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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Rarebird who wrote (21762)	11/14/2004 9:42:56 AM
From: glenn_a	Read Replies (1) \| Respond to of 110194

Rarebird - on recessions; and Rothbard on "controlled" vs. "non-controlled" changes in the money supply in the 1920's/1930's ... ((In recessions, all valuations and many prices fall, but debts do not diminish in the slightest.)) Well, unless debt is defaulted on, in which case it can diminish rather significantly. :( Of course, this has the potential to develop beyond a recession into a depression. BTW, I found Murray Rothbard's "America's Great Depression" to be a very interesting read. In particular, his analysis from the early 1920's until I think it was the mid-1930's of changes in the money supply that were within the Fed's control vs. changes that were outside of the Fed's control. It's interesting, because according to Rothbard's analysis, the Fed continued to expand money supply in the early 1930's through open-market purchases as the like in an effort to reliquify the economy. The problem was, the bursting of the 1920's credit and related asset bubbles led to such uncontrolled contraction of the money supply that Fed "controlled" efforts to continue to expand the money supply were woefully insufficient to counterbalance "uncontrolled" money supply contraction. It's an interesting perspective - both in illuminating the limitations of Fed Policy in a deflationary credit bubble bust, and also its distinction between "Fed-controlled" and "uncontrolled" causes of changes in the money supply. Rothbard categorizes precisely the types of changes in money supply that are within Fed control, and external to Fed control, and analyzes how these relative contributions effected money supply from the early 1920's to the mid-1930's. If anyone is interested let me know, and I can post the #'s from Rothbard's book when I get home later today. Regards, Glenn