Morning Joe Has Sudden Epiphany: You Know, ‘It Doesn’t Trickle Down!’

[fskimospy]

All the crisis I just looked at for the US seemed to involve Government manipulation. Do you have an example of a crisis that did not have government regulation as one of its causes? I'm sure there were lots of recessions but not a full on crisis so far as I can see.

How about the panic of 1837? Or really any one of the numerous banking panics in the 1800's? All of these likely could have been prevented with additional government regulation.

https://en.wikipedia.org/wiki/Panic_of_1837

If you look at US history you'll see that bank panics were a common occurrence until the government stepped in with heavy financial regulation. Then they basically disappeared until many of those regulations were removed or were circumvented by the finance community.

 

[realibrad]

How about the panic of 1837? Or really any one of the numerous banking panics in the 1800's? All of these likely could have been prevented with additional government regulation.

https://en.wikipedia.org/wiki/Panic_of_1837

If you look at US history you'll see that bank panics were a common occurrence until the government stepped in with heavy financial regulation. Then they basically disappeared until many of those regulations were removed or were circumvented by the finance community.

You are not trying.

Literally the very link you just posted explained how the government was involved. The US government bought bonds from the Bank of England which is their central bank. When the bank adjusted its interest rates higher, all other western banks copied them as was the norm at the time. This caused cotton prices to fall. Quite literally the very start was the over purchase of bonds by the US for expansion and the adjustment of the English Central bank.

Then there was the Specie Circular of 1836.

The Specie Circular of 1836 mandated that western lands could be purchased only with gold and silver coin. The circular was an executive order issued by Andrew Jackson, and favored by Senator Thomas Hart Benton of Missouri and other hard-money advocates. The intent was to curb speculation in public lands, but the circular set off a real estate and commodity price crash as most buyers were unable to come up with sufficient hard money or "specie" (gold or silver coins) to pay for the land.

If you go through your link, you will see multiple government actions that were part of the crisis. I will not bother going through the others if you are not going to put in the effort.

 

[fskimospy]

You are not trying.

Literally the very link you just posted explained how the government was involved. The US government bought bonds from the Bank of England which is their central bank. When the bank adjusted its interest rates higher, all other western banks copied them as was the norm at the time. This caused cotton prices to fall. Quite literally the very start was the over purchase of bonds by the US for expansion and the adjustment of the English Central bank.

Then there was the Specie Circular of 1836.

If you go through your link, you will see multiple government actions that were part of the crisis. I will not bother going through the others if you are not going to put in the effort.

I have to say if anyone's not trying it's you. This is an incredibly lazy way to analyze that crisis and it only serves to help you reach the conclusion you want to reach. A central bank adjusting their interest rate due to market pressures is not 'government regulation causing a financial crisis' by any definition I am aware of.

If your question was to bring up the last time a financial panic happened where governments had literally no involvement then you are going to basically have to go back to a time before governments. Governments are going to be involved with every financial crisis ever because they are part of the financial system. That does not mean that they are the cause of them, and furthermore central bank interest rates aren't financial regulation by any known definition of the term.

If you go and look throughout US history you will see that the frequency and depth of financial crises has a strong and inverse relationship to the amount of financial regulation. It's the best way we have to prevent them.

 

[realibrad]

I have to say if anyone's not trying it's you. This is an incredibly lazy way to analyze that crisis and it only serves to help you reach the conclusion you want to reach. A central bank adjusting their interest rate due to market pressures is not 'government regulation causing a financial crisis' by any definition I am aware of.

If your question was to bring up the last time a financial panic happened where governments had literally no involvement then you are going to basically have to go back to a time before governments. Governments are going to be involved with every financial crisis ever because they are part of the financial system. That does not mean that they are the cause of them, and furthermore central bank interest rates aren't financial regulation by any known definition of the term.

If you go and look throughout US history you will see that the frequency and depth of financial crises has a strong and inverse relationship to the amount of financial regulation. It's the best way we have to prevent them.

I still feel like the central bank was not looking at the full implications and should be looked at as having some responsibility, but fine, ignore that.

What about this whole section from your link?

Within the United States, there were several contributing factors. In July 1832, President Andrew Jackson vetoed the bill to recharter the Second Bank of the United States (BUS), the nation's central bank and fiscal agent. As the BUS wound up its operations in the next four years, state-chartered banks in the West and South relaxed their lending standards, maintaining unsafe reserve ratios.[2] Two domestic policies, in particular, exacerbated an already volatile situation. The Specie Circular of 1836 mandated that western lands could be purchased only with gold and silver coin. The circular was an executive order issued by Andrew Jackson, and favored by Senator Thomas Hart Benton of Missouri and other hard-money advocates. The intent was to curb speculation in public lands, but the circular set off a real estate and commodity price crash as most buyers were unable to come up with sufficient hard money or "specie" (gold or silver coins) to pay for the land. Secondly, the Deposit and Distribution Act of 1836 placed federal revenues in various local banks (derisively termed "pet banks") across the country. Many of these banks were located in western regions. The effect of these two policies was to transfer specie away from the nation's main commercial centers on the East Coast. With lower monetary reserves in their vaults, major banks and financial institutions on the East Coast had to scale back their loans, which was a major cause of the panic along with the real estate crash.[9]

I'm not saying that the government was just there doing things during the crisis, but was causing many of the factors that drove the crisis. Your link literally supports that argument.

Be honest, you did not read through the causes fully. You probably read the first few sentences and then posted the link. At the very least, had you read through it, you would have chosen another crisis as the causes were very much linked to government actions.