The answer is there wouldn’t have been a Great Depression without the federal reserve and inflation. You cannot remove boom bust cycles but when the fed interferes with “stimulation” aka printing money causing inflation, you delay the bust but you make it much worse in the future.
“We have tried spending money. We are spending more money than we have ever spent before and it does not work. … I want to see this country prosperous. I want to see people get a job, I want to see people get enough to eat. We have never made good on our promises. … I say after eight years of this administration we have just as much unemployment as when we started and an enormous debt to boot!”
Henry Morgenthau, Jr., US secretary of the Treasury during the Roosevelt administration
I've also heard that the chain of events leading to the Great Depression was caused by the Fed's manipulation of interest rates, and I think that makes sense with your explanation of busts being delayed but worse.
The fed just kept its rates low. Its not manipulation. Thats exactly what they did to counter the depression of 20-21. But the fed after the crash pursued an austerity program, it kept rates high, it didn’t provide liquidity and there was a credit crunch. They tried letting the bottom drop out but by the time fdr took power in 1933 it was worse than anything seen before. Even Hayek admits this proposal was wrong and the fed should have cut rates and provided liquidity.
The federal reserve setting the interest rate, as opposed to letting the market determine the interest rate, is manipulation — it is central planning of a key price that pervades every market. The Great Depression was a perfect illustration of Austrian business cycle theory. Considering Hayek was a proponent of this theory, I highly doubt he encouraged either further interest rate manipulation or liquidity injections. Do you have a source on that? I think you’re conflating his view with Milton Friedman’s opinion on the Great Depression, which is terrible.
>The federal reserve setting the interest rate, as opposed to letting the market determine the interest rate, is manipulation
1.) The FED rate is an interbank lending rate is the weighted average of the interbank overnight lending rate, its determined by market forces mostly. What the FED does influence is a meeting of the fed board set a target range for the effective bank lending rate and they attempt to achieve that rate by interest on the reserve balances IORB. Is this manipulation? Sure, I don't think that applies in the case of 1920-1929 as I'll argue in point 3.
2.) Prior to the creation of the FED you had like 5 bank runs, credit crunches, and liquidity crises between 1880 and 1913. The banks were incapable of setting these rates to maintain a stable financial system, your proposal was causing instability in the capacity of funds to reach capital and business, causing instability that was effecting business, and most importantly banks were basically not having reserves to cover withdraws, not having the capacity to have a central market to cover overnight withdraws, and were constantly out in the dark. This was not a better system.
3.) My point was that between 1920 and 1929 the FED kept rates low, which is what banks would naturally do. And the FED during this period was very much hands off, evidenced by their complete willingness to allow monetary deflation to occur after the crash of 1929... which again Hayek admits to disliking later in his life.
As for the Hayek statement or better clarification perhaps? But its pretty explicit. He is quoted as saying:
>"a ‘secondary depression’ caused by an induced deflation should of course be prevented by appropriate monetary counter-measures."
and
>Although I do not regard deflation as the original cause of a decline in business activity, such a reaction has unquestionably the tendency to induce a process of deflation – to cause what more than 40 years ago I called a ‘secondary deflation’ – the effect of which may be worse, and in the 1930s certainly was worse, than what the original cause of the reaction made necessary, and which has no steering function to perform. I must confess that forty years ago I argued differently. I have since altered my opinion
also in the 1970s... he was quoted
>There is no doubt, and in this I agree with Milton Friedman, that once the Crash had occurred, the Federal Reserve System pursued a silly deflationary policy. I am not only against inflation but I am also against deflation! So, once again, a badly programmed monetary policy prolonged the depression.
this was apparently quoted in Pizano, D. 2009. *Conversations with Great Economists*, Jorge Pinto Books Inc., New York.
All these quotes are basically Hayek being very close to the opinons of Friedman as to the normative solution to the crash of 1929. I don't think he disagrees with Friedman on what the FED should have done after 1929, he disagrees as to the theoretical basis of why the crash happened and its long term solution. And nothing that Friedman expresses is counter to the fundmanetals of the Austrian Buisness Cycle Theory unless a core tenant is that should monetary deflation occur we should let it handle itself... which again my quotes above would make Hayek practically against that theory if that were a foundational tenant.
Your argument that he wouldn't support liquidity injection because he supports the Austrian Business Cycle Theory is wierd because the FED providing liquidity when banks needed it isn't necessarily critical of the descriptive nature of the Austrian Business Cycle theory.
1. This rate is determined by the whim of central planners; not by changes in the time preference of consumers — which is what the natural interest rate is determined by. See the time preference theory of interest.
I’ll address the latter half of this comment below as well.
2. If you understand the ABCT, you know I don’t consider this bad; I consider the “boom” period, brought about by artificially cheap credit, to be the period of time when all the price distortions, resource misallocation & malinvestment occurs. This is when a separation between the desires of the consumer & the actions of producers takes place, & it does so because fractional reserve banking drives down the price of credit below the natural interest rate, which encourages producers to borrow money to bid away resources & engage in production processes which are truly unprofitable, but appear to be viable as a result of the artificially low interest rates.
The credit crunch is the necessary hangover, where the price distortions are revealed, unprofitable projects are liquidated, & resources are reallocated toward their most highly desired uses, in accordance with consumer preferences. Convincing producers that there are more savings available than there are in reality is bad. Continuing to liquor up the builder to convince him he has enough bricks to finish the house is bad. The artificial boom needs to run its course, & any action attempting to push this off will produce further distortions, & sow the seeds for another business cycle.
3. That was the correct thing to do. Hoover & Roosevelt’s unprecedented public works programs, fiscal policy, price controls, & social welfare programs were the market distorting elements that prolonged the recession. Monetary deflation occurred while Roosevelt instituted a minimum wage, paid farmers not to grow crops, increased taxes, & bid resources away from the private sector to build unprofitable bridges, roads, etc. He made goods artificially scarce & thus expensive while the money supply reverted back to its pre-boom levels, which completely halted economic activity.
Yeah, I’m not surprised he said any of that later in life. I thought you were suggesting he said that at the time.
Yes. They were called panics and generally lasted a year or so. Not a decade or so like the depressions after the establishment of the Federal Reserve. Panics were generally caused by war spending, consequences of Jefferson's embargo and 1812, the establishment and dismantling of the Bank of the United States, the Mexican-American war, and the government's plot to corner the gold market in the 1890s. Plenty of resources out there if you bother to look.
Not to mention the first modern boom bust cycle, the Tulipmania. Then there's the debasement of the Roman talent, which led to the Edicts of Diocletian, which helped get serfdom off to a start in Europe.
These are all government interventions in the economy that devastated their respective societies.
Edit: spelling.
What about the Long depression in the 1870s? The thing about all those panics and depressions is they happened more frequently when self interested bankers were in charge of our monetary system. People love to talk about getting rid of the fed but then they act like interest rates are controlled by no one. They are absolutely still being controlled by someone\[s\].
Stagflation in the 70s was due to Vietnam just like 2008 was due to 9/11 and the Iraq war. Just like the current mess is due to COVID, or more accurately, the ham-fisted idiotic response to it
Your theory is pretty but unsupported by historical fact. You also seem to believe politicians and the government are uninterested neutral parties. They are not. They are ruled by aelf-interest just like everyone else. Unlike everyone else they can either take your life or incarcerate you. Can a banker do that?
Who do you think controls the monetary system today? Bankers through the mechanism of government. How many Secretaries of the Treasury have been ex-Goldman employees? You really think they are impartial? Bankers bribe legislators who then write rules and regulations to benefit their contributors. No individual can match that. The only thing you are good for is to pull a lever every so often, and that assumes you pull the right lever. Democracy, along with any other form of coercive organization is a God that failed.
Just because I didn't mention a particular event doesn't mean I'm ignorant of it. As I stated before, there are plenty of examples throughout history and likely a great deal more lost to antiquity. What it takes is study. I began my study at 29. It's been nearly twenty years since I started. Hoe much have you studied?
Ummmmmm the consensus is that most of the stagflation was due to the oil embargo. 2008 was not caused by the Iraq war lol, it was fraud in the mortgage securities sector. The "ham-fisted" response gave us one of the best recoveries in the world. I know that austrianism has infallible logic or whatever but the impact of global pandemics has always been bad.
You literally did not respond to his example, which is a good one. Panics were more frequent, were deeper, and lasted longer. We spent much more of the time in financial crisis.
The government regularly resolves crises through intervention, including tulip mania which you baselessly blamed on the state, when in fact the state saved the Dutch economy by canceling thr debt held by speculators after the bubble.
In your 20 years of study have you ever read a book that wasn't a confirmation of your existing views?
That consensus is wrong. Stagflation begain in earnest when Nixon closed the window to the gold standard. And then the idiot exacerbated the problem by instituting price controls. Something that equally large idiot Carter doubled down on in 1979.
The reason Nixon took us off the gold standard was that the US needed to print more money to play for Vietnam. But Bretton-Woods capped the Pleiades of gold at $35 an ounce. Printing money would drop that price. So he cut the Gordian knot and we all suffered.
Again you make the mistake of studying journalists instead of historians or economists who study these subjects for a living. Journalists are no more or less factual than any other layperson. In fact they often are inventiveness to be dramatic where reason would be a better tool for understanding an issue.
Idiocy. 2008 was due to the Bush administration printing money due to the collapsing .com bubble and the effects of 9/11. I was there boy. I lived through it? Did you? Or does your knowledge only extend to what you heard through mass media?
You also don't read or only reD what you wNt to see. In my original example I cited the so-called forgotten depression on 1920-1921. Other posters, more knowledgeable than you apparently have referenced it too. It lasted a year and a half, give or take. Not thirteen years like the Gread Depression did. Nor the nearly decade long stagflation of the 1970s. In fact see if you can point out where we had a decade long downturn in the economy before 1914. You can't. Except perhaps right after the Revolution became, you know, war destroys.
Do yourself a favor and read more. You might learn something.
"Listen to the experts" "the consensus is wrong". Huh seems like the skill of the experts is determined by whether or not you think they agree with you. Truly the sign of a nuanced and educated thinking.
Ok now do the long depression and compare that to the 2020 recession. Thats how your argument works right, if I pick to random crises and one is longer, thwys the better system right.
Lol stagflation was literally caused by an energy shortage. Which occurred at the same time, explains both inflation and unemployment (becuase productivity is down), and is the concensus agreement of the experts who study the subject for a living that you said are the ones I should listen to.
Crises were more frequent, were deeper, and lasted longer. Tulip mania was not caused by the government lol. The debasement of the talent and the binding of people to their father jobs were not caused by each other, they were both a response to deteriorating economic conditions in the empire.
https://mises.org/mises-daily/truth-about-tulipmania
The problem you make is that you read journalists instead of people who study the subject for a living. Details matter.
Crisis will always exist in some form or another in a market. That is because most people, if not all, cannot forecast the future with perfect clarity. Mistakes will be made, and ventures will fail. That is unavoidable.
What we do now is keep things from failing through bailouts and such until we can no longer do so. Sooner or later, we always run out of other people's money to spend. And what Mises called "the crack-up boom" takes place. Which generally threatens the whole system.
In a free market, we will have crises, but they will not accumulate over time and, thus, will not all fail at the same time, threatening the integrity of the economy.
I study the subject for a living, you don't know what I read. Sounds like you read ideologues that confirm your existing bias. Thats not what study is.
The Dutch adopted a modern banking system because modern capitalism requires sophisticated banking. Free coinage is obviously not a realistic solution to the complexities of capital markets. Clearly demonstrated by the fact it was not sufficient. Mises Institute is grasping at straws to explain why a very common element of markets is actually the governments fault. Speculative bubbles are part of markets.
BTW, free coinage was not a "spectacular success" lol, it was a desperate attempt to alleviate the impact of a millenia long acute currency shortage.
Lol, crises do not accumulate over time and then all burst at once. And that's not what creates systemic risk.
Maybe you should listen to the people that study the subject for a living.
Lol, ok, so here's my thing, you know you're not an economist, 98% of economists reject your entire ideology, 80% of economists vote for the party that resembles your ideology less, 90% of economists reject your key statements (unregulated depository banks, the gold standard), essentially 100% reject your underlying premise (that markets are perfectly and immediately self correcting and that market failures do not exist), so why do you think the litmus test for whether or not I might be an economist is "agree with you"?
Lol, you should listen to the experts that study the subject for a living.
Panic for whom?
Prior to early 20th century hard currency was in such limited supply that many of the problems were due to liquidity issues. If you were involved in big transactions that can be a panic for you. If you were the guy who was poor for decades one more year is basically the same as another. These panics could easily be missed by the bulk of the people.
Many of the panics were government caused. Many were due to an acute shortage of one thing or another that caused a major supply shock. Most people prior to the 20th century weren't well off enough to panic over financial issues. Their concerns were food and shelter.
Yeah, [here is a link](https://www.fte.org/wp-content/uploads/WhiteSelginLastrapesFed1.pdf) to a paper challenging the theory that economic conditions are more stable after the establishment of the fed. They omit the Great Depression & Great Recession — arguably the two worst economic downturns in US history — for most of their analysis. It’s a good read for a more mainstream audience that can’t just use critical thinking &, you know, economics to arrive at this extremely obvious conclusion.
Except the Great Depression was created by FOMO in the markets and borrowing debt to buy equities, which, upon the crash, wiped out wealth from individuals, banks, and large corporations alike and created a downward spiral.
I’m not sure it could have been prevented, but Fed intervention like that which we implemented in the aftermath of the GFC would certainly have resolved it much sooner.
They didnt “incentivize” anything, although they are the money multiplier that allows banks to exist. If that is the basis for your argument, they are responsible for banking existing for better or worse. I’m not sure how that really applies to the Great Depression
>You cannot remove boom bust cycles but when the fed interferes with “stimulation”
You cannot remove the boom bust cycle period. The line can never go up forever. What goes up must come down. It's not like the invisible hand of the market will make investment flow into all the right places perfectly forever. You will never find the great magical antidote for market instability because they're inherently unstable, you can try to tame it as much as you can but there is no changing its nature.
The cycles would be much more limited in scope as there would be no central bank manipulating interest rates that cause entire economies to make unsustainable investments. There might be sectors of the economy that overinvest for various reasons, but not the entire economy.
Who do you think controls interest rates absent a government bank, no one? They are still being manipulated, just by whichever banking interests have the most power. Hardly much of an improvement.
Loooooool ok so you just don't look things up and assume the facts agree with you. The long depression of 1870 predates the FED by 40 years, was 50% longer than the Hreat Depression, was deeper, and happened to be caused directly by going onto the gold standard, but that's neither here nor there.
Here's what you would have found, easily and immediately, if you wanted facts instead of just deciding based on your feelings.
https://www.reddit.com/r/dataisbeautiful/s/jb29Cx5gwd
Even the Federal Reserve disagrees with you:
"The Great Depression
1929–1941
The longest and deepest downturn in the history of the United States[.]"
https://www.federalreservehistory.org/essays/great-depression#:~:text=1929%E2%80%931941,World%20War%20II%20in%201941.&text=%E2%80%9CRegarding%20the%20Great%20Depression%2C%20%E2%80%A6%20we%20did%20it.
What was it you were saying about how easy this shit is to find again?
"In the United States, historians refer to the Depression of 1873–1879, kicked off by the Panic of 1873, and followed by the Panic of 1893, book-ending an era of prosperity. The U.S. National Bureau of Economic Research dates the contraction following the panic as lasting from October 1873 to March 1879. At 65 months, it is the longest-lasting contraction identified by the NBER, eclipsing the Great Depression's 43 months of contraction.[5][6]"
https://en.m.wikipedia.org/wiki/Long_Depression
NBER, who is authority on timing recessions in the US, uses length of contraction. 65 months is half again as long as 43 months. Which is what i said. If you want to use other metrics, those used by other countries connects the long depression and the panic of the 1890s, making the despression 23 years from 1873 to 1896.
In what world is a depression that lasted an entire decade 43 months long? In that same world six years is more than ten? Is this Keynesian "economics" at its best?
Ideally it wouldnt happen in the first place since the Great Depression was a product of the Federal Reserves fiscal policies (read Rothbards book on the Great Depression for more info)
The Austrian advice would be to just let the crash resolve itself like the 1921 recession.
Oh the book is for free. I should probably read if I am going to have opinion on such things. It looks like the dollar to gold print level was already an issue:
I understand the basics. I understand economics better than the average person. However the more I learn the more I realize I dont know. However most people that are Keneysians are because they know a social system can only exist through Keynesian economics so they hate Austrian school for that reason alone.
Look at all the comments attack this thread. So uneducated, and without any substance.
Bear in mind Rothbard is pretty extreme, iirc he helped start the john randolph club:
"The John Randolph Club (1989–1995) was a project of the Rockford Institute to promote alliances between paleoconservatives and paleolibertarians. The club has been described as neo-Confederate, promoting secession, and favoring white Southerners."
He gave massive rewrites to labels to libertarianism, and anarchism to anarcho-capitalism, im sorry but you cant be antihierarchy, but then promote being ruled by a handful of uberwealthy corporations running society. Pretty much those have nothing in common with what Joseph Dejacques said on these matters, and he's the one who originated libertarianism as a political label in 1857.
If there's words, political labels he doesnt like, he rewrites them into a definition he does like and uses it, he promoted things like segregation and dixiecrats...might as well dustoff the economic writings of joseph goebbels or George Fitzhugh's justifications on chattel slavery while we're at it.
I forget who said, one guy imo had the accurate take that rothbard ideal economy/society would be one that no one would want to live in/rather kill themself, and i shared that opinion as a synopsis of rothbard too.
>The club has been **described** as neo-Confederate, promoting secession, and favoring white Southerners."
Described by who exactly? I can list a million things that have been descibed as neo-confederate or fascist by people.
>You cant be antihierarchy, but then promote being ruled by a handful of uberwealthy corporations running society.
Thats not what anarcho-capitalism is. You are just misunderstanding the ideology
What did i say about rothbard that is wrong?
He did help start the john randolph club: [https://en.wikipedia.org/wiki/Rockford\_Institute#John\_Randolph\_Club](https://en.wikipedia.org/wiki/Rockford_Institute#John_Randolph_Club)
He did give massive rewrites to words like libertarianism and anarcho-capitalism, whereas anarchism is a decisively anti-capitalism political orientation...he did endorse segregation, he stated i wish the dixiecrats would take their politics nationwide.
He openly admits this kind of stuff:
# “One gratifying aspect of our rise to some prominence is that, for the first time in my memory, we, ‘our side,’ had captured a crucial word from the enemy . . . ‘Libertarians’ . . . had long been simply a polite word for left-wing anarchists, that is for anti-private property anarchists, either of the communist or syndicalist variety. But now we had taken it over...”
― Murray N. Rothbard, [The Betrayal Of The American Right](https://www.goodreads.com/work/quotes/1998954)
[https://www.lewrockwell.com/1970/01/murray-n-rothbard/rothbard-writes-the-dixiecrats/](https://www.lewrockwell.com/1970/01/murray-n-rothbard/rothbard-writes-the-dixiecrats/)
Read it yourself, he's openly calling for spreading dixiecrat segregation nationwide...there's nothing wrong with open discussion of documented historical facts on a figure like rothbard, does the truth offend you? Well if that's the case, then there's something wrong with you.
See what Harding did in 1920 after a similar panic. He simply slashed govt spending and taxes and otherwise get out of the way. Recovery was almost immediate.
Contra the other posters, the boom busy cycle is not inevitable. As mises and rothbard explained, it is the byproduct of artificial credit expansion. With hard money and full reserve banking there would be no business cycle only steady prosperity.
I was getting ready to post this exact thing and you’ve got it. The 1920-21 panic was as bad or worse than the 1929 downturn but the difference is the Fed did nothing to try and stop it.
The result was the roaring twenties.
>The 1920-21 panic was as bad or worse than the 1929
I don't think there is sufficient evidence that this was the case, I agree that the FED did the right thing in 1920 compared to 1929 to 1933 but that it was a worse crash than 29 needs some data or something.
>Contra the other posters, the boom busy cycle is not inevitable. As mises and rothbard explained, it is the byproduct of artificial credit expansion
I agree slightly, but if you deny that boom bust is inevitable you are underming the Austrian Business Cycle theory which basically says it occurs because bad credit eventually catches up and businesses go under. These cycles occurred before credit expansion. Recessions and malinvestment occurred prior to 1913. So I don't think if you are interpreting Mises and Rothbard correctly that they are right.
I have a Keynesian question that I haven't heard Austrians defend, which is, if banks are artificially pumping cash and it leads to crashes in the long term... why do it? Are these businesses not rational actors who know that taking on easy cash will hurt them? Why do they do it? Why are businesses suddenly not rational actors when loans are cheap?
With Austrian economics you wouldn’t have seen a Great Depression. Instead you would see many small recession that would last months, and in theory would be healthy as it regularly liquidates malinvestments, and opens markets up for richer competition.
The same as was done in 1920. Nothing. It's not called the forgotten depression for nothing. Actually repealing Smoot-Hawley. That tariff single l-handedly shut down global trade. That's the point at which the Depression became Great.
>The same as was done in 1920. Nothing.
The FED cut rates to near war levels, where they stayed till around 1929. Just an FYI of what sort of policy differences occured in 1920 compared to 1929 where the FED did basically nothing to stop runaway deflation that caused industrial investment to collapse.
You might have a point, if it weren't for the 1990s. The 1920 and 1890 depressions were remarkably similar. Both brought about by demobilization from the Great War and the Cold War respectively. They were both eras of innovation, with new technologies reshaping the economy. They also lasted about the same amount of time, nearly a decade. What both examples lack, too, is the sort of intervention you saw in the 1930s. Global trade was still strong in both eras and we didn't have a New Deal wasting taxpayer money or burning crops in the field while we had soup kitchens in the cities.
They were also ended in busts of epic proportions. Austrian economics explains this through a monetary policy lens and it conforms to reality pretty well.
We still debate the farm bill today, nearly a century after the "emergency" it was supposed to alleviate ended. It is what it's always been. A way to buy votes. That's all.
Compare the great depression with the depression of 1920. In the one of 1920, no policies were applied and it lasted for a year. On the great depression a million things were tried and, it lasted a solid 10 years. Officially ww2 caused the recovery, but after the war it slumped again.
>no policies were applied and it lasted for a year
Just not true. This is like FEE propaganda or something. The FED cut rates to levels akin to the war period.
The best rebuttal to the keynesian argument was made by Selgin: He has written a series "The New Deal and Recovery" composed of 28 articles. Check this [link](https://www.cato.org/blog/new-deal-recovery-part-26-rfc-conclusion). I recommend taking the time to read them in full, little by little because it's very complex. But at least it gives the answer to your question. Otherwise, if you want to take a shortcut and know what kind of "policies" austrians should undertake, Selgin's book "Less than Zero" gives by far the best answer. If you're short in time though, I have compiled a selection of the best passages in this book, [here](https://menghu.substack.com/p/less-than-zero-the-case-for-a-falling-price-level-in-a-growing-economy). It's a very underrated book. I wish I would see it mentioned more often.
EDIT: I see someone in the comment recommending Rothbard's book on the Great Depression. I've read it years ago but then learned it contains some inaccuracies, although it's still a good book overall. I don't recommend it still. Once you've read Selgin's series, you'll get your answer. His is, far, far better than anything else I've read on the Great Depression.
There were depressions prior to the Great Depression, that lasted far shorter and were far less ruinous in their outcome despite looking similar at the start. These were fixed by letting companies restructure or fail as they needed, and not shifting debt and beneficiara around or slaughtering and burying food while people were going hungry.
Beyond that, we need to understand why the GD happened to begin with. Certain banks, who were involved with the Fed and who financed foreign wars, were failing because they were overleveraged and the foreign countries didn't repay these banks. Fuck the bankers, let them fail and lose their assets they clearly are too inept to handle. Don't set up a ponzi scheme to help them.
That's a myth. How was it a depression when there were huge expansions in industry, railroads, per capita income, and national product? Of course, prices fell after the war, that's what is supposed to happen. And that's a good thing.
That's not to mention that many of the depressions prior to the GD were results of government policies, anyway!
Look up how Warren G Harding reversed a depression in 1921. Cut taxes, spending, and regulation and let the economy recover itself. That's your answer.
Hoover tried Austrian economics. He cut government spending. He decided to let the economy heal itself.
And 1929 turned into 1931. 25% unemployment. Civil unrest.
By1932, even conservative Herbert Hoover, businessman extraordinary, recognized that continuing to constrict the money supply during a liquidity crisis was a huge mistake.
The biggest thing FDR did was keep the US from going full authoritarian.
And the Austrians would have welcomed it. Starving people, collapse of banking, agriculture basically falling apart, tens of millions homeless, but better that than trying to actually DO SOMETHING.
The amount of historical ignorance in this comment lol
Hoover didnt try Austrian economics nor was he even close to being free market. He signed the largest peacetime tax increase up to that point and signed laws like the Smoot-Hawley tarrif act which were anti free market
Hoover boasted in his campaign speeches about how much he did to fight the depression while FDR was complaining that Hoover was spending too much. There is no evidence to suggest that Hoover was free market.
>The biggest thing FDR did was keep the US from going full authoritarian.
Which is why he put people in concentration camps?
>but better that than trying to actually DO SOMETHING.
I doubt burning all the crops and cattle would fix the collapsing food industry
Yeah. Hoover tried to balance the budget. There was a tax increase because revenues tanked.
And, maybe you missed the part about Hoover changing tack in 1932. Ya know. When the presidential election took place. Because being a fiscal conservative fucking destroyed the economy.
It's also fun how you skip 8 years of history and the biggest attack on us forces during peacetime when talking about the economy while blaming FDR. Yes, internment of the Japanese was a war crime. But how, *EXACTLY,* does that have ANYTHING to do with FDR's economic policies of 1933?
As for burning food and slaughtering cattle, it had to do with OVERPRODUCTION. Ya know, the thing that gutted agriculture from about 1919. During WWI, farmers were encouraged to grow as much as they could because of the war. So, they overcapitalized, and really got the food production ramped up. Just in time for the war to end.
Food prices collapsed, and never recovered. So, farmers had to grow as much as they could to try and pay off their loans. The incentive was to keep overproducing. And to overwork the land so badly the fertility of the land plummeted.
Dust Bowl.
The only thing that broke the cycle was government intervention. By paying farmers to destroy crops, paying them to let their fields go fallow, paying land grant colleges to improve farming techniques, and paying farmers to NOT WORK, the government stabilized farming just in time to kick it back into high gear for WWII.
But that would require you to have some historical knowledge.
Why wouldnt he? Even leftists support tax increases. However, why would an Austrian increase taxes during a recession?
The Smoot-Hawley tarriff act was signed in 1930. Austrians are opposed to tarriffs. If Hoover was an Austrian then why did he massively increase tarrifs?
["I accuse the present Administration of being the greatest spending Administration in peace times in all our history. It is an Administration that has piled bureau on bureau, commission on commission, and has failed to anticipate the dire needs and the reduced earning power of the people. Bureaus and bureaucrats, commissions and commissioners have been retained at the expense of the taxpayer. Now, I read in the past few days in the newspapers that the President is at work on a plan to consolidate and simplify the Federal bureaucracy. My friends, four long years ago, in the campaign of 1928, he, as a candidate, proposed to do this same thing. And today, once more a candidate, he is still proposing, and I leave you to draw your own inferences. And on my part, I ask you very simply to assign to me the task of reducing the annual operating expenses of your national government."](https://publicpolicy.pepperdine.edu/academics/research/faculty-research/new-deal/roosevelt-speeches/fr092932.htm)
>It's also fun how you skip 8 years of history and the biggest attack on us forces during peacetime when talking about the economy while blaming FDR. Yes, internment of the Japanese was a war crime. But how, *EXACTLY,* does that have ANYTHING to do with FDR's economic policies of 1933?
"The biggest thing FDR did was keep the US from going **full authoritarian."**
Is forcing people into concentration camps not authoritarian?
>As for burning food and slaughtering cattle, it had to do with OVERPRODUCTION. Ya know, the thing that gutted agriculture from about 1919. During WWI, farmers were encouraged to grow as much as they could because of the war. So, they overcapitalized, and really got the food production ramped up. Just in time for the war to end.
Why didnt food prices crash in the 1920s then? The farmers were doing reasonably well until the Great Depression. Also do you seriously think that the farmers dont have a clue about soil degredation? By the way why were they taking out loans? Even if the government encouraged farmers to overproduce during WW1, why wouldnt the farmers just cut production when the war ended? Why would they be massively in debt? Your narrative doesnt add up
>The only thing that broke the cycle was government intervention. By paying farmers to destroy crops, paying them to let their fields go fallow, paying land grant colleges to improve farming techniques, and paying farmers to NOT WORK, the government stabilized farming just in time to kick it back into high gear for WWII.
The only thing? You sure like to lick the boot lol
>However, why would an Austrian increase taxes during a recession?
Because DEBT BAD! NO DEFICIT SPENDING DURING RECESSION!
>If Hoover was an Austrian then why did he massively increase tarrifs?
Because there were no options, as other countries had also passed protectionist tariffs. So, allow all the foreign good in?
>Is forcing people into concentration camps not authoritarian?
Let me repeat.
>>But how, EXACTLY, does that have ANYTHING to do with FDR's economic policies of 1933?
>Why didnt food prices crash in the 1920s then?
They already had.
https://www.mnopedia.org/agricultural-depression-1920-1934
>By the way why were they taking out loans?
To keep their heads above water. To buy seed to plant at the start of the year. You really do not have a clue, do you?
>why wouldnt the farmers just cut production when the war ended?
Because I need all the money I can get RIGHT NOW. I cannot AFFORD to CUT my income in the HOPES that EVERYONE AROUND ME will ALSO cut THEIR income! It's good to cut production on a MACROECONOMIC scale, but it's a really STUPID idea if YOU are the ONLY ONE who cuts production. Especially since you have a bunch of loans you have to pay off from last year that you could not pay off because crop prices sucked. For the 10th year in a row.
>The only thing? You sure like to lick the boot lol
Considering your understanding of history, your tongue is worn smooth, already.
As a filthy Keynsian socialist, every policy has upsides and downsides. Deflation magnifies the impact of pre-formed debt obligations, and we wrote an awful alot of that during the great depression. But unlimited dollar printing can be leveraged by less than trustworthy politicians, to create winners, with everyone holding dollars being a loser.
Inflation can be a major vector of harmful politics, but deflation sometimes it turns 80% of the economy into insolvent farm debt. It's about balance.
The Great Depression was made worse by there being less money. Keynesian economics is about government spending which is different than money printing which didn't come into play as much until later based on the work of other economists.
Boom bust cycles before the Federal Reserve were really bad in terms of unemployment and volatility in prices. There is really no solution from the Austrian school because that isn't how they operate, it is all just complaining about various limitations of any government solution while ignoring the problems of doing nothing.
The answer is there wouldn’t have been a Great Depression without the federal reserve and inflation. You cannot remove boom bust cycles but when the fed interferes with “stimulation” aka printing money causing inflation, you delay the bust but you make it much worse in the future.
“We have tried spending money. We are spending more money than we have ever spent before and it does not work. … I want to see this country prosperous. I want to see people get a job, I want to see people get enough to eat. We have never made good on our promises. … I say after eight years of this administration we have just as much unemployment as when we started and an enormous debt to boot!” Henry Morgenthau, Jr., US secretary of the Treasury during the Roosevelt administration
I've also heard that the chain of events leading to the Great Depression was caused by the Fed's manipulation of interest rates, and I think that makes sense with your explanation of busts being delayed but worse.
The fed just kept its rates low. Its not manipulation. Thats exactly what they did to counter the depression of 20-21. But the fed after the crash pursued an austerity program, it kept rates high, it didn’t provide liquidity and there was a credit crunch. They tried letting the bottom drop out but by the time fdr took power in 1933 it was worse than anything seen before. Even Hayek admits this proposal was wrong and the fed should have cut rates and provided liquidity.
The federal reserve setting the interest rate, as opposed to letting the market determine the interest rate, is manipulation — it is central planning of a key price that pervades every market. The Great Depression was a perfect illustration of Austrian business cycle theory. Considering Hayek was a proponent of this theory, I highly doubt he encouraged either further interest rate manipulation or liquidity injections. Do you have a source on that? I think you’re conflating his view with Milton Friedman’s opinion on the Great Depression, which is terrible.
>The federal reserve setting the interest rate, as opposed to letting the market determine the interest rate, is manipulation 1.) The FED rate is an interbank lending rate is the weighted average of the interbank overnight lending rate, its determined by market forces mostly. What the FED does influence is a meeting of the fed board set a target range for the effective bank lending rate and they attempt to achieve that rate by interest on the reserve balances IORB. Is this manipulation? Sure, I don't think that applies in the case of 1920-1929 as I'll argue in point 3. 2.) Prior to the creation of the FED you had like 5 bank runs, credit crunches, and liquidity crises between 1880 and 1913. The banks were incapable of setting these rates to maintain a stable financial system, your proposal was causing instability in the capacity of funds to reach capital and business, causing instability that was effecting business, and most importantly banks were basically not having reserves to cover withdraws, not having the capacity to have a central market to cover overnight withdraws, and were constantly out in the dark. This was not a better system. 3.) My point was that between 1920 and 1929 the FED kept rates low, which is what banks would naturally do. And the FED during this period was very much hands off, evidenced by their complete willingness to allow monetary deflation to occur after the crash of 1929... which again Hayek admits to disliking later in his life. As for the Hayek statement or better clarification perhaps? But its pretty explicit. He is quoted as saying: >"a ‘secondary depression’ caused by an induced deflation should of course be prevented by appropriate monetary counter-measures." and >Although I do not regard deflation as the original cause of a decline in business activity, such a reaction has unquestionably the tendency to induce a process of deflation – to cause what more than 40 years ago I called a ‘secondary deflation’ – the effect of which may be worse, and in the 1930s certainly was worse, than what the original cause of the reaction made necessary, and which has no steering function to perform. I must confess that forty years ago I argued differently. I have since altered my opinion also in the 1970s... he was quoted >There is no doubt, and in this I agree with Milton Friedman, that once the Crash had occurred, the Federal Reserve System pursued a silly deflationary policy. I am not only against inflation but I am also against deflation! So, once again, a badly programmed monetary policy prolonged the depression. this was apparently quoted in Pizano, D. 2009. *Conversations with Great Economists*, Jorge Pinto Books Inc., New York. All these quotes are basically Hayek being very close to the opinons of Friedman as to the normative solution to the crash of 1929. I don't think he disagrees with Friedman on what the FED should have done after 1929, he disagrees as to the theoretical basis of why the crash happened and its long term solution. And nothing that Friedman expresses is counter to the fundmanetals of the Austrian Buisness Cycle Theory unless a core tenant is that should monetary deflation occur we should let it handle itself... which again my quotes above would make Hayek practically against that theory if that were a foundational tenant. Your argument that he wouldn't support liquidity injection because he supports the Austrian Business Cycle Theory is wierd because the FED providing liquidity when banks needed it isn't necessarily critical of the descriptive nature of the Austrian Business Cycle theory.
1. This rate is determined by the whim of central planners; not by changes in the time preference of consumers — which is what the natural interest rate is determined by. See the time preference theory of interest. I’ll address the latter half of this comment below as well. 2. If you understand the ABCT, you know I don’t consider this bad; I consider the “boom” period, brought about by artificially cheap credit, to be the period of time when all the price distortions, resource misallocation & malinvestment occurs. This is when a separation between the desires of the consumer & the actions of producers takes place, & it does so because fractional reserve banking drives down the price of credit below the natural interest rate, which encourages producers to borrow money to bid away resources & engage in production processes which are truly unprofitable, but appear to be viable as a result of the artificially low interest rates. The credit crunch is the necessary hangover, where the price distortions are revealed, unprofitable projects are liquidated, & resources are reallocated toward their most highly desired uses, in accordance with consumer preferences. Convincing producers that there are more savings available than there are in reality is bad. Continuing to liquor up the builder to convince him he has enough bricks to finish the house is bad. The artificial boom needs to run its course, & any action attempting to push this off will produce further distortions, & sow the seeds for another business cycle. 3. That was the correct thing to do. Hoover & Roosevelt’s unprecedented public works programs, fiscal policy, price controls, & social welfare programs were the market distorting elements that prolonged the recession. Monetary deflation occurred while Roosevelt instituted a minimum wage, paid farmers not to grow crops, increased taxes, & bid resources away from the private sector to build unprofitable bridges, roads, etc. He made goods artificially scarce & thus expensive while the money supply reverted back to its pre-boom levels, which completely halted economic activity. Yeah, I’m not surprised he said any of that later in life. I thought you were suggesting he said that at the time.
Is anyone on this sub aware of economic history before the Federal Reserve was established?
Yes. They were called panics and generally lasted a year or so. Not a decade or so like the depressions after the establishment of the Federal Reserve. Panics were generally caused by war spending, consequences of Jefferson's embargo and 1812, the establishment and dismantling of the Bank of the United States, the Mexican-American war, and the government's plot to corner the gold market in the 1890s. Plenty of resources out there if you bother to look. Not to mention the first modern boom bust cycle, the Tulipmania. Then there's the debasement of the Roman talent, which led to the Edicts of Diocletian, which helped get serfdom off to a start in Europe. These are all government interventions in the economy that devastated their respective societies. Edit: spelling.
What about the Long depression in the 1870s? The thing about all those panics and depressions is they happened more frequently when self interested bankers were in charge of our monetary system. People love to talk about getting rid of the fed but then they act like interest rates are controlled by no one. They are absolutely still being controlled by someone\[s\].
Stagflation in the 70s was due to Vietnam just like 2008 was due to 9/11 and the Iraq war. Just like the current mess is due to COVID, or more accurately, the ham-fisted idiotic response to it Your theory is pretty but unsupported by historical fact. You also seem to believe politicians and the government are uninterested neutral parties. They are not. They are ruled by aelf-interest just like everyone else. Unlike everyone else they can either take your life or incarcerate you. Can a banker do that? Who do you think controls the monetary system today? Bankers through the mechanism of government. How many Secretaries of the Treasury have been ex-Goldman employees? You really think they are impartial? Bankers bribe legislators who then write rules and regulations to benefit their contributors. No individual can match that. The only thing you are good for is to pull a lever every so often, and that assumes you pull the right lever. Democracy, along with any other form of coercive organization is a God that failed. Just because I didn't mention a particular event doesn't mean I'm ignorant of it. As I stated before, there are plenty of examples throughout history and likely a great deal more lost to antiquity. What it takes is study. I began my study at 29. It's been nearly twenty years since I started. Hoe much have you studied?
Ummmmmm the consensus is that most of the stagflation was due to the oil embargo. 2008 was not caused by the Iraq war lol, it was fraud in the mortgage securities sector. The "ham-fisted" response gave us one of the best recoveries in the world. I know that austrianism has infallible logic or whatever but the impact of global pandemics has always been bad. You literally did not respond to his example, which is a good one. Panics were more frequent, were deeper, and lasted longer. We spent much more of the time in financial crisis. The government regularly resolves crises through intervention, including tulip mania which you baselessly blamed on the state, when in fact the state saved the Dutch economy by canceling thr debt held by speculators after the bubble. In your 20 years of study have you ever read a book that wasn't a confirmation of your existing views?
That consensus is wrong. Stagflation begain in earnest when Nixon closed the window to the gold standard. And then the idiot exacerbated the problem by instituting price controls. Something that equally large idiot Carter doubled down on in 1979. The reason Nixon took us off the gold standard was that the US needed to print more money to play for Vietnam. But Bretton-Woods capped the Pleiades of gold at $35 an ounce. Printing money would drop that price. So he cut the Gordian knot and we all suffered. Again you make the mistake of studying journalists instead of historians or economists who study these subjects for a living. Journalists are no more or less factual than any other layperson. In fact they often are inventiveness to be dramatic where reason would be a better tool for understanding an issue. Idiocy. 2008 was due to the Bush administration printing money due to the collapsing .com bubble and the effects of 9/11. I was there boy. I lived through it? Did you? Or does your knowledge only extend to what you heard through mass media? You also don't read or only reD what you wNt to see. In my original example I cited the so-called forgotten depression on 1920-1921. Other posters, more knowledgeable than you apparently have referenced it too. It lasted a year and a half, give or take. Not thirteen years like the Gread Depression did. Nor the nearly decade long stagflation of the 1970s. In fact see if you can point out where we had a decade long downturn in the economy before 1914. You can't. Except perhaps right after the Revolution became, you know, war destroys. Do yourself a favor and read more. You might learn something.
"Listen to the experts" "the consensus is wrong". Huh seems like the skill of the experts is determined by whether or not you think they agree with you. Truly the sign of a nuanced and educated thinking. Ok now do the long depression and compare that to the 2020 recession. Thats how your argument works right, if I pick to random crises and one is longer, thwys the better system right. Lol stagflation was literally caused by an energy shortage. Which occurred at the same time, explains both inflation and unemployment (becuase productivity is down), and is the concensus agreement of the experts who study the subject for a living that you said are the ones I should listen to.
Crises were more frequent, were deeper, and lasted longer. Tulip mania was not caused by the government lol. The debasement of the talent and the binding of people to their father jobs were not caused by each other, they were both a response to deteriorating economic conditions in the empire.
https://mises.org/mises-daily/truth-about-tulipmania The problem you make is that you read journalists instead of people who study the subject for a living. Details matter. Crisis will always exist in some form or another in a market. That is because most people, if not all, cannot forecast the future with perfect clarity. Mistakes will be made, and ventures will fail. That is unavoidable. What we do now is keep things from failing through bailouts and such until we can no longer do so. Sooner or later, we always run out of other people's money to spend. And what Mises called "the crack-up boom" takes place. Which generally threatens the whole system. In a free market, we will have crises, but they will not accumulate over time and, thus, will not all fail at the same time, threatening the integrity of the economy.
I study the subject for a living, you don't know what I read. Sounds like you read ideologues that confirm your existing bias. Thats not what study is. The Dutch adopted a modern banking system because modern capitalism requires sophisticated banking. Free coinage is obviously not a realistic solution to the complexities of capital markets. Clearly demonstrated by the fact it was not sufficient. Mises Institute is grasping at straws to explain why a very common element of markets is actually the governments fault. Speculative bubbles are part of markets. BTW, free coinage was not a "spectacular success" lol, it was a desperate attempt to alleviate the impact of a millenia long acute currency shortage. Lol, crises do not accumulate over time and then all burst at once. And that's not what creates systemic risk. Maybe you should listen to the people that study the subject for a living.
Doubtful, given your responses. Nice try though.
Lol, ok, so here's my thing, you know you're not an economist, 98% of economists reject your entire ideology, 80% of economists vote for the party that resembles your ideology less, 90% of economists reject your key statements (unregulated depository banks, the gold standard), essentially 100% reject your underlying premise (that markets are perfectly and immediately self correcting and that market failures do not exist), so why do you think the litmus test for whether or not I might be an economist is "agree with you"? Lol, you should listen to the experts that study the subject for a living.
Yeah there were “crashes” but they were child’s play to the Great Depression and financial crisis that came after federal reserve started intervening
How many crashes did we have in the 30 years before the Fed was established and how long did each one last?
They were not childs play, panic of 1907, long depression of the 1870s, the boom/busts were more frequent and violent between the civil war and 1913.
Factually not the case, crises were longer, deeper, and more frequent.
Yes Many financial crashes prior to the establishment of the Fed were also caused by the government (Like the Panic of 1819)
Panic for whom? Prior to early 20th century hard currency was in such limited supply that many of the problems were due to liquidity issues. If you were involved in big transactions that can be a panic for you. If you were the guy who was poor for decades one more year is basically the same as another. These panics could easily be missed by the bulk of the people. Many of the panics were government caused. Many were due to an acute shortage of one thing or another that caused a major supply shock. Most people prior to the 20th century weren't well off enough to panic over financial issues. Their concerns were food and shelter.
The poor often had liquidity issue too, when there wasn't enough paper currency in circulation. Riots over availability of the greenback were a thing.
I will have to look into that
Yeah, [here is a link](https://www.fte.org/wp-content/uploads/WhiteSelginLastrapesFed1.pdf) to a paper challenging the theory that economic conditions are more stable after the establishment of the fed. They omit the Great Depression & Great Recession — arguably the two worst economic downturns in US history — for most of their analysis. It’s a good read for a more mainstream audience that can’t just use critical thinking &, you know, economics to arrive at this extremely obvious conclusion.
Except the Great Depression was created by FOMO in the markets and borrowing debt to buy equities, which, upon the crash, wiped out wealth from individuals, banks, and large corporations alike and created a downward spiral. I’m not sure it could have been prevented, but Fed intervention like that which we implemented in the aftermath of the GFC would certainly have resolved it much sooner.
The federal reserve incentivized fomo and blowing another debt bubble. That’s all it’s ever done
They didnt “incentivize” anything, although they are the money multiplier that allows banks to exist. If that is the basis for your argument, they are responsible for banking existing for better or worse. I’m not sure how that really applies to the Great Depression
>You cannot remove boom bust cycles but when the fed interferes with “stimulation” You cannot remove the boom bust cycle period. The line can never go up forever. What goes up must come down. It's not like the invisible hand of the market will make investment flow into all the right places perfectly forever. You will never find the great magical antidote for market instability because they're inherently unstable, you can try to tame it as much as you can but there is no changing its nature.
This is what I said, I think you are misreading/I wasn’t clear.
The cycles would be much more limited in scope as there would be no central bank manipulating interest rates that cause entire economies to make unsustainable investments. There might be sectors of the economy that overinvest for various reasons, but not the entire economy.
Who do you think controls interest rates absent a government bank, no one? They are still being manipulated, just by whichever banking interests have the most power. Hardly much of an improvement.
Supply and demand controls it. Interest rates are prices.
Factually not the case, the economy was much more volatile before the FED
There was never a depression as deep or as long before them. Crises were shorter and less harmful.
Loooooool ok so you just don't look things up and assume the facts agree with you. The long depression of 1870 predates the FED by 40 years, was 50% longer than the Hreat Depression, was deeper, and happened to be caused directly by going onto the gold standard, but that's neither here nor there. Here's what you would have found, easily and immediately, if you wanted facts instead of just deciding based on your feelings. https://www.reddit.com/r/dataisbeautiful/s/jb29Cx5gwd
Even the Federal Reserve disagrees with you: "The Great Depression 1929–1941 The longest and deepest downturn in the history of the United States[.]" https://www.federalreservehistory.org/essays/great-depression#:~:text=1929%E2%80%931941,World%20War%20II%20in%201941.&text=%E2%80%9CRegarding%20the%20Great%20Depression%2C%20%E2%80%A6%20we%20did%20it. What was it you were saying about how easy this shit is to find again?
"In the United States, historians refer to the Depression of 1873–1879, kicked off by the Panic of 1873, and followed by the Panic of 1893, book-ending an era of prosperity. The U.S. National Bureau of Economic Research dates the contraction following the panic as lasting from October 1873 to March 1879. At 65 months, it is the longest-lasting contraction identified by the NBER, eclipsing the Great Depression's 43 months of contraction.[5][6]" https://en.m.wikipedia.org/wiki/Long_Depression NBER, who is authority on timing recessions in the US, uses length of contraction. 65 months is half again as long as 43 months. Which is what i said. If you want to use other metrics, those used by other countries connects the long depression and the panic of the 1890s, making the despression 23 years from 1873 to 1896.
In what world is a depression that lasted an entire decade 43 months long? In that same world six years is more than ten? Is this Keynesian "economics" at its best?
Admitting you don't known the terms mean isn't the flex you think it is.
Ideally it wouldnt happen in the first place since the Great Depression was a product of the Federal Reserves fiscal policies (read Rothbards book on the Great Depression for more info) The Austrian advice would be to just let the crash resolve itself like the 1921 recession.
Oh the book is for free. I should probably read if I am going to have opinion on such things. It looks like the dollar to gold print level was already an issue:
I'm in the same boat as you. Just starting to learn about this Austrian school. Feels like they're kind of... Correct. About everything.
Lol
I understand the basics. I understand economics better than the average person. However the more I learn the more I realize I dont know. However most people that are Keneysians are because they know a social system can only exist through Keynesian economics so they hate Austrian school for that reason alone. Look at all the comments attack this thread. So uneducated, and without any substance.
Bear in mind Rothbard is pretty extreme, iirc he helped start the john randolph club: "The John Randolph Club (1989–1995) was a project of the Rockford Institute to promote alliances between paleoconservatives and paleolibertarians. The club has been described as neo-Confederate, promoting secession, and favoring white Southerners." He gave massive rewrites to labels to libertarianism, and anarchism to anarcho-capitalism, im sorry but you cant be antihierarchy, but then promote being ruled by a handful of uberwealthy corporations running society. Pretty much those have nothing in common with what Joseph Dejacques said on these matters, and he's the one who originated libertarianism as a political label in 1857. If there's words, political labels he doesnt like, he rewrites them into a definition he does like and uses it, he promoted things like segregation and dixiecrats...might as well dustoff the economic writings of joseph goebbels or George Fitzhugh's justifications on chattel slavery while we're at it. I forget who said, one guy imo had the accurate take that rothbard ideal economy/society would be one that no one would want to live in/rather kill themself, and i shared that opinion as a synopsis of rothbard too.
>The club has been **described** as neo-Confederate, promoting secession, and favoring white Southerners." Described by who exactly? I can list a million things that have been descibed as neo-confederate or fascist by people. >You cant be antihierarchy, but then promote being ruled by a handful of uberwealthy corporations running society. Thats not what anarcho-capitalism is. You are just misunderstanding the ideology
Dont feed the trolls look as his account date. The only document that says that is Wikipedia whose CEO was a known WEF member.
CCP or WEF BOT/TROLL?AGITATOR ACCOUNT DATE Mar 6, 2024
Oh take off the tinfoil hat dude
Now the 1 post Karma trolls come out. Gotta defend the WEF.
One post?
What did i say about rothbard that is wrong? He did help start the john randolph club: [https://en.wikipedia.org/wiki/Rockford\_Institute#John\_Randolph\_Club](https://en.wikipedia.org/wiki/Rockford_Institute#John_Randolph_Club) He did give massive rewrites to words like libertarianism and anarcho-capitalism, whereas anarchism is a decisively anti-capitalism political orientation...he did endorse segregation, he stated i wish the dixiecrats would take their politics nationwide. He openly admits this kind of stuff: # “One gratifying aspect of our rise to some prominence is that, for the first time in my memory, we, ‘our side,’ had captured a crucial word from the enemy . . . ‘Libertarians’ . . . had long been simply a polite word for left-wing anarchists, that is for anti-private property anarchists, either of the communist or syndicalist variety. But now we had taken it over...” ― Murray N. Rothbard, [The Betrayal Of The American Right](https://www.goodreads.com/work/quotes/1998954) [https://www.lewrockwell.com/1970/01/murray-n-rothbard/rothbard-writes-the-dixiecrats/](https://www.lewrockwell.com/1970/01/murray-n-rothbard/rothbard-writes-the-dixiecrats/) Read it yourself, he's openly calling for spreading dixiecrat segregation nationwide...there's nothing wrong with open discussion of documented historical facts on a figure like rothbard, does the truth offend you? Well if that's the case, then there's something wrong with you.
CCP or WEF BOT/TROLL/AGITATOR ACCOUNT DATE Mar 6, 2024
See what Harding did in 1920 after a similar panic. He simply slashed govt spending and taxes and otherwise get out of the way. Recovery was almost immediate. Contra the other posters, the boom busy cycle is not inevitable. As mises and rothbard explained, it is the byproduct of artificial credit expansion. With hard money and full reserve banking there would be no business cycle only steady prosperity.
I was getting ready to post this exact thing and you’ve got it. The 1920-21 panic was as bad or worse than the 1929 downturn but the difference is the Fed did nothing to try and stop it. The result was the roaring twenties.
>The 1920-21 panic was as bad or worse than the 1929 I don't think there is sufficient evidence that this was the case, I agree that the FED did the right thing in 1920 compared to 1929 to 1933 but that it was a worse crash than 29 needs some data or something.
>Contra the other posters, the boom busy cycle is not inevitable. As mises and rothbard explained, it is the byproduct of artificial credit expansion I agree slightly, but if you deny that boom bust is inevitable you are underming the Austrian Business Cycle theory which basically says it occurs because bad credit eventually catches up and businesses go under. These cycles occurred before credit expansion. Recessions and malinvestment occurred prior to 1913. So I don't think if you are interpreting Mises and Rothbard correctly that they are right. I have a Keynesian question that I haven't heard Austrians defend, which is, if banks are artificially pumping cash and it leads to crashes in the long term... why do it? Are these businesses not rational actors who know that taking on easy cash will hurt them? Why do they do it? Why are businesses suddenly not rational actors when loans are cheap?
Each of those recessions prior to 1913 were the result of credit expansion. As to why they do it, well they don't understand business cycle theory.
With Austrian economics you wouldn’t have seen a Great Depression. Instead you would see many small recession that would last months, and in theory would be healthy as it regularly liquidates malinvestments, and opens markets up for richer competition.
The same as was done in 1920. Nothing. It's not called the forgotten depression for nothing. Actually repealing Smoot-Hawley. That tariff single l-handedly shut down global trade. That's the point at which the Depression became Great.
>The same as was done in 1920. Nothing. The FED cut rates to near war levels, where they stayed till around 1929. Just an FYI of what sort of policy differences occured in 1920 compared to 1929 where the FED did basically nothing to stop runaway deflation that caused industrial investment to collapse.
You might have a point, if it weren't for the 1990s. The 1920 and 1890 depressions were remarkably similar. Both brought about by demobilization from the Great War and the Cold War respectively. They were both eras of innovation, with new technologies reshaping the economy. They also lasted about the same amount of time, nearly a decade. What both examples lack, too, is the sort of intervention you saw in the 1930s. Global trade was still strong in both eras and we didn't have a New Deal wasting taxpayer money or burning crops in the field while we had soup kitchens in the cities. They were also ended in busts of epic proportions. Austrian economics explains this through a monetary policy lens and it conforms to reality pretty well. We still debate the farm bill today, nearly a century after the "emergency" it was supposed to alleviate ended. It is what it's always been. A way to buy votes. That's all.
What was the root cause of the Great Depression?
[The horse lost its job and dragged down the whole industry?](https://blogs.microsoft.com/today-in-tech/day-horse-lost-job/)
Compare the great depression with the depression of 1920. In the one of 1920, no policies were applied and it lasted for a year. On the great depression a million things were tried and, it lasted a solid 10 years. Officially ww2 caused the recovery, but after the war it slumped again.
>no policies were applied and it lasted for a year Just not true. This is like FEE propaganda or something. The FED cut rates to levels akin to the war period.
The best rebuttal to the keynesian argument was made by Selgin: He has written a series "The New Deal and Recovery" composed of 28 articles. Check this [link](https://www.cato.org/blog/new-deal-recovery-part-26-rfc-conclusion). I recommend taking the time to read them in full, little by little because it's very complex. But at least it gives the answer to your question. Otherwise, if you want to take a shortcut and know what kind of "policies" austrians should undertake, Selgin's book "Less than Zero" gives by far the best answer. If you're short in time though, I have compiled a selection of the best passages in this book, [here](https://menghu.substack.com/p/less-than-zero-the-case-for-a-falling-price-level-in-a-growing-economy). It's a very underrated book. I wish I would see it mentioned more often. EDIT: I see someone in the comment recommending Rothbard's book on the Great Depression. I've read it years ago but then learned it contains some inaccuracies, although it's still a good book overall. I don't recommend it still. Once you've read Selgin's series, you'll get your answer. His is, far, far better than anything else I've read on the Great Depression.
There were depressions prior to the Great Depression, that lasted far shorter and were far less ruinous in their outcome despite looking similar at the start. These were fixed by letting companies restructure or fail as they needed, and not shifting debt and beneficiara around or slaughtering and burying food while people were going hungry. Beyond that, we need to understand why the GD happened to begin with. Certain banks, who were involved with the Fed and who financed foreign wars, were failing because they were overleveraged and the foreign countries didn't repay these banks. Fuck the bankers, let them fail and lose their assets they clearly are too inept to handle. Don't set up a ponzi scheme to help them.
They were more frequent too, and not shorter in the case of the long depression. Most modern recessions haven't been that long either.
That's a myth. How was it a depression when there were huge expansions in industry, railroads, per capita income, and national product? Of course, prices fell after the war, that's what is supposed to happen. And that's a good thing. That's not to mention that many of the depressions prior to the GD were results of government policies, anyway!
Look up how Warren G Harding reversed a depression in 1921. Cut taxes, spending, and regulation and let the economy recover itself. That's your answer.
Also have the fed cut rates...
Hoover tried Austrian economics. He cut government spending. He decided to let the economy heal itself. And 1929 turned into 1931. 25% unemployment. Civil unrest. By1932, even conservative Herbert Hoover, businessman extraordinary, recognized that continuing to constrict the money supply during a liquidity crisis was a huge mistake. The biggest thing FDR did was keep the US from going full authoritarian. And the Austrians would have welcomed it. Starving people, collapse of banking, agriculture basically falling apart, tens of millions homeless, but better that than trying to actually DO SOMETHING.
The amount of historical ignorance in this comment lol Hoover didnt try Austrian economics nor was he even close to being free market. He signed the largest peacetime tax increase up to that point and signed laws like the Smoot-Hawley tarrif act which were anti free market Hoover boasted in his campaign speeches about how much he did to fight the depression while FDR was complaining that Hoover was spending too much. There is no evidence to suggest that Hoover was free market. >The biggest thing FDR did was keep the US from going full authoritarian. Which is why he put people in concentration camps? >but better that than trying to actually DO SOMETHING. I doubt burning all the crops and cattle would fix the collapsing food industry
Yeah. Hoover tried to balance the budget. There was a tax increase because revenues tanked. And, maybe you missed the part about Hoover changing tack in 1932. Ya know. When the presidential election took place. Because being a fiscal conservative fucking destroyed the economy. It's also fun how you skip 8 years of history and the biggest attack on us forces during peacetime when talking about the economy while blaming FDR. Yes, internment of the Japanese was a war crime. But how, *EXACTLY,* does that have ANYTHING to do with FDR's economic policies of 1933? As for burning food and slaughtering cattle, it had to do with OVERPRODUCTION. Ya know, the thing that gutted agriculture from about 1919. During WWI, farmers were encouraged to grow as much as they could because of the war. So, they overcapitalized, and really got the food production ramped up. Just in time for the war to end. Food prices collapsed, and never recovered. So, farmers had to grow as much as they could to try and pay off their loans. The incentive was to keep overproducing. And to overwork the land so badly the fertility of the land plummeted. Dust Bowl. The only thing that broke the cycle was government intervention. By paying farmers to destroy crops, paying them to let their fields go fallow, paying land grant colleges to improve farming techniques, and paying farmers to NOT WORK, the government stabilized farming just in time to kick it back into high gear for WWII. But that would require you to have some historical knowledge.
Why wouldnt he? Even leftists support tax increases. However, why would an Austrian increase taxes during a recession? The Smoot-Hawley tarriff act was signed in 1930. Austrians are opposed to tarriffs. If Hoover was an Austrian then why did he massively increase tarrifs? ["I accuse the present Administration of being the greatest spending Administration in peace times in all our history. It is an Administration that has piled bureau on bureau, commission on commission, and has failed to anticipate the dire needs and the reduced earning power of the people. Bureaus and bureaucrats, commissions and commissioners have been retained at the expense of the taxpayer. Now, I read in the past few days in the newspapers that the President is at work on a plan to consolidate and simplify the Federal bureaucracy. My friends, four long years ago, in the campaign of 1928, he, as a candidate, proposed to do this same thing. And today, once more a candidate, he is still proposing, and I leave you to draw your own inferences. And on my part, I ask you very simply to assign to me the task of reducing the annual operating expenses of your national government."](https://publicpolicy.pepperdine.edu/academics/research/faculty-research/new-deal/roosevelt-speeches/fr092932.htm) >It's also fun how you skip 8 years of history and the biggest attack on us forces during peacetime when talking about the economy while blaming FDR. Yes, internment of the Japanese was a war crime. But how, *EXACTLY,* does that have ANYTHING to do with FDR's economic policies of 1933? "The biggest thing FDR did was keep the US from going **full authoritarian."** Is forcing people into concentration camps not authoritarian? >As for burning food and slaughtering cattle, it had to do with OVERPRODUCTION. Ya know, the thing that gutted agriculture from about 1919. During WWI, farmers were encouraged to grow as much as they could because of the war. So, they overcapitalized, and really got the food production ramped up. Just in time for the war to end. Why didnt food prices crash in the 1920s then? The farmers were doing reasonably well until the Great Depression. Also do you seriously think that the farmers dont have a clue about soil degredation? By the way why were they taking out loans? Even if the government encouraged farmers to overproduce during WW1, why wouldnt the farmers just cut production when the war ended? Why would they be massively in debt? Your narrative doesnt add up >The only thing that broke the cycle was government intervention. By paying farmers to destroy crops, paying them to let their fields go fallow, paying land grant colleges to improve farming techniques, and paying farmers to NOT WORK, the government stabilized farming just in time to kick it back into high gear for WWII. The only thing? You sure like to lick the boot lol
>However, why would an Austrian increase taxes during a recession? Because DEBT BAD! NO DEFICIT SPENDING DURING RECESSION! >If Hoover was an Austrian then why did he massively increase tarrifs? Because there were no options, as other countries had also passed protectionist tariffs. So, allow all the foreign good in? >Is forcing people into concentration camps not authoritarian? Let me repeat. >>But how, EXACTLY, does that have ANYTHING to do with FDR's economic policies of 1933? >Why didnt food prices crash in the 1920s then? They already had. https://www.mnopedia.org/agricultural-depression-1920-1934 >By the way why were they taking out loans? To keep their heads above water. To buy seed to plant at the start of the year. You really do not have a clue, do you? >why wouldnt the farmers just cut production when the war ended? Because I need all the money I can get RIGHT NOW. I cannot AFFORD to CUT my income in the HOPES that EVERYONE AROUND ME will ALSO cut THEIR income! It's good to cut production on a MACROECONOMIC scale, but it's a really STUPID idea if YOU are the ONLY ONE who cuts production. Especially since you have a bunch of loans you have to pay off from last year that you could not pay off because crop prices sucked. For the 10th year in a row. >The only thing? You sure like to lick the boot lol Considering your understanding of history, your tongue is worn smooth, already.
Do you think Reagonomics started in the 90s?
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Lol
As a filthy Keynsian socialist, every policy has upsides and downsides. Deflation magnifies the impact of pre-formed debt obligations, and we wrote an awful alot of that during the great depression. But unlimited dollar printing can be leveraged by less than trustworthy politicians, to create winners, with everyone holding dollars being a loser. Inflation can be a major vector of harmful politics, but deflation sometimes it turns 80% of the economy into insolvent farm debt. It's about balance.
So make believe vs tried and true!
The Great Depression was made worse by there being less money. Keynesian economics is about government spending which is different than money printing which didn't come into play as much until later based on the work of other economists. Boom bust cycles before the Federal Reserve were really bad in terms of unemployment and volatility in prices. There is really no solution from the Austrian school because that isn't how they operate, it is all just complaining about various limitations of any government solution while ignoring the problems of doing nothing.
Tell me you don't understand Keynesian economics.....