The FED Caused the Great Depression

The Federal Reserve Bank and our own Government were the major causes of the Great Depression extending beyond what it should have been. When the Depression first hit the Presidency increased tariffs while at the same time making larger banks loan money to smaller banks to keep them afloat. This ended horribly and when people saw it wasn't working FDR was elected. Once the New Deal was passed through it created another mess by increasing the spending of the Government and creating an Artificial marketplace. Once the legislature cut funding the Economy went into a Freefall because the jobs created weren't needed in society.

WWII hit and more major spending occurred but, the spending itself didn't save the USA from its own Economic woes... it was the fact that every Industrial country was in ruins except for the USA. Russia was still some what intact but, their own Command Economy made them lag behind as well as their own population/cities taking a major hit. America got out of the Great Depression because there was no one left standing to compete.

 

Year - % chg real GDP
1930 -8.6%
1931 -6.5%
1932 -13.1%
1933 -1.3% <-FDR takes office, implements "New Deal"
1934 +10.9%
1935 +8.9%
1936 +13.1%
1937 +5.1%
1938 -3.4%
1939 +8.1%
1940 +8.8%

Source: BEA.gov.

Looks to me like the big mess was 1930-32.

 

GDP change? Is that what you're presenting? I don't want to confuse anything with what you've posted.

 

Yes, the hint was the fact I put "GDP" in the title of the data.

Year - % chg real GDP
1930 -8.6%
1931 -6.5%
1932 -13.1%
1933 -1.3% <-FDR takes office, implements "New Deal"
1934 +10.9%
1935 +8.9%
1936 +13.1%
1937 +5.1%
1938 -3.4%
1939 +8.1%
1940 +8.8%

Source: BEA.gov.

 

Was confused with chg... not the GDP part. Haha

But to get to your point about it being rough around 1930-1932 that is simply because the "Real GDP" includes Government spending. When the New Deal was put into place the GDP skyrocketed simply because it created an Artificial Market. From 1930 on it was equally bad imo simply due to the fact you had joblessness to artificially created jobs... such as Painting and digging holes. When in 1938 it was no longer funded the crash came once again because the Market didn't accept the fake jobs.

 

In 1933 we needed and "artificial" market. The "real" one had completely collapsed.

 

In 1933 we needed and "artificial" market. The "real" one had completely collapsed.

1937-38 wasn't anywhere near the scope of 1930-32, but I agree that a rapid cutback in Govt spending cause the economy to fall back into recession.

A lessons our conservative friends should take note of today.

 

We needed the Market not to be interfered with... Both Presidencies during the era interefered. If they simply let the Market correct the bad investments the country could have stepped out of it in 6months to 2yrs but, instead they took the route of prolonged agony for 10+yrs. An artificial market doesn't create wealth at all... If you believe it to be the case then we should go running after mirages if we're dieing of thirst.

 

no they didn't

lol

 

Elaborate a bit?

 

An artificial market? Is that like speculators betting on ever increasing prices, without regard to risks?

 

The did let the markets correct bad investment. This was the result:

Year - % chng GDP
1930 -8.6%
1931 -6.5%
1932 -13.1%

Economic production dropped 30% real, 40% actual, in just three years.

How much more do you think the economy should have been allowed to destroy in a depressionary spiral itself before a major intervention was justified?

 

No, not at all. Speculators make a claim something is going to be worth less or more in a given period of time.

Governments tossing in terms of today Billions of dollars on job creation that doesn't yield jobs that stick without funding or jobs that are pointless to begin with aren't the same thing at all.

 

The Government increased tariffs on foreign goods and forced larger banks to give loans to smaller ones to keep them afloat... yup no Government interference at all.

 

And a majority of the American business community approved of those measures. It's funny how that minor detail is never brought up by historical revisionists. True free trade as a principal was slow to catch on in America and the Isolationists were quick to support tariffs in the face of lost sales and declining profits (not making the mental jump that other countries would quickly retaliate).

 

Source for that assertion?

I'm not aware this happened 1930-32.

 

http://en.wikipedia.org/wiki/Federal_Home_Loan_Bank_Act

http://en.wikipedia.org/wiki/Reconstruction_Finance_Corporation

http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff_Act

All failures of the Hoover Administration and he touched quite a bit by allowing these to get passed through.

 

So protectionists... not capitialists proposed such a tariff. The "dont touch it" approach worked in the 1920s but, the Government decided to step in and try to fix it themselves. Command Economies never work.. and pseudo free markets don't work either.

 

Do you have any citations that support your assertion quoted above? None of these did. I didn't even ask about the Tariff act, for example.

 

http://www.enotes.com/major-acts-congress/federal-home-loan-bank-act
http://www.britannica.com/EBchecked/topic/203399/Federal-Home-Loan-Bank-Act

http://www.britannica.com/EBchecked/topic/493753/Reconstruction-Finance-Corporation-RFC
http://www.enotes.com/topic/Reconstruction_Finance_Corporation

The Federal Government did indeed intervene in the Marketplace.. there are plenty of other situations from Hoover's Administration of other involvements directly effecting the Private Sector.

 

None of those stay the Govt forced larger banks to give loans to smaller ones to keep them afloat...

Do you have an sources that actually support your assertion I quoted above?

The fact you simply cite a bunch of irrelevant sources leads me to the conclusion you've simply fabricated your claim.

 

>>>I don't know that the Fed is the root cause of our current economic problems now or in the past, but if we have another depression, I'm going after the fed, Wall Street the banks, the lobbies, and the multinationals. I'm just trying to live my life in peace with a fairly predictable dollar and all those boys are playing "Hide the LearJet".