Book Nook Message Board - Msg: 15586813

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To: Ilaine who wrote (121)	3/30/2001 12:48:41 AM
From: JF Quinnelly	Read Replies (1) of 443

You sound more like you're writing a sequel to Gravity's Rainbow rather than studying banking in the Great Depression. What occurred was a Perfect Storm of economic events. You had Reparations, which were logically impossible for the Germans to adhere to- Keynes warned about this as early as 1920 in his book The Economic Consequences of the Peace. You had the British trying to reestablish the pre-War value of the pound, which resulted in a prolonged British deflation. You had the Fed and Bank of England coordinating in a decade of American monetary inflation whose effect was masked by deflationary forces- new technology, inventions, a move from farming to manufacturing. You had a prolonged stock market boom in response to the monetary expansion. You had banks that were allowed to invest funds in stocks. You had banks collapse without the Fed attempting to keep the depositors whole. Once the vicious spiral got underway 30% of the American money supply, people's savings, simply went to Money Heaven as banks collapsed. And this doesn't even include the wealth lost by the collapse of stock prices. Throw in tariff wars and a tangle of new government bureaus and regulations and you get the Great Depression.

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