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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: LLCF who wrote (11836)	12/13/2001 7:51:26 PM
From: Ilaine	Read Replies (2) \| Respond to of 74559

Friedman&Schwartz (sorry, I have to make sure we include Schwartz because she's female, even though she never got a Nobel) and the Austrians both give monetary explanations for the Great Depression - actually they aren't far off on their explanations as to the causes, but they differ on whether the Fed could have done anything to make things better after the thing started. Friedman&Schwartz said yes, Austrians said no. I guess what you are talking about is whether rate cuts and liquidity injections by the Fed will prevent our present thing from being as bad as that one. But there would be alternative hypotheses, e.g., that institutions which were put into place during the 1930's help the financial system manage systemic shocks. The SEC does prevent some of the outright fraud that is endemic in markets; deposit insurance should prevent bank failures; mortgage insurance may stop the debt-default-deflation avalanche from taking everything down with it. Etc. etc. etc. Notice how nobody's talking about bankruptcy reform these days?