Um, the wealthiest economy BEFORE Keynesian economics:
Ummm, you still haven't answered why the largest increase in purchasing power was during the Great Depression. Do you think that might have something to do with why we do what we do now? Lol. I mean, unless you are a huge fan of Depressions, which based on your economic theories, it seems like you are.
Short term? The Great Depression lasted over a decade. And it wasn't until we flooded the economy with money to pay for WWII that things started getting better. We probably would have been in a Depression for decades longer if it wasn't for WWII. Your ideology is a failure, that's why no one uses it. It has no mathematical basis, it is just ignorant fears of government.
| [SIZE=-1]Lessons from the 1929 Crash and the Great Depression How to to avoid a Remake of the Keynesian Debacle [/SIZE] "There will be no further Crash in our Lifetime", John Maynard Keynes |
Nederl.versie |
[SIZE=-1]
[/SIZE][SIZE=-1]Calvin Coolidge [/SIZE][SIZE=-1] Republican President[/SIZE][SIZE=-1] 1923-1929 [SIZE=-2]historical recording of a speach in which Coolidge announces public spending cuts[/SIZE][/SIZE] | 
[/SIZE][SIZE=-1] [/SIZE][SIZE=-1]T[/SIZE][SIZE=-1]he post war period was an era of great prosperity [/SIZE][SIZE=-1]generally referred to as the roaring twenties[/SIZE][SIZE=-1]. [/SIZE][SIZE=-1]US President Coolige was an advocate of "small government" and [/SIZE][SIZE=-1]his supply side economics proved a real success story. [/SIZE][SIZE=-1]Under his presidency, [/SIZE][SIZE=-1]the top marginal tax rates were gradually reduced[/SIZE][SIZE=-1]from 73% in 1922 to 24% in 1929. These "Mellon tax cuts" restored the incentives to work, save and invest [/SIZE][SIZE=-1]and generated an atmosphere of great dynamism[/SIZE][SIZE=-1]. T[/SIZE][SIZE=-1]he reduction of top tax rates [/SIZE][SIZE=-1]particularly [/SIZE][SIZE=-1]motivated the[/SIZE][SIZE=-1]entrepreneurs to [/SIZE][SIZE=-1]engage in the risky business of innovation with an unprecedented series of great discoveries and inventions [/SIZE][SIZE=-1]as the logical consequence. [/SIZE][SIZE=-1]Electrification, radio, phonograph and telephone [/SIZE][SIZE=-1]date from this era and brought a wide range of new machinery and[/SIZE][SIZE=-1] consumer goods. N[/SIZE][SIZE=-1]ew tools and processes (Ford's assembly line) drastically increased productivity. [/SIZE][SIZE=-1]All these brand new technologies boosted productivity and prosperity all over the world. [/SIZE] |
[/SIZE][SIZE=-1]
[/SIZE][SIZE=-1]
In the Soviet Union[/SIZE][SIZE=-1], the communist experiment was still young and initially looked like a success story. Many considered the economic model organised by central planners as a modern and rational alternative for the "irrational anarchy" of free markets. In Europe as well as in the U.S., the economic dispute between the [/SIZE][SIZE=-1]socialist - interventionist ideas of [/SIZE][SIZE=-1]J.M Keynes'[/SIZE][SIZE=-1] and the classic liberal ideas of the "Austrian school" of [/SIZE][SIZE=-1] Von Mises and Hayek was at the centre of the political debate. [/SIZE]
[SIZE=-1]Easy access to cheap credit[/SIZE]
[SIZE=-1]By the end of the decade the economic boom culminated in a general euphoria, particularly in [/SIZE][SIZE=-1]the U.S. [/SIZE][SIZE=-1]Asset prices skyrocketed. [/SIZE][SIZE=-1]Prior to the euphoria a long period of easy access to cheap credit [/SIZE][SIZE=-1]had caused the [/SIZE][SIZE=-1]money [/SIZE][SIZE=-1]supply to grow at a much faster [/SIZE][SIZE=-1]pace than the real economy.
[/SIZE][SIZE=-1]
[/SIZE][SIZE=-1]
From [/SIZE][SIZE=-1]1921 to 1929 [/SIZE][SIZE=-1]the US money supply increased by 61 percent. In Europe the fast[/SIZE][SIZE=-1]money supply was exacerbated by the massive German compensations for war damages. English repayment of war loans inflated the US money supply even further.[/SIZE][SIZE=-1]As a consequence i[/SIZE][SIZE=-1]nflationary pressures increasingly built up in Europe as well as in de U.S. [/SIZE]
[SIZE=-1]Between 1928 and 1929, the easy access to cheap credit caused reckless speculation on stock markets and on assets in general. Prices gradually inflated to an unsustainable asset bubble. [/SIZE][SIZE=-1]In the 30 months [/SIZE][SIZE=-1]from March 1926 to September 1929 [/SIZE][SIZE=-1]the Dow Jones rose 230% from 166 [/SIZE][SIZE=-1]to 381. [/SIZE][SIZE=-1]A correction had become inevitable, but turned into a [/SIZE][SIZE=-1]severe crash due to [/SIZE][SIZE=-1]calamitous government intervention.[/SIZE]
[SIZE=-1]
[/SIZE][SIZE=-1]Political Blunders[/SIZE]
[SIZE=-1]Hoping to control the speculation, the political authorities and inexperienced Federal Reserve (°1913) took some most unfortunate[/SIZE][SIZE=-1]anticyclic [/SIZE][SIZE=-1]measures. Today [/SIZE][SIZE=-1]Most economists [/SIZE][SIZE=-1]consider these as[/SIZE][SIZE=-1]overdone. For free market economists the [/SIZE][SIZE=-1]interventions were[/SIZE][SIZE=-1]superfluous absurdities.[/SIZE]
[SIZE=-1]In an effort to control speculation, US [/SIZE][SIZE=-1]government [/SIZE][SIZE=-1]first banned bank loans for margin trades. Moreover [/SIZE][SIZE=-1]the FED drastically raised its discount rate from 3.5% (Jan 1928) to 6% (Aug 1929). It caused an unexpectedly contraction of the money supply by a massive one third i[/SIZE][SIZE=-1]n the six months from [/SIZE][SIZE=-1]August '29 till March '30. [/SIZE][SIZE=-1]Markets reacted most vigorously. [/SIZE][SIZE=-1]Stocks plummeted and asset prices crashed, causing a dramatic contraction of the real economy. [/SIZE]
[SIZE=-1]
[/SIZE][SIZE=-1]
In an effort to remedy the accelerating recession[/SIZE][SIZE=-1] the US Government then relied on protectionism. In the Smoot-Hawley act of 1930, the US raised import duties on 25.000 articles to an average rate of 65%. The American protectionism caused reprisal protective measures by most[/SIZE][SIZE=-1]trading partners. [/SIZE][SIZE=-1]The trade war that followed just killed international trade, with devastating effects on productivity and boosting[/SIZE][SIZE=-1]u[/SIZE][SIZE=-1]nemployment to unprecedented levels. [/SIZE]
[SIZE=-1]Facing budget deficits as a result of declining revenues and increasing welfare demands President Hoover then decided to double income taxes. The 1932 Revenue [/SIZE][SIZE=-1]act increased top tax rates from 25% to 63%. President Roosevelt later increased these rates even further to 79% and[/SIZE][SIZE=-1]at one point even [/SIZE][SIZE=-1]proposed a top tax rate of 99.5%.[/SIZE][SIZE=-1] Moreover drastic[/SIZE][SIZE=-1]reduction of most tax exemptions did particularly hurt middle income[/SIZE][SIZE=-1]groups.
[/SIZE]
In an effort to halt the panic, [/SIZE][SIZE=-1]Roosevelt two days after his inauguration declared a "bank holiday"[/SIZE][SIZE=-1]. For four days the nation's banks were[/SIZE][SIZE=-1]closed [/SIZE][SIZE=-1]and all financial transactions were halted. In the meantime the new president pushed the Emergency Banking Act through the legislative chain.
[/SIZE]
[SIZE=-1] Roosevelt's Radio announcement of the bank holiday [/SIZE][SIZE=-1]
[/SIZE]
[SIZE=-1]Passed by Congress on March 9 1933, the [/SIZE][SIZE=-1]Emergency Banking Act[/SIZE][SIZE=-1]handed the president a far-reaching grip over bank dealings and foreign transactions. [/SIZE][SIZE=-1]The act also allowed Roosevelt to seize[/SIZE][SIZE=-1] peoples gold holdings, and devalue the dollar with 40%. The American devaluation set in motion a downward spiral of competitive d[/SIZE][SIZE=-1]epreciations by the trade partners all over the world, ruining the world trade and American exports even further. Only two months later the Agricultural Adjustment Act (AAA) was passed. [/SIZE][SIZE=-1]In an effort to stabilise the depressed farming market and support food prices t[/SIZE][SIZE=-1]he act encouraged farmers to grow fewer crops and to destroy crops and cattle. [/SIZE][SIZE=-1]As the crisis deepened ever further, [/SIZE][SIZE=-1]panic spread to the political leaders. In an ever faster pace they declared new emergency measures.
The rapid succession and unpredictability of government interventions created a climate of legal uncertainty and [/SIZE][SIZE=-1]deteriorated the [/SIZE][SIZE=-1]poor business climate even further. [/SIZE][SIZE=-1]Rapidly changing tax rates and subsidy regimes, regulations of wages, prices, interests and production were all government interventions on a scale the world had not known till then. The interventions created a general sence of uncertainty and fear. Faced with so much incalculable risk most industrialists decided to [/SIZE][SIZE=-1]postpone investments till things had settled.[/SIZE]
| [SIZE=-1]New Deal, bad Deal, with devastating Social Damage[/SIZE] [SIZE=-1]It was in deed not free market failure which produced the 1929 depression. [/SIZE][SIZE=-1]It was interventionism and political bungling on a [/SIZE][SIZE=-1]grand scale, with the one policy blunder [/SIZE][SIZE=-1]succeeding the other: [/SIZE][SIZE=-1]trade crushing tariffs, incentive-sapping taxes, mind-numbing controls [/SIZE][SIZE=-1]on production and competition, senseless destruction of crops, coercive labor laws and not in the least[/SIZE][SIZE=-1] the FED's mismanagement of the money supply. [/SIZE] [SIZE=-1] 
| Government intervention only deepended the crisis |
[SIZE=-1]
[/SIZE][SIZE=-1]
Conclusion[/SIZE]
[SIZE=-1]The specialists on the matter Murray Rothbard, Laurence Reed, Amity Shlaes unanimously agree: [/SIZE][SIZE=-1]the great depression was not a crisis of capitalism but merely a crisis of interventionism. Politicians completely mishandled a mild recession. It was not [/SIZE][SIZE=-1]market failure but the combined mistakes [/SIZE][SIZE=-1]of Central Banks and Central Government. Irrational fear for deflation led them to distort the healing price mechanism. They prevented [/SIZE][SIZE=-1]prices and wages from falling, hindering markets from adjusting to the new situation and finding a new equilibrium. The interventions caused such [/SIZE][SIZE=-1]distortions that they lead to [/SIZE][SIZE=-1]massive misallocation of scarce resources ultimately [/SIZE][SIZE=-1]turning the natural slowdown of the business cycle into the deep depression[/SIZE][SIZE=-1].
[/SIZE][SIZE=-1]
[SIZE=-1]Politicians and the FED would much better have left[/SIZE][SIZE=-1]markets to themselves. The price mechanism guided by the[/SIZE][SIZE=-1]collective wisdom of [/SIZE][SIZE=-1]millions of individuals such as expressed [/SIZE][SIZE=-1]in billions of [/SIZE][SIZE=-1]free [/SIZE][SIZE=-1]economic choices would have lead markets[/SIZE][SIZE=-1]to a [/SIZE][SIZE=-1]new equilibrium [/SIZE][SIZE=-1]and stable prices in just a few quarters[/SIZE][SIZE=-1]. [/SIZE]
[SIZE=-1]In his analysis "Great Myths of the Great Depression", Lawrence Reed [/SIZE][SIZE=-1]convincingly demonstrates[/SIZE][SIZE=-1] that Roosevelt's deficit spending did not boost demand at all. The massive resourses spent in [/SIZE][SIZE=-1]low productive public investments [/SIZE][SIZE=-1]was merely outcrowding productive business investment [/SIZE][SIZE=-1]as well as private consumption[/SIZE][SIZE=-1]. In this way Roosevelt's Keynesian remedies [/SIZE][SIZE=-1]of the [/SIZE][SIZE=-1]socialist-style New Deal and the [/SIZE][SIZE=-1]and excessive (near fascist) dirgism [/SIZE][SIZE=-1]in the National Recovery Act (NRA)[/SIZE][SIZE=-1]rather than remedying the 1929 crisis, prolonged it well into the 40's.[/SIZE]
You have nothing but Keynesian BS on your side.
The massive increase in money supply and cheap credit (Keynesian Kool Aid policies you advocate) were the major causes for market destabilization and ultimately the crash economists call the Great Depression. Just as artificially cheap credit created by the Fed resulted in the housing bubble and crash of 2008.
And of course, whenever your back is against the wall and your lunacy is exposed, you resort to childish name calling!
Loser!@#0
Just posting long useless articles and images does not prove a point, lol. 1920s were another example of just how awesome life is after the government greatly expands the money supply.
"From 1921 to 1929 the US money supply increased by 61 percent. In Europe the fastmoney supply was exacerbated by the massive German compensations for war damages. English repayment of war loans inflated the US money supply even further.As a consequence inflationary pressures increasingly built up in Europe as well as in de U.S."
"Between 1928 and 1929, the easy access to cheap credit caused reckless speculation on stock markets and on assets in general. Prices gradually inflated to an unsustainable asset bubble. In the 30 months from March 1926 to September 1929 the Dow Jones rose 230% from 166 to 381. A correction had become inevitable, but turned into a severe crash due to [SIZE=-1]calamitous government intervention."
[/SIZE]face)(*^%[SIZE=-1][/SIZE]
