[youtube]http://www.youtube.com/watch?v=myEPfcpKCcs[/youtube] http://www.zerohedge.com/news/2012-09-29/how-bad-was-great-depression We're in for it
Who actually stimulated the money supply? It would have to have been The Fed wouldn't it - or did the government have the legislative power to do so? I ask because my not very good friend Saul Eslake laid a pellet load of blame at the feet of The Fed, blaming their inaction for it's impact and longevity.
Saul Eslake talks shit by the way. He mentions in an interview on ABC News Radio that The Fed is operating under a paradigm that has no historical precedence, therefore the effects of QE are unknown. I call this BS. They are trying to replicate history. The Fed may very well be hoping that the "Roaring 20's" are once more visited. They may very well be hoping that history repeats itself and that the * Of course, as we all know the stock market is not reaching dizzying heights. But they continue to try. This is what The Fed is trying to do I believe. But it won't work. *http://www.fee.org/articles/great-myths-of-the-great-depression/
Personally I think the 2000's were the equivalent to the Roaring 20's. The whole reason that Greenspan did his magic - due to the bursting of the tech bubble, etc. But I think the parallels to history have to stop somewhere - I believe we're in new territory, whereby global finance/banking will be re-written (because it has to). And I think the USA will get little say in the matter, simply because if it doesn't play along with the rest of the world it will be an outcast.
You have a good point Dogmatix. Perhaps the 2000's where the same as the roaring 20's. Back in the 20's I doubt people went around saying "wow this is such a prosperous decade". Instead they would of felt like it was the new normal and the way things are. A bit like people who have 2 4WD's, or a large house or those who made a killing in real estate in the 2000's. They would of just gotten use to it and not of realized how roaring the 2000's where until years later when the media referred to it as roaring.
When i was about 12 i think, i asked my mother "what was it like in the Great Depression"? Her reply, "I did not even know there WAS a Great Depression". (she was 19 at the time of the Wall st Crash) (Go to the library and borrow 'Weevils in the Flour' - Wendy Lowenstein)
My father used to relate stories of the great depression..Dads father died in 1939..My father was aged 15 when the great depression started..His father was the equivalent of a CEO of a city council making good money so his family never felt the wrath of these bad times. However, most of the families around him did. These were some of the things that everyone did in those hard days. They all had a vegetable garden and they all grew different vegetables and they all had a variety of fruit trees..If they had a bumper crop, they would share it with others. Dads family had a cow and several families shared the milk. They all made their own butter too! There was an old Russian Storekeeeper, who my dad said helped so many people during the depression, pay me when you can was the order of the day. He kept a tab and most people stayed loyal well after WW2 had finished and eventually paid him what was owed. Dad would often be called to the fence by the lady next door, Would he kindly ask his mum if she could borrow a cup of sugar, flour etc. Some landlord even let families stay in their houses paying no rent for it was considered better to have someone care for the house rather than have the house fall in to disrepair. This was the time when a lot of men who could not find work were continually on the move looking for work in country areas. Professional men, white collar workers and labourers were all in this group. You would have to move 30 miles every two weeks to get your rations which consisted of flour, tea, butter, sugar and jam..They were called swaggies and became a part of Australian folk lore. Dad always told me the best jobs to have in such times was in the brewery/pub or at the racetrack! It seems to me from what I have read about the great depression, was that there was plenty of goods around but no one had much money to buy. Then again, I don't think that too may owed any $$ except for a few that were buying a house. Debt is the difference this time..It has enabled us to live good and easy lives but it may become the straw that broke our backs and force us once again to live a life of survival. I hope it never comes to this but if it does, I fear that we have become too soft and the good days of affluence will be remembered with "Why didn't I see it coming"? Why did I waste so much? At least here on SS, everyone is stacking for a rainy day.. Regards Errol 43
Errol, It always intrigued me when I was a kid at just how many houses my grandfather owned in Shepparton. I always seemed to learn of another one from time to time. Years later i found out the real story. He was a good Methodist, and during the Depression he would turn up at the mortgagee auctions and buy the repossessed house. He then put the ex owner in at whatever rent he could afford, sometimes nothing.
Having read more on the topic I tend to agree. The major difference between now and then was that The Fed has not taken any deflationary action through raising interest rates or choking off money supply so far. Bernanke likes to say that he is not guided by history as there is no precedence, but he is fibbing. He knows that the severity and longevity of the Great Depression owed itself partly to The Fed's deflationary actions in response to their bubble induced recession of the 20's (he likes to blame gold for it). Of course, the legislative damage of Hoover and FDR did even greater damage. Bernanke is using the Great Depression's lesson - by not contracting the money supply - in trying to avoid a Great Depression. He knows his history but will not admit it as he is a dyed in the wool Keynesian. He however will find that Obama, or whatever pathetic Republican excuse for a President will in the end be solely responsible for plunging the US back into a depression. Both the Republican President Hoover, and the Democrat President Roosevelt committed "treason" with the labour and industrial policies they pursued and the same is happening again. It matters little which side of politics is in power - the end result will be similar. It is often said that Ayn Rand must have been a prophet as what she wrote in "Atlas Shrugged" is coming to pass now. I used to think this too, but I suggest now it was the events of the Great Depression that gave her the material to pen her novel. "Atlas Shrugged" has already happened, it may very well happen again. Read http://www.fee.org/articles/great-myths-of-the-great-depression/ and be in shock at the glaring similarities with FDR's bitter and twisted views of business and those of Julia Gillard and Wayne swan. It's almost as if the Labor spin monkeys have decided that the role model for our current crop of Labor leaders will be Franklin Delano Roosevelt himself and have committed themselves to studying his administration and are schooling our current crop of politicians likewise! We are witnessing a policy of bitterness and hate and setting class against class from the Labor party now in Australia. FDR would be proud - but as he was so infatuated with his own self-importance, he would probably consider he did a far better job than Gillard and Swan and they are still babes in the woods, with much to learn.
ALP was in government 19 9/31 at the start of the depression but then wasn't back in power until 1941. Don't know if it made much difference here in Australia! There was certainly a lot of class difference here in Australia as well as religious intolerance. There were two large department stores in the town I was brought up in..One was owned by a Protestant, the other by a Catholic. If you were after a job, the first question you was asked is, What religion are you. Wrong answer, no job! No married women either for as soon as a girl got married that was the end of her job. Thats why it is impossible to compare the financial disaster of today compared with the great depression.. Males made up probably 80% of the workforce in those 29/31 days and the unemployment rate was around 30%. As most families depended on the male as the sole breadwinner, it was a tragedy for the whole family if he lost his job. The job of the wife was hard as they had large families, washing took a whole day with the next day being reserved for ironing. The rest of the time was taken up with cleaning and cooking meals for large families..The lives of the women were extremely hard especially when their husband lost his job. Just imagine how hard it would be today if no one had any income in any home..Centre Link may not be there as a safety net if things really get bad here in Australia..In countries like Greece and Spain, pensions/unemployment payments are being cut drastically. Lets hope it never turns out like this here. Regards Errol 43
I think you have this part a little about face. It would have been the driving down of interest rates that saw an expansion of money through credit. Same same but different lol I think you will find this not to be the case. The fed began raising interest rates from memory late 2004 or early 2005 all the way up until the pop in 2007/8 where rates then fell off a cliff again. Sure they raised them to slow and not nearly enough over those years as speculation was going mental throughout all the rises. From what I have read, the Fed's "deflationary actions" in the 1920's were not really blamed by Bernanke in his book (I haven't read it only heard others commenting on it) but more so them "allowing" the deflationary events that were unfolding post 1929 stock market crash. ie the Deflationary event was happening through natural business cycle channels and Bernanke claims that the Fed should have been stepping in there really hard to prevent it. As above but absolutely on the Hoover HDR comment. I think this is where central banking always falls down and always will. The sheer arrogance in them to believe they know what interest rate is best for us is always going to see them fail. Either raising rates too fast or more likely raising them too slow. To the effect that by the time the interest rate lever finally puts a break on the economy, the car is heading too fast into the corner and the brakes lock up. In the timebefore and after this happens it will be never the intention of the Fed (or any other Keyensian/FRB loving central bank) to want to contract the money supply. The private sector, having gotten drunk on free Fed labelled liquor in the boom times (1920's &2000's) is always going to be the ones to do the natural contracting of the money supply through debt de leveraging. Sure in raising interest rates the Fed is attempting to slow the expansion but it never wants the money supply expansion to contract. They know, any contraction is seen as bad for an economy and know how quickly it could maintain it's own momentum and crash the system. I have heard Peter Schiff mention the same similarities between Hoover and Bush and Obama a FDR... The same could be said between Hoover and Howard, and FDR and Rudd/Gillard/Swan. It's such a great comparison to make under the circumstances. The stupid part about it is, the masses seem to think that these policies are a good thing. At least they like the fact that the governments are "trying" to do something about it. Little do they know, anything they do try will only be detrimental.
Well done on this reply. I can picture the events as described , not that I was there, but as a good strong family memory. Post of the week .......
This whole thread is awesome & represents a picture of the egg timer. When all the sand has passed into the bottom chamber, just turn the chamber over & start the same processes. Just change the dates, names & clothing styles. Sometime the glass egg timer is going to break......
! 1 Public and private debt are much higher now than then 2. Corporations have replaced Capitalists 3.Stock markets are now gambling Casinos instead of Investments of business. Regards Errol 43
Errol, Here in Melbourne we had a VERY rich man called Sidney Myer, He was a Polish Jew who came out with an empty pocket and made good in retailing. During the Great Depression he provided funds for many public projects that gave employment to the less fortunate. Probably the most well known was 'The Boulevard' in Ivanhoe. The Boulevard was a winding track along the banks of the Yarra River, and many men got a job on that, upgrading it to a full suburban road. Myer paid for the lot, and there were many others. My FIL was one of them and he related the story of a mate who ruined his hands working shifting rocks etc on the boulevard. He was a watchmaker! One day, my FIL found him sitting on the side of the road with his head in his hands, crying. Bob told me that the thing that got him out of the Great Depression was the 'Put Put' golf game. He was a carpenter and building those was the first real employment he had had since the Great Depression hit. He also related with much shame was the time a volunteer social worker bought around a bag of potatoes to help feed his family. He was so ashamed of his situation he threw them back at her. Another on Sidney Myer, when his brand new 6 storey 'MYER' store was opened in Lonsdale st Melbourne in 1942, he handed it over to the US Army to use as a HQ for the duration of the war. The State of Victoria did the same with the brand new Royal Melbourne Hospital. ....and as another example less well know was Sir Phillip Game, the Governor of NSW who sacked Jack Lang. He quietly handed over his entire salary to the poor via the support groups etc.
My father told me that , during the depression, he was working pick and shovel down a deep trench with other men. The foreman used to walk along the top of the trench and throw sharp stone onto the shirtless backs of the diggers.Anyone who took exception to this was sacked.
So in light of 1 and 3 you're saying it will be far worse? There are still some capitalists around , but they are small players in the field now compared to the corporations and frequently the prey for attacks by Government's, the media and the general public (including many on this forum). Government is now the largest single employer, so the importance that entrepreneurs play in the economic and social structure of a community is less valued.
Shiney, I think it is very possible that it will be far worse. As for the stock-market, (and Bond market) just about every worker has a HUGE stake in the market via his Superannuation and other retirement savings. If that goes down 90% like it did in the first years of the Great depression it will be a MESS. Debt is the very foundation of our current troubles, FAR too much, and no hope of ever getting it back under control. It will be inflated away, the only question is at what annual rate. ....and Small Business (<20 employees) is the largest 'single' employer in OZ today.
