So now that we are one quarter away from a double dip...

[LnGrrrR]

I don't believe that. However, lets assume it's true. We still have something like the 2nd highest corporate tax rate in the world, which is the primary reason why new jobs are everywhere but here.

I would say the primary reason new jobs are overseas is because the dollar goes alot further in other countries.

[Nbadan]

I would say the primary reason new jobs are overseas is because the dollar goes alot further in other countries.

WC was reaching for straws there....you can get low wages in Mexico, so why do multinationals bother to move all the way to china and Indonesia to manufacture? Less regulations to protect the environment...

[Ignignokt]

There was more than that. You can't discount the raise in civilian labor force after the first WW. It was the second largest increase in workforce behind the end of WWII in the history of the US.

And the Fed strategy backfired terribly. By raising the rates so much (we wouldn't see a 7% interest rate for another 50 years after that), they completely obliterated lending among banks and to consumers.

The depression ended when the Fed lowered the rates back down to 4.5%...



Here's timeline for you:
- In December 1919 the rate was raised to 4.75%.
- In January 1920 it was raised to 6%.
- Depression started.
- In June 1920 it was raised to 7%.
- In 1921, during the July-November period, the Fed sharply reduced the rate by half a point until reaching 4.5%.
- Depression ended.

Starting in 1922, the recovery was already visible, with unemployment going under 7% by then, lowering to under 5% by 1923.



The deflation was not necessary because since the Fed was created in 1913, they didn't back up the entire money supply with gold anymore. We were effectively under fiat money (some will say the beginning of the end), and the cycles of inflation/depression that were characteristic of the gold standard didn't apply anymore.



They were completely different crashes. One had to do with a flood of new workers and the adjustments the economy had to do post World War I, compounded by bad monetary policy that rewarded speculation instead of investment.

The other was a lot closer to what we see today: Over-indebtedness coupled with deflation, which triggers debt liquidation, which in turn contracts the money supply as bank loans are paid off, at that point pessimism sets in followed by hoarding of money.

Since the margin requirements of 1929 were only 10%, as soon as debt started to be liquidated brokers called in these loans, and they simply could not be paid back. That's where the bank runs started.

While the loss of monetary base was bigger in 1920, the actual loss of assets by the general population was much, much bigger in the Great Depression.

1. The raise in interest rates was due to inflation. The raise in interest rates stopped the inflation and got America quicker out of the depression of early 20's unlike Europe.

2. The economy started to rebound once the inflation stopped and prior to the interest drop.

3. THe 1920's monetary loss was WAY WORSE than the depression. You seem to conveniently want to skip that fact along with the inflationary money one.

WAY WORSE.

[Ignignokt]

1 yr beats 8.

[Ignignokt]

There was more than that. You can't discount the raise in civilian labor force after the first WW. It was the second largest increase in workforce behind the end of WWII in the history of the US.

And the Fed strategy backfired terribly. By raising the rates so much (we wouldn't see a 7% interest rate for another 50 years after that), they completely obliterated lending among banks and to consumers.

The depression ended when the Fed lowered the rates back down to 4.5%...

Thank you for bringing this point up. Now i will use it to bludgeon your Keynesian arguments.

1. Even with a larger increase in workforce than WWII, and a e in interest rates, the unemployment rate only got as high as 11 percent.

.. This was the opposite of Keynesian theory, yet the unemployment rate was lower than in the Depression of the 30's even tho Hoover and FDR lowered the interest rates to really low levels and pumped more credit and spent more money. Both guys used public works aswell.

11 percent compared to 18-25 percent.. You tell me!

One policy contracted the money supply, the other expanded it. One had a worst recession.

And according to Keynes, the 1920's would have been worse because they did the opposite of what he proposed. LOL!!!

You can either raise interest rates and pay off the debt like in the 20's to get out of a recession and have the market adjust properly..

OR you can run massive deficits, and pump fake money?

The former outperformed the latter.

Here's timeline for you:
- In December 1919 the rate was raised to 4.75%.
- In January 1920 it was raised to 6%.
- Depression started.
- In June 1920 it was raised to 7%.
- In 1921, during the July-November period, the Fed sharply reduced the rate by half a point until reaching 4.5%.
- Depression ended.

Starting in 1922, the recovery was already visible, with unemployment going under 7% by then, lowering to under 5% by 1923.

Why do you choose to include the fact that the e in interest was due to the fact that the economy started to sink because of inflation? High interest rates didn't cause the slump of that economy, rather it was a reaction to combat the effects of it.

Why do you choose to ignore this fact or include it?

While the loss of monetary base was bigger in 1920, the actual loss of assets by the general population was much, much bigger in the Great Depression.

Oh geez.. that's easy to explain.

One lasted for more than a decade. That doesn't say anything at all.

The stock market crash was bigger in 1920 and if it was prolonged to the same time as the 30's it would have been far more devastating.

the assets during the intial stock market crash were heavier in the 20's.

[Ignignokt]

So I guess Keynesian theory only works during world wars according to the Keynesians on this forum, no??

The reason govts don't do drastic money pumping during times of peace is because you run the risk of having inflation.

So.. Keynesian economic recovery is only feasible under conditions of war. LOL

[Winehole23]

Or deflation.

[Ignignokt]

Or deflation.

I'll take that brotha.

[Ignignokt]

Heres what you have to know about the 1929 SM crash.....

“But, as Milton Friedman…shows in his Monetary History of the United States (written in collaboration with Anna Schwartz), the real catastrophe did not arrive until 1933, when a run on the banks precipitated a major banking crisis that ruined many businesses and families.”

the stock market crash itself didn't cause the run on the banks... Govt policies did.

[Winehole23]

Ok, I'll bite. How?

[LnGrrrR]

Ok, I'll bite. How?

Because it DID damn it! When will you realize the hard (conservative) rules of economics?!?

1) Tax cuts = More GDP
2) Government policies/interference = Weaker dollar
3) Democrats running goverment = scared investors, poor economy

Cmon WH, you should know that by now with all of the info posted on this board....

[ElNono]

So I guess Keynesian theory only works during world wars according to the Keynesians on this forum, no??

The reason govts don't do drastic money pumping during times of peace is because you run the risk of having inflation.

So.. Keynesian economic recovery is only feasible under conditions of war. LOL

No, it works on recession caused by deflation.

Something you've been conveniently ignoring for a while searching for your free market opinion pieces.

[ElNono]

Heres what you have to know about the 1929 SM crash.....

the stock market crash itself didn't cause the run on the banks... Govt policies did.

Don't just tease us with little tidbits... tell me what Milton Friedman thought the cause of the 1920 crash was...

[ElNono]

You could as-well let us know which Free Market think thank (Adam Smith Ins ute?) is your information coming from... so we know where you're getting your bantering material from...

[Ignignokt]

Don't just tease us with little tidbits... tell me what Milton Friedman thought the cause of the 1920 crash was...

That's irrelevant.. that quote from freidman was a historical quote. But i don't agree with his economic viewpoint, he's a moneterist who advocates low interest rates. He's just another form of economic interventionist.

[Ignignokt]

You could as-well let us know which Free Market think thank (Adam Smith Ins ute?) is your information coming from... so we know where you're getting your bantering material from...

I didn't get my info or arguments from them, i got it from the sources I have alreaday posted.

You can on sources all you want, yours was Wikipedia

But it's more productive to argue the facts.

[ElNono]

That's irrelevant.. that quote from freidman was a historical quote. But i don't agree with his economic viewpoint, he's a moneterist who advocates low interest rates. He's just another form of economic interventionist.

LOL, it's irrelevant when you're cherry picking.

It wasn't me bringing up the 1920 crash, it was you. If you think Friedman is an authority on the topic, then quote the whole thing...

BTW, Friedman was a Keynesian until he split with his own Monetarist theory.

[Ignignokt]

LOL, it's irrelevant when you're cherry picking.

It wasn't me bringing up the 1920 crash, it was you. If you think Friedman is an authority on the topic, then quote the whole thing...

BTW, Friedman was a Keynesian until he split with his own Monetarist theory.

Dude, you're so thick headed.

He wasn't talking about the 1920 crash in that quote, he was talking about the historical events of the 1929 crash.

I used him because at best he's an authority on the historionics of economics on those times.

If you want to dispute the facts of what he said, go ahead. But it's silly to harp on me for using a hostile source to my belief for proof.

What's so wrong about having diverse sources, on one hand you're ting on the fact that I used single supportive sources, now you're whining about me using hostile sources.

You seem to be caught up in the tic for tac instead of the facts.

I brought up the comparison between both crashes in this thread before you posted here, it's not something I pulled out of the hat. Both crashes are worthy of comparison, and your objections concerning comparing and studying two seperate crashes are warrantless. Keynesians, Obama, and his economic team looked to FDR for clues on how to deal with this current crash. Are they wasting their time??

So it's really your objections to look at damning evidence as the cause for you to act like a petulant child about it.

[ElNono]

I didn't get my info or arguments from them, i got it from the sources I have alreaday posted.

Like the Foundation of Economic Education?

Home to freedom, prosperity, free markets and austrian economics for over 50 years.

You can on sources all you want, yours was Wikipedia

Because Wikipedia is widely recognized as a pro-Keynesian outlet...

But it's more productive to argue the facts.

You have no intention to arguing the facts. You've already moved the goalposts quite a few times since we started discussing your claim that the economy only recovered once FDR left.

Obviously, you then changed your argument to being Congress in the middle of of Truman's presidency, then you brought up the 1920 crash.

Was the economy out of the recession and recovered while FDR was still in government, yes or no?

[ElNono]

Dude, you're so thick headed.

He wasn't talking about the 1920 crash in that quote, he was talking about the historical events of the 1929 crash.

I used him because at best he's an authority on the historionics of economics on those times.

He had an opinion on what caused the 1920 crash also. Why didn't you post that when I was saying that bad economic policy was partly to blame?

He's not an authority when he backs up my claims?

[Ignignokt]

He had an opinion on what caused the 1920 crash also. Why didn't you post that when I was saying that bad economic policy was partly to blame?

He's not an authority when he backs up my claims?

His oppinion and the historical facts he brings up are two different things and can be judged seperately. His historical facts contradict yours, and his economic beliefs and ideas contradict mine, I say that's a balanced source, no?

[Ignignokt]

You have no intention to arguing the facts. You've already moved the goalposts quite a few times since we started discussing your claim that the economy only recovered once FDR left.

Obviously, you then changed your argument to being Congress in the middle of of Truman's presidency, then you brought up the 1920 crash.

Those are actually two and the same events or causations. I don't see a problem here.

[Ignignokt]

Also, I didn't say anything about Wikipedia's bias, just that it's not exactly a strong source or anything to be proud about if you're ting on other people's sources.

[Ignignokt]

Was the economy out of the recession and recovered while FDR was still in government, yes or no?

No, the majority of the labor force was getting killed in the battlefields, and there was command economy in place with food rationing. Despite all economic indicators you can cite, I don't know how that's better than a recession.



Now let me ask you a MORE important question..

Did the NEW DEAL get us out of the Depression??

[ElNono]

Is there a problem answering my posts inline? Or there's some stuff you rather not talk about? Like the Foundation of Economic Education, maybe?