Hi DJ- Turned in my last term paper yesterday at 3 p.m., went to sleep at 7 p.m., slept until 1 a.m., went back to bed at 3 a.m. and got up at noon. IOW I am exhausted and haven't been keeping up very well with the rest of the world. Due to subject matter of classes, could not focus on anything relevant to my own interests. One thing I am discovering is that I know much more about economics, finance, investing, and foreign exchange than the other history students OR my history professors thanks, in part, to stuff I picked up as a lawyer but probably most of it stuff I picked up on SI, e.g., arguing with you guys (all you guys). I mean, one professor was not sure whether Greenspan is in charge of the Federal Reserve.
Think I'll take some economics classes next - maybe those guys are more up on things.
Just started reading stuff by Martha Olney, Ph.D. economist out at Berkeley. Basically, she specializes in the development of consumer credit ("Buy Now, Pay Later") in the 1920's, and the role of the collapse of consumer credit in the Great Depression. Essentially, the manufacturers of durable goods (automobiles, refrigerators, washing machines) used credit as what she calls a "production smoothing device," and when credit was unavailable, that caused what she calls "underconsumption." I think that means that the consumer was ready and willing to buy, but unable because the pattern which had been developed was paying on time, not saving. Even credit-worthy consumers were unable to buy due to unavailability of credit.
I mentioned a week or two ago the Panic of 1837, caused when Congress pulled all the US deposits out of state banks and paid off the federal debt.
That was the second worst depression in US history.
What's interesting is how these actions reflected philosophical differences between hard money advocates and soft money advocates. The hard money guys won the argument in 1837, and they held on to the purse strings in 1929. I don't think it's a coincidence that depressions followed.
One thing about my approach that I think is good is that I don't believe in any school of economics. I just want the facts. Theorists already have an explanation for everything. They don't have to find out what actually happened because they already know what "must" have happened. |
