... Chiefly being adherence to the gold standard and higher interest rates while the country was in a recession and the European economies were in a depression caused by World War I and war debts owed to the Morgan Bank and other international banks. It was the end of a dynasty. As Roosevelt said in his inaugural, he was going to “throw the moneylenders out of the temple.” Now someone will talk about throwing the oracle out - Greenspan - if this current mess doesn’t stabilize.....
Mike, here you echo the conventional wisdom about the Great Depression - that it was somehow caused by the '29 stock market crash. The fact is that the economy was already headed into the toilet by mid-1929, and the stock market was only forecasting the tough love to come. The Federal Reserve in the 1920s had engineered a bubble, and then attempted to manage the bubble that they had created. In other words, the boom of the 20s and bust of the 30s were both the result of government intervention in the market mechanism.
So, what was Roosevelt's cure? Why, more government intervention in the economy, of course. And despite his attempt to wear the cloak of morality by quoting Jesus, Roosevelt was the closest we have ever come to having a domestic version of Mussolini or Hitler.
To answer your earlier question about the difference between Karl Polyani and Murray Rothbard: Polyani saw the Depression as being the inevitable result of the exposure of the masses to "market forces" (Leave it to a Marxian to find inevitabilities everywhere - although I personally have never seen a "market force"). Rothbard, on the other hand, notes that the business cycle has been least disruptive when the government did not intervene in the economy or markets. Further, he provides ample evidence showing that the Depression was caused by government intervention in the markets by attempting to inflate, and then deflate, the money supply.
BTW, the U.S. remained in the Depression until WW II, despite the fact that the moneylenders were thrown out of the temple in 1933. Joe Kennedy, a notorious manipulator of stocks, was made Chairman of the SEC. According to the conventional wisdom, Roosevelt "saved the country". In what way? |
