bailing out simply keeps one's head above water long enough for a real rescue to be mounted.

Look at Rancher89's post. Those were real people and the situation was beyond bleak.

My grandfather told me about the dustbowl, but the starvation was due to lack of food. How did a "bail out" feed people?

I'm not being a smart ass. I'm a well entrenched libertarian and I am enjoying hearing another side.

 

[GunnyFreedom]

The Great Depression was not nearly as allegorical to our current market as was the Panic of 1837:

http://en.wikipedia.org/wiki/Panic_of_1837

Study the Panic of 1837 and be afraid. Be very afraid.

 

[Mongoose470]

I've read lots of conflicting theories, but I was wondering if there was a somewhat quick summary. Particularly the role of the Fed Reserve.

A socialist friend and I were arguing politics over beer. I was holding my own on economics until we came to the depression. He mentioned that the "wealthy capitalists pulled some schemes and got richer."

To which I responded, "Oh you mean Rockefeller, Morgan, Rothchild... The guys on the Fed..."

He changed the subject as usual, but I realized I'm very weak here.

To sum it up, the welfare state and taxation established by fiscal and monetary policy.

 

[acptulsa]

My grandfather told me about the dustbowl, but the starvation was due to lack of food. How did a "bail out" feed people?

I'm not being a smart ass. I'm a well entrenched libertarian and I am enjoying hearing another side.

Remember that welfare (or "relief") was not something the government handed out or had ever handed out. Furthermore, believe it or not, a large segment of the population would rather have starved than take it. The WPA, PWA, CCC and most of the rest of the alphabet soup of the 'thirties created jobs, pure and simple. Wages and no loss of dignity.

 

[GunnyFreedom]

The Panic of 1837 took place shortly after President Jackson eliminated the central bank, and that action has been blamed for the subsequent depression. Problem is, in 1830 the elimination of the federal central bank simply led to the creation of several state central banks, all pluaged with the same problem...massive credit and money supply expansion leading to rampant inflation and wild inverstor speculation.

In this case, the 'pin-prick' which burst the currency bubble leading to the Panic itself, was the specie circular, which demanded that all purchases of real property be accomplished in gold rather than the devalued paper money. it was done in the hopes of returning lost reserves to the failing banks; but as it turned out there simply were not enough reserves to cover the paper money, and instead of filling the bank's coffers with gold again, people just stopped buying real property.

Thus a 'housing bubble,' originally created by currency inflation, burst. That burst led to investor pullouts, foreign concerns began to drop their invesments in the US, sell out their holdings, and as all the paper money poured back in there was hyper inflation for a short period of time, followed by hyper deflation as banks began to fail in droves; on account of a total lack of reserves despite millions in paper money in the vault taken out of circulation when they failed.

A 5 year depression ensued, and while the 25% of bank failures in 1837 does not match the 33% bank failures during the Great Depression, the Panic of 1837 was arguably worse, and demonstratably longer than the Great Depression.

 

[WRellim]

I've read lots of conflicting theories, but I was wondering if there was a somewhat quick summary. Particularly the role of the Fed Reserve.

A socialist friend and I were arguing politics over beer. I was holding my own on economics until we came to the depression. He mentioned that the "wealthy capitalists pulled some schemes and got richer."

To which I responded, "Oh you mean Rockefeller, Morgan, Rothchild... The guys on the Fed..."

He changed the subject as usual, but I realized I'm very weak here.

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).

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]

 

[Paulitician]

Terrific poist WRellim.

LOL, where did you find that avatar?!

The BEAST 50 Most Loathsome People in America, 2006 (John McCain is number 1, HAH)

 

[The_Orlonater]

Man, where do guys learn all this stuff?

Man, WRellim that was a terrific post.

 

[gutteck]

Watch the “money masters” and you’ll understand much better what happened.



The Money Masters
http://video.google.com/videoplay?docid=-515319560256183936






//

 

[WRellim]

Man, where do guys learn all this stuff?

Man, WRellim that was a terrific post.

Some of it came from family history (had a grandmother who raised a family of 6 during the depression years, and gave me some good "I was there" grounding on WWI, the depression and WWII as well -- and as she was also a school teacher, she would discuss history with me, correcting a lot of the BS that was in the textbooks.) I still remember Nixon f'ing us over on the Gold standard in 71, and my grandmother explaining what FDR did back in 1933 & 34 and how that affected everyone on the farms... she predicted disaster would follow.

Beyond that... READING... lots and lots of reading (since early 1970's -- probably only a few years behind RP and digging into the same subject matter of economics & money).


Main thing (in ANY subject matter) is *NOT* to accept people's explanations at face value. (And especially not those notorious individuals feted as "ex-perts" -- I always figured I didn't care if they used to be "perts"or not, what mattered was whether they were telling the truth, or instead were trying to blow smoke up my derrière ...or they were among {the vast majority of mankind} of the befuddled "sincere but deluded" category who were just regurgitating what someone else fed them, and never had an independent thought in their life).

And make extensive use of Ayn Rand's maxim:

"Contradictions do not exist. Whenever you think you are facing a contradiction, check your premises [root assumptions]. You will find that one of them is wrong."

​

In my experience, contradictions are the "key" to understanding things... learn to hunt out contradictions (and then identify and dig into the underlying assumptions) and you will be able to "unlock" a huge number of things that are otherwise puzzling to people. (Similar to Eliyahu Goldratt's "Theory of Constraints" as well).

The rest is "digging" into the underlying premises/assumptions being fed to you (or which you have already "bought" and eaten). Which was a LOT more difficult back then (no internet... had to spend time in the library and flipping through LOTS of books, adding pieces together over time).

I had other "help" as well ... several school teachers and other in positions of authority who demonstrated 100% hypocrisy right in front of me -- and which were easily "caught" in by the thoughts and questions of an alert grammar school child. ("Wonderful" teachers in retrospect -- though the MAIN thing they taught me was that most people in positions of authority are full of **it, and tend to feed a lot of BS to others; a verbal and mental gymnastic form of "sleight-of-hand" which they used mainly to disguise their own ignorance. Catching them in their BS was a simple process for someone familiar with Socratic method... take them at their word, turn it back on them and feed them some more rope, ask the questions that reveal the lack of anything under their feet... and watch them "hang themselves" in fairly short order. Not a skill to make one popular, but if used selectively you can avoid both the Hemlock AND frequently avoid being sold a "bill of goods.")




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.

Right now the things are DIRT CHEAP -- I mean like $5 or $10 for a full set (which used to go for in excess of $1,000 back when $1,000 was a lot of money) -- they are basically giving them away now (because almost no one buys them, and with lots of "old folks" dying off the supply is too high).

A major advantage of old PRINTED encyclopedia is that (unlike wikipedia and the modern "online" private ones) they are a "snapshot" in time... they are not "edited" to match modern "politically correct" BS; nor are the older ones "watered down" to suit the modern ADHD mentality. They can also serve as a good "double-check" against the modern fingertip info.

Plus, unlike online resources, you HAVE TO flip past a whole bunch of "other" stuff to get to the articles you want... and flipping past that can be a true "adventure" in the whole breadth of learning and knowledge -- which even modern HTML "hot-links" cannot rival. (HTML links take you to RELATED subject matter, a wonderful thing... but you miss the "Serendipity" of finding what you were NOT looking for.)

Finally, if you look at the sum total of human knowledge... sure mankind has learned a LOT since the 1950's and 60's -- but we've forgotten a lot as well (or had it shoved down the old "memory hole" by TPTB) -- and 90% (or more) of the information in those "old" printed Encyclopedia is still valid (especially history, basic science, etc).

 

[kombayn]

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).

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]

Wow, truly impressive. One of the best posts I've read today.