Great Myths, Great Depression: Take Action

This coming October 29 marks the anniversary of 1929’s “Black Tuesday,” when The New York Times index of industrial stocks fell about 40 points, the worst hit in Wall Street history to that point. With the current fiscal, financial and economic turmoil, we must learn from history — specifically about bad ideas that turned what could have been a short-lived, less painful recession into the drawn-out calamity it was. To that end, read the article cited in the blog immediately below, or review the Mackinac Center’s Great Myths of the Great Depression. Before next week’s anniversary, pass these readings along. Promptly write a letter-to-the-editor. Contact your elected officials. We cannot afford the consequences of ill-conceived ideas passed into liberty-endangering law. The Oct. 3 federal bailout bill is exemplar. As Bob Williams of the Olympia-based Evergreen Freedom Foundation opined, that bill “essentially nationalizes the mortgage market and gives the Secretary of Treasury virtually dictatorial power over much of our economy.” Imagine what else will come down the federal, and state, political pike if we just stand by.

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Posted by at 06:00 | Posted in Measure 37 | 5 Comments |Email This Post Email This Post |Print This Post Print This Post
  • John Fairplay

    Pres. Roosevelt tried nationalizing things too and those policies were a pretty dramatic failure, if the goal was to improve the economy. It took the shock of a World War to do that.

    I’m not too worried about the present situation, though. Once Obama wins – and a suitable time passes, say ’til just before the 2010 elections – the economy will improve dramatically…some might say magically.

    • Kenny

      Obama is no Rosevelt, he is something altogether new both good and really really really bad.

  • John in Oregon

    I fond this paragraph most interesting.

    “Most monetary economists, particularly those of the “Austrian School,” have observed *the close relationship between money supply and economic activity.* When government inflates the money and credit supply, interest rates at first fall. Businesses invest this “easy money” in new production projects and a boom takes place in capital goods. As the boom matures, business costs rise, interest rates readjust upward, and profits are squeezed. The easy-money effects thus wear off and the monetary authorities, fearing price inflation, slow the growth of, or even contract, the money supply. In either case, the manipulation is enough to knock out the shaky supports from underneath the economic house of cards. ”

    For some time I have held that the “housing bubble” is only incidental to the present problem. That the true problem is a “credit bubble” spurred on by a Government policy of easy credit for low income borrowers.

    One lesson I learned in economics / accounting 101 is that borrowing creates money. On the ledger the money loaned to me is off set by my promise to pay. In theory banks could lend any amount and remain solvent on the ledger. Thus the regulatory requirement that all banks maintain a minimum reserve of real tangible assets.

    The recent run up of borrowing in the form of Government mandated sub prime lending has the same effect. Some $1.5 to $5 trillion has been quoted as flowing through Fannie and Freddie.

    I cant exactly prove the increased money supply is involved. Government and the social justice organizations with the assistance of the media have every reason cover their tracks and fingerprints on the meltdown.

    I suspect the real question now is are we headed for more of the same Government intervention that was the creator of the great depression.

  • Rupert in Springfield

    >are we headed for more of the same Government intervention that was the creator of the great depression.

    I sure would think so. We have good old Barney Frank, one of the architects of the current mess, now advocating we simply forget about the deficit for a while and spend whatever we want.

    Oh, and by the way, I don’t want to ruin the plot for you, so don’t read ahead if you dont want to spoil the big surprise ending.

    Since we seem to be making similar mistakes to the Depression, massive government intervention, protectionism etc. you can expect a repeat of the ending the last time around. Like with Roosevelt and Hoover, all this will be blamed on Bush. Hopefully the major plot change will be less fascist tactics than those of Roosevelt. I tend to doubt it though.

  • John in Oregon

    I guess we should have expected someting like this.

    *House Democrats Contemplate Abolishing 401(k)*
    October 16, 2008

    The House Labor Committee and the House Ways and Means Committee are currently preparing a new system of Government guaranteed retirement accounts to which all workers would be obliged to contribute.

    Under the plan 401(k) plans would be taxed and all workers be required to invest 5 percent of their pay into a government retirement account invested in special government bonds that would pay 3 percent a year. The present SSI rate of 15.2% would not change and is in addition to the required savings of the new plan.

    I am sure the legacy media will research this plan and rush into print on November 5th.

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