The FED Caused the Great Depression

The Fed created the conditions which lead to the Great Depression. Bernanke has even admitted it. But don't take his word for it.

The roaring 20s? Artificial expansion of the money supply and credit. There is evidence that Benjamin Strong, Fed chairman at the time, inflated the dollar on purpose to save England from a post- WWI Depression. They created conditions which weakened the dollar and moved gold out of America and into England. This transfer of wealth also contributed to the Depression. Now whether Benjamin Strong intentionally created the Great Depression is up for debate.

The fact is that Benjamin Strong was hand-picked, along with the rest of the first Federal Reserve board, by Col. Edward Mandell House. House was Woodrow Wilson's personal advisor, and the two were very close to each other. In 1912, House wrote a book called Philip Dru: Administrator: a Story of Tomorrow, 1920-1935 in which his fictitious hero, making himself a benign dictator, abolished protective tariffs, set up a system for social security, and arranged for the representation of labor on corporate boards and for a sharing of profits among the workers. Moreover, he imposed a graduated income tax, and developed a banking system that presaged the Federal Reserve; and he united the Great Powers of the world in a league for collective security. He also has fire-side chats to the citizens.

If you haven't figured it out, this is FDR to a tee, also incorporating elements of American government that would be implemented from 1913 through WW2. But Col. House wrote it 20 years before FDR even took office. I could ramble on for a long time about Col. House, but i won't. The fact is that Strong was trying to save England from a Great Depression at the expense of America. Now who knows if Strong knew what kind of repercussions his actions would have on the economy. But the fact is that he was loyal to Col. House, who certainly wanted to see a Great Depression as an excuse for expansion of government. House's intentions were more sinister, as he was also instrumental in creating the Council on Foreign Relations.

After being informed of all of this historically accurate information, and knowing exactly what sort of people we are dealing with, I'll leave you to decide whether or not the Great Depression was intentionally caused by the Federal Reserve. We simply don't know for sure one way or the other. But the biggest question of all is - would they intentionally cause another one, say, the one we are on the verge of experiencing right now?

 

Yes they did and they did on purpose.
Bernanke even said in congress they did, but he say they were sorry and wouldn't do it again LOL!

 

LMAO! that's so bad

 

The FRB caused it and The government response to it prolonged it. Does history repeat?

 

Lol, way to take what Bernanke said wayyyyyy out of context. Bernanke did say the Fed caused the Great Depression. But do you know WHY he thinks they did?

He thinks the Fed caused the Great Depression, because the Fed didn't do their intended job. The Fed didn't inject enough liquidity in to banks to prevent bank runs. The Fed allowed over half the banks in America to fail. That is why he says the Fed caused it... he is using that to advocate the necessity of the Fed and their ability to liquidate banks during recessions. He is actually promoting the Fed, but you would not have known that would you?

 

What a load of malarkey and codswallop! The Fed was being run by flunkeys of the extremely rich of the day like the Morgan Trust. Every economic boom in a capitalist system eventually has a bust, and it was the desire to produce greater and greater paper profits that creating the Roaring 20s and set the stage for the almost inevitable Great Depression. Does Dr. Righteous really think that a few token lefties could somehow subvert the entire global capitalist system by themselves without the right reacting to them and crushing them (politically) like bed bugs?

This is just another right-wing apologia for both the Great Depression and the 'fact' (so-called) that the recent economic crisis supposedly had absolutely nothing to do with them. If Righteous is so correct, why was it that FDR's financial reforms produced 40 years of prosperity with a strong middle class and their removal produced 30 years of increasing wealth inequality and financial instability?

 

that's true, why do we have booms?

 

Actually no.
Three primary factors caused the Great Depression:
1. The Versailles treaty and namely the French,
2. The Taft-Hartley Act of 1925 that raised tarriffs and excise taxes on imports, and
3. isolationism developing in the country that cause our international trade to dwindle to absolutely nothing.

If the Federal Reserve was the culprit, it was because of monetary contracton of M2 and not by wealth redistributon. Keep in mind that only 3% of the pouplation paid any income tax and there was very little social structure during Hoover's presidency to counteract anything Woodrow wilson did. .

 

Speculators

 

how do speculators cause booms?

 

They cause excessive demand for paper wealth and not productive wealth just like your buddy Peter Schiff says!

 

how do speculators cause excessive demand for paper wealth? what is excessive demand? what is paper wealth?

 

Because they are buying the product to sell for a profit rather than to use for productive purposes.

So once the last buyer says, wait a second, I'm not gonna pay that much for that crap. Then it comes tumbling down!

 

you forgot to explain paper wealth, still not sure what that is.

why would someone buying something because he thinks the price will go up later represent "excessive" demand?

 

I know you are trying to get to some Austrian point... just say it. We both know what speculation is.

 

im not making any points. I don't understand what you're trying to say so I'm asking questions.

 

Maybe so, but Federal war-spending revitalized the economy and brought about the end of the depression. That didn't happen on it's own as a result of the "free market," that happened because the Government spend money to win the war, which also resulted in the US becoming one of the two super-powers at that time. The Fed might have been trying to prevent Britain from collapsing, to save it's own foreign investments, or for some greater reason, but it also solved the problem with war spending, which created thousands of jobs in the private sector.

Odd that Conservatives don't like to admit that.

 

you are a victim of the broken window fallacy. how does destruction of wealth revitalize an economy?

 

Someone who buys a house to sell for a profit is a speculator
Someone who buys a house to live in is buying it for productive use

As more and more people are buying houses, more and more houses are being built. Demand sky rockets, housing goes buckwild. Then all of a sudden there aren't enough people who actually want a house to live in. And boooooom!

Just an example!

And I know eventually you are going to ask me where they get that money, and I will say the bank, and you will ask why the bank lent so much money, and I will say because interest rates were low, and you will start whacking off to Ron Paul posters!

 

Where can I find this place?

 

Lol! I won't ask where they got the money. But silently we both know.

 

I didn't say it did, Lotor. I said Federal war spending did a number of things which resulted in the end of the great depression; it created jobs in factories with government contracts, it put a lot of people to work, which resulted in personal spending, which "trickled down" to small businesses, which retained or created more jobs. In short, WWII spending ended the great depression.

Now a sizable chuck of our economy is based on military spending and the US is the number one weapons supplier in the world. War is good business because there is always a demand for it, in fact, our generals say we are in a state of "perpetual war." But that is besides my point that the Federal Government brought about the end of the depression.

Why don't you address that point?

 

Lol! But, I will argue the fact that speculative booms and busts differ. For instance the tech boom/bust. Not many people were directly affected by it because it was those that drove the gravy train of tech stocks, and those that invested in created tech companies that were directly impacted.

The difference, is that a common person making $50k a year couldn't go to the bank and ask for $300k to invest in the stock market. The bank would consider that too risky.

The housing bubble was completely different in that banks completely dropped their standards. The risk was taking away from them and passed on. So I will argue that the system failed during the housing boom. The cheap money and the reckless lending by banks definitely played a massive role.

BUT, that doesn't mean the system can't work. That just means we need to regulate banks and make them accountable for the loans they give. The housing market would not have been any where near as bad if Wall Street didn't figure out ways to pass risk around in a circle to the point they were so over leveraged and no one actually owned anything except paper.

 

how does printing money to employ people to build guns bombs and tanks feed starving people?

military spending is wasteful for many reasons. first and foremost, war is wasteful and destructive. the government employing people to make tanks that blow up buildings does not make the world more properous.

 

well, we've been over the same points a few times now. how about I recommend a book for you to read, and you can return the favor. we're just digging holes and filling them back up. hey that's kind of like government employment!