Lessons From The Depression

[Kathianne]

While the dollar is strengthening, some of the messages being sent by the candidates are troubling. The movement to isolationism of the US always starts with protectionism:

http://www.washingtonpost.com/wp-dyn/content/article/2008/08/17/AR2008081702079_pf.html




Five Ways to Wreck a Recovery

By Amity Shlaes
Monday, August 18, 2008; A11

Perverse monetary policy was the greatest cause of the Great Depression. But five non-monetary missteps were important in making the Depression great, and the same missteps damaged the global economy as well. While many are thinking about the Depression, few seem concerned about replicating these Foolish Five today:

· Giving in to protectionism....

· Blaming the messenger....

· Increasing taxes in a downturn...

· Assuming bigger government will bring back growth...

· Ignoring the cost of inconsistency...

[Joe Steel]

While the dollar is strengthening, some of the messages being sent by the candidates are troubling. The movement to isolationism of the US always starts with protectionism:

http://www.washingtonpost.com/wp-dyn/content/article/2008/08/17/AR2008081702079_pf.html

Amity Shlaes is just a rightwing hack. Nothing she writes can accetped as anything but a deliberate attempt to misrepresent.

Amity Shlaes - Bio (http://www.amityshlaes.com/bio.php)

[Kathianne]

Amity Shlaes is just a rightwing hack. Nothing she writes can accetped as anything but a deliberate attempt to misrepresent.

Amity Shlaes - Bio (http://www.amityshlaes.com/bio.php)

That's your response about anyone that isn't saying, "Raise taxes on the rich!" Which is why most don't bother responding to you.

[avatar4321]

That's your response about anyone that isn't saying, "Raise taxes on the rich!" Which is why most don't bother responding to you.

He doesnt realize he is rich.

[midcan5]

I never understand the wingnut's efforts to re-write history? The great depression even among the best historians and economists is still complex but there are certain key items that stand out and in a way duplicate today. One is the collapse of a bubble, stock then real estate now. Two is a wide separation of rich and poor. Then 25% unemployment, today people who cannot afford their homes. Instead of studying or analyzing the differences and similarities the wingnut are tools are a corporate point of view.

cause great depression
http://gusmorino.com/pag3/greatdepression/

"The Great Depression was the worst economic slump ever in U.S. history, and one which spread to virtually all of the industrialized world. The depression began in late 1929 and lasted for about a decade. Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade. The maldistribution of wealth in the 1920's existed on many levels. Money was distributed disparately between the rich and the middle-class, between industry and agriculture within the United States, and between the U.S. and Europe. This imbalance of wealth created an unstable economy. The excessive speculation in the late 1920's kept the stock market artificially high, but eventually lead to large market crashes. These market crashes, combined with the maldistribution of wealth, caused the American economy to capsize."

[Kathianne]

I never understand the wingnut's efforts to re-write history? The great depression even among the best historians and economists is still complex but there are certain key items that stand out and in a way duplicate today. One is the collapse of a bubble, stock then real estate now. Two is a wide separation of rich and poor. Then 25% unemployment, today people who cannot afford their homes. Instead of studying or analyzing the differences and similarities the wingnut are tools are a corporate point of view.

cause great depression
http://gusmorino.com/pag3/greatdepression/

"The Great Depression was the worst economic slump ever in U.S. history, and one which spread to virtually all of the industrialized world. The depression began in late 1929 and lasted for about a decade. Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade. The maldistribution of wealth in the 1920's existed on many levels. Money was distributed disparately between the rich and the middle-class, between industry and agriculture within the United States, and between the U.S. and Europe. This imbalance of wealth created an unstable economy. The excessive speculation in the late 1920's kept the stock market artificially high, but eventually lead to large market crashes. These market crashes, combined with the maldistribution of wealth, caused the American economy to capsize."

There was 'unequal distribution of income', but mostly between rural and industrialized areas. Too much credit without collateral, then again it was the first time credit was 'easily available' an overstatement regarding current times.

In any case, the 'lessons' listed are part and parcel of what happened during those times also.

[MtnBiker]

Money was distributed disparately between the rich and the middle-class

Exactly who distrubutes money and by what method do they use to decide who receives what?

[Monkeybone]

Exactly who distrubutes money and by what method do they use to decide who receives what?

The Government distrubutes, that goes without saying. Then it goes down if you are related to leaders, and then how much you can "scratch the back" of the leaders and then what is left is given to the little people. That amount is determined by how much "volunteer" work you do for the Gov.

[Kathianne]

The Government distrubutes, that goes without saying. Then it goes down if you are related to leaders, and then how much you can "scratch the back" of the leaders and then what is left is given to the little people. That amount is determined by how much "volunteer" work you do for the Gov.

Not during the 20's, that would have been 'big banking.' The government did begin to subsidize farmers, but not nearly what would happen under the New Deal and after.

[Hobbit]

Whatever the cause, most historians and economists now believe that the New Deal prolonged the Depression, and that only a sharp rise in the demand for things like tanks and airplanes brought on by WWII pulled us out. Say what you want about war, but it's good for the economy.

[Joe Steel]

That's your response about anyone that isn't saying, "Raise taxes on the rich!" Which is why most don't bother responding to you.

This thread started with a citation. Dismissing the cited author as a hack is valid commentary. She's a woman with a mission, a mission to distort reality for profit. She's a panderer. She's selling nonsense to those who believe only nonsense.

[Joe Steel]

Whatever the cause, most historians and economists now believe that the New Deal prolonged the Depression, and that only a sharp rise in the demand for things like tanks and airplanes brought on by WWII pulled us out. Say what you want about war, but it's good for the economy.

Which itself proves the soundness of the New Deal. Government spending creates prosperity.

[Kathianne]

This thread started with a citation. Dismissing the cited author as a hack is valid commentary. She's a woman with a mission, a mission to distort reality for profit. She's a panderer. She's selling nonsense to those who believe only nonsense.

Seriously, which you aren't, it was a valid opinion. You don't have to agree with, but killing the messenger is disingenuous.

Not to mention this is your regular response to anything not related to raising taxes. ;)

[midcan5]

Whatever the cause, most historians and economists now believe that the New Deal prolonged the Depression, and that only a sharp rise in the demand for things like tanks and airplanes brought on by WWII pulled us out. Say what you want about war, but it's good for the economy.

I've never read that or even heard that? Give a source other than a wingnut voodoo partisan wacko - or give that even so we can see where you learn your bizarre ideas. You would need to look to other parts of the world and apply that thinking as it was worldwide. Keynesian economics works, Reagan and Bush both did the same, spent like crazy, but the spreading of wealth at the same time creates the best situation. Trickle down doesn't work.

http://www.cepr.net/index.php/op-eds-columns/op-eds-columns/america-since-1980-a-right-turn-leading-to-a-dead-end/

[Kathianne]

I've never read that or even heard that? Give a source other than a wingnut voodoo partisan wacko - or give that even so we can see where you learn your bizarre ideas. You would need to look to other parts of the world and apply that thinking as it was worldwide. Keynesian economics works, Reagan and Bush both did the same, spent like crazy, but the spreading of wealth at the same time creates the best situation. Trickle down doesn't work.

http://www.cepr.net/index.php/op-eds-columns/op-eds-columns/america-since-1980-a-right-turn-leading-to-a-dead-end/

Ive not seen a good argument that the New Deal made the Depression worse, nor better from the majority of Americans. Roosevelt, by force of personality helped people feel better, less malaise if you will.

It took the build up to WWII to break the back of the Depression.

It's not argued however that the New Deal transformed the government from smaller to bigger from that point forward.

[red states rule]

Ive not seen a good argument that the New Deal made the Depression worse, nor better from the majority of Americans. Roosevelt, by force of personality helped people feel better, less malaise if you will.

It took the build up to WWII to break the back of the Depression.

It's not argued however that the New Deal transformed the government from smaller to bigger from that point forward.

kathianne, while the New Deal did not end the Depression it did create the give me and entitlement mentality we have today, and instill in people the government should take care of them

[Kathianne]

kathianne, while the New Deal did not end the Depression it did create the give me and entitlement mentality we have today, and instill in people the government should take care of them

I already addressed that. ;) Trust me, I'm pretty well informed about the Depression years.

[red states rule]

I already addressed that. ;) Trust me, I'm pretty well informed about the Depression years.

My mom and dad went through it, and they talked alot about it. Since I lived through the Carter years I do laugh when libs whine about how bad the current economy is

The current crop of Dems want to take us back to the Carter years, and if they try hard enough even back to the 1930's

[April15]

By Amity Shlaes
Monday, August 18, 2008; A11

Perverse monetary policy was the greatest cause of the Great Depression. But five non-monetary missteps were important in making the Depression great, and the same missteps damaged the global economy as well. While many are thinking about the Depression, few seem concerned about replicating these Foolish Five today:

· Giving in to protectionism. In Herbert Hoover's time, Sen. Reed Smoot and Rep. W.C. Hawley proposed a tariff that was to raise effective duties by as much as half. More than a thousand economists signed an open letter warning that the duties would "raise the cost of living and injure the great majority of our citizens."

But Hoover's Republican Party didn't much care. In its 1928 platform, the GOP had pledged to "reaffirm our belief in the protective tariff." Ambivalent, Hoover signed the bill. An irate Canada and many other nations retaliated. At a time when the United States was begging for foreign markets, it lost them. The selfish signal discouraged an already unstable Europe.

Today, international trade claims a sizable share of our economy. Bilateral free-trade agreements with Colombia or Panama are good insurance -- cheap steps that might prevent an expensive loss, that of the Western Hemisphere to Venezuela's Hugo Chávez.

The real trade partners in the southern hemisphere are Chile, Brazil and Argentina. Why is this strawman argument about chavez being brought in?

Yet again, one party -- the Democrats, this time -- is cavalier. House Speaker Nancy Pelosi is blocking passage of these bilateral agreements. And another ambivalent politician -- Sen. Barack Obama -- has sent mixed messages to Canada about just how much he wants to roll back the North American Free Trade Agreement.

Where in the hell does she get her info?


· Blaming the messenger. Punishing the stock market for the 1929 crash was popular in Washington in the early 1930s. Lawmakers attacked the practice of short selling; Senate Banking Committee counsel Ferdinand Pecora hauled J.P. Morgan and other Wall Streeters in for hearings. By 1934, Congress was creating the Securities and Exchange Commission. The Roosevelt administration also prosecuted business leaders, including former Treasury secretary Andrew Mellon and utilities magnate Samuel Insull. The new regulatory culture cut crime and protected investors. But the arbitrary nature of the assault petrified Wall Streeters.

In 1929 it was margin calls that sent it down. Not shorting or such.

Today, too, a "Blame the Street" mood prevails. SEC Chairman Chris Cox has criticized "naked shorts," an attack with a legitimate anti-fraud component. But targeting short-selling also generates uncertainty. The investigations of Bear Stearns and Freddie Mac are just the beginning; more prosecutions are likely. Like the Sarbanes-Oxley Act, which followed Enron's accounting meltdown, this cleanup will send companies and jobs abroad.

The ethics of mortgage short selling is a reason for this current monetary boondogel.


· Increasing taxes in a downturn. Hoover more than doubled income tax rates, taking the top marginal rate to 63 percent from 25 percent. FDR hiked the top rate to 90 percent. Perhaps worse, Roosevelt's Treasury crafted taxes to punish business, including an undistributed profits tax and an excess profits tax, that ultimately sucked cash from a capital-starved economy.

With all the capital being sucked out by bankruptcies and foreclosures not to mention the federal governments attempt to bankrupt itself with an un needed war and reduced income it only makes sense to increase revenues by reducing the givaways to big oil with their mega profits.

Today, Democrats are planning tax increases that make Bill Clinton's hike look mild. The proposals start with lifting the cap on Social Security payroll taxes -- an effective increase in the top marginal tax rate of 6.2 percent, or for some 12.4 percent, all by itself. Add in the promised repeal of the Bush tax cuts and you have an additional 4.6 percent increase. Effective top rates approach 50 percent. There are also proposed increases for dividends and capital gains. Taken together, these will make the U.S. economy sluggish and more like that of Europe.

· Assuming bigger government will bring back growth. There's a sense today that Washington has retreated too much from daily lives. Wall Streeters mutter that "the system" (the financial markets) doesn't work anymore. In the 1930s, people didn't just mutter that -- they believed it. Public-sector expansion seemed the only way to sustain America's promise. New Deal programs did much to alleviate the pain month to month -- many found dignity in six months of work at the Works Progress Administration, the Public Works Administration or the Civilian Conservation Corps. But economics is a competition for scarce capital. Such state solutions tended to suppress the creation of long-term private-sector jobs, as did the aggressive Wagner Act for organized labor. The National Recovery Administration, the New Deal's centerpiece, favored large businesses at the expense of small fry. The new Tennessee Valley Authority and Roosevelt's repressive Public Utility Holding Company Act combined to crowd out private utilities that hoped to light up the South. As for Wall Street, those New Yorker magazine cartoons were accurate: Wall Streeters retreated into their martinis and country houses rather than rebuild. This yielded the "Depression within the Depression" of 1937.

· Ignoring the cost of inconsistency. FDR spoke of "bold persistent experimentation." Obama speaks of "change." Both can do damage. What's more, the list of experiments is always finite. Our bailouts look reassuring, but even Washington cannot rescue the entire economy. And foreign investors wonder where Washington will stop. Already concerned about the inconsistent dollar policy, China is now troubled by the inconsistent rescues.

The proximate danger today is a repeat of the 1970s, not the 1930s. But if lawmakers don't remember the old missteps, they might find that their new recovery legislation imperils our recovery.

All we need do is get away from raygun finances and life will be fine.