Hi Jay -
Re:
Message 17334840
The Anderson article seems to be based on Murray Rothbard's history of the Great Depression, which leaves a lot to be desired as a history, in my opinion.
The Fed tight-money/loose-money argument is sort of a chicken-and-egg argument. Rothbard argued, as was popular at the time, that the reason the stock market crashed was because it got too high to begin with, ergo, blame it on loose money. There is no doubt whatsoever that Hoover persuaded the Fed to stomp on the stock market, and that is what caused the stock market to decline. The crash of October 1929 was probably triggered by the collapse of the Hatrey empire, the Enron of its day.
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Which is different from what caused the Great Depression. My favorite explanation for the cause of the Great Depression is found here:
csu.edu.au
A synthesis of Keen's Debt-Deflation theory and the Mundell-Fleming theory is probably the best explanation, and I am contemplating how to put that into plain English -- I don't think I can explain it to anyone who isn't familiar with the history, so it would take quite a bit of work.
I've got some more stuff here:
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There was NO liquidity crisis immediately after the crash - take a look at interest rates. There was a liquidity crisis in October 1929.
The bank failures were probably the result of the Great Deflation, see here:
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I am still working on Roosevelt. It seems clear that the economy turned around after Roosevelt shut down all the bad banks, and maybe going off gold and raising the gold-dollar exchange rate helped too. I think the gold-dollar exchange rate was artificially low, which helped cause the Great Deflation.
In other words, that was then, this is now. |
