The Forgotten Depression of 1920-21

[CallMeJoe]

Wikipedia says...

If some anonymous author put it in Wikipedia, it must be true!

 

[PingSpike]

But 5,000 years ago its becomes really hard to understand WHY gold was of value . TO soft and heavey for weapons , The color isn't really that popular among the masses. So why was gold so valued by the ancients. The ans. is out there ya just have to except the facts.!

I would say gold was used as a currency precisely because of its uselessness. It is both (somewhat) rare and useless. That makes it a good candidate for currency. If it had many uses, then it would be better suited to being used to make something.

 

[William Gaatjes]

You left out the one that no one likes to think about, a serious reduction in the workforce (some soldiers don't come back).

True. I do not like to think about it, but sometimes it seems the recruiting of new soldiers seems to take place primary in cities and towns with a lot of poverty.

 

[GoPackGo]

Massive huge socialism is what happened.

Here is a graph of the US military budget.

People had full time employment doing what basically amounts to digging holes then immediately filling said hole. Build a tank, it blows up. Build bullets, shoot them. Build a boat, it sinks. Ya know, it's almost like getting people to build things fixes the economy when unemployment is high. Maybe the government should focus on getting people back to work building things. Instead of building a bunch of military shit that will be destroyed in 1 month, let's try building shit like bullet trains or widen some highways. As I said in another thread, retro-fitting stuff would work great right now.

The problem with those type of work programs is they end when the work is done...a reminder of the 1930's:

" Once I built a railroad, I made it run, made it race against time.
Once I built a railroad; now it's done. Brother, can you spare a dime?"

 

[Throckmorton]

Widely believed by whom? Anyone with an ounce of brains knows what brought the great depression to an end . ANYONE.

Yeah, government deficit spending.

 

[Craig234]

Yeah, government deficit spending.

It's sort of interesting, isn't it.

Practically no stimulus 1929-1933: Things got worse
Medium stimulus with work programs 1933-1941: Things gradually improved, mostly when the stimulus was largest, and got worse when the stimulus was reduced around 1937
Huge stimulus 1942-1945: The end of the Great Depression

Now, the logical conclusion from this is, that stimulus... wait, is the reader a Republican?

It's funny to note that the lesson is FDR didn't go far ENOUGH with stimulus and could have ended the depression earlier with much more. Another note though, it that Keynesian theory calls for stimulus in the recession, but for government spending restraint in the good times - a lesson lost on modern Republicans who want to spend all that and more in good times for the political gain of doing so.

Ever since Reagan, in the last 30 years before the last two all are either Republicans running big deficits, or a Democrat reducing the deficit annually for 8 years to zero.

 

[PeshakJang]

Republicans bad. Democrats good.

Except when Democrats bad, then progressives good.

Stimulus good!

Idiot.

 

[Nemesis 1]

http://www.youtube.com/watch?v=jLBRVelYqhE

 

[Anarchist420]

It's sort of interesting, isn't it.

Practically no stimulus 1929-1933: Things got worse
Medium stimulus with work programs 1933-1941: Things gradually improved, mostly when the stimulus was largest, and got worse when the stimulus was reduced around 1937
Huge stimulus 1942-1945: The end of the Great Depression

Now, the logical conclusion from this is, that stimulus... wait, is the reader a Republican?

It's funny to note that the lesson is FDR didn't go far ENOUGH with stimulus and could have ended the depression earlier with much more. Another note though, it that Keynesian theory calls for stimulus in the recession, but for government spending restraint in the good times - a lesson lost on modern Republicans who want to spend all that and more in good times for the political gain of doing so.

Ever since Reagan, in the last 30 years before the last two all are either Republicans running big deficits, or a Democrat reducing the deficit annually for 8 years to zero.

No offense or anything, but I don't get why you ignore the fact that Hoover did a lot. He raised the top marginal rate from 25% to 63%, he started the precursor to the FDIC, he installed wage controls, and he signed the Smoot-Hawley tariff. He also ran all the Mexicans back to Mexico.

If the Fed had been abolished right after the stock market crash, then the Great depression would not have been Great. It would've been more like the panic of 1837. That is, it would've been over in 2-3 years, instead of 12 years.

 

[feralkid]

Massive huge socialism is what happened.

Here is a graph of the US military budget.

People had full time employment doing what basically amounts to digging holes then immediately filling said hole. Build a tank, it blows up. Build bullets, shoot them. Build a boat, it sinks. Ya know, it's almost like getting people to build things fixes the economy when unemployment is high. Maybe the government should focus on getting people back to work building things. Instead of building a bunch of military shit that will be destroyed in 1 month, let's try building shit like bullet trains or widen some highways. As I said in another thread, retro-fitting stuff would work great right now.

Stop making sense.

The U.S. is great at getting the job done when there are wolves at the door.

When it is termites in the basement, not so much.

 

[PeshakJang]

If the Fed had been abolished right after the stock market crash, then the Great depression would not have been Great. It would've been more like the panic of 1837. That is, it would've been over in 2-3 years, instead of 12 years.

And you base this on what... since it flies in opposition of just about every economic study of the great depression done in the last 80 years.

Like it or not, contrary to Craig's juvenile wailing about stimulus and "because this, then that!" idiotic ramblings, the recovery from the great depression was in very large part due to the departure from the gold standard. This is not just in America, it is around the globe. Countless studies have shown this.

There were plenty of other "stimulus" projects, some of which are similar to what we are doing today, most of which don't come anywhere near what we are doing today, which helped aspeed the recovery and lower unemployment, but to try and draw a line of causality and claim that stimulus saved us then, more stimulus will save us now, is ignorance at it's finest, and shows that those who make these claims really don't know much about what they are talking about... they just want more money thrown at a problem.

What kind of economic impact did a transcontinental railway have back in those days? What impact would it have if we built one today? It would be pretty stupid to draw a line and say "since we did it then and it did this, if we do it today it will do the same", is faulty logic at best.

 

[Craig234]

No offense or anything, but I don't get why you ignore the fact that Hoover did a lot. He raised the top marginal rate from 25% to 63%, he started the precursor to the FDIC, he installed wage controls, and he signed the Smoot-Hawley tariff. He also ran all the Mexicans back to Mexico.

If the Fed had been abolished right after the stock market crash, then the Great depression would not have been Great. It would've been more like the panic of 1837. That is, it would've been over in 2-3 years, instead of 12 years.

No offense taken, but I think you misread my comment on the topic of stimulus as being about any activity. You're right that Hoover did various things.

From Wiki, some of his policies:

Calls for greater government assistance increased as the US economy continued to decline. Hoover rejected direct federal relief payments to individuals, as he believed that a dole would be addictive, and reduce the incentive to work. He was also a firm believer in balanced budgets, and was unwilling to run a budget deficit to fund welfare programs.[41] However, Hoover did pursue many policies in an attempt to pull the country out of depression. In 1929, Hoover authorized the Mexican Repatriation program to combat rampant unemployment, the burden on municipal aid services, and remove people seen as usurpers of American jobs. The program was largely a forced migration of approximately 500,000 Mexicans and Mexican Americans to Mexico, and continued through to 1937. In June 1930, over the objection of many economists, Congress approved and Hoover signed into law the Smoot-Hawley Tariff Act. The legislation raised tariffs on thousands of imported items. The intent of the Act was to encourage the purchase of American-made products by increasing the cost of imported goods, while raising revenue for the federal government and protecting farmers. However, economic depression now spread through much of the world, and other nations increased tariffs on American-made goods in retaliation, reducing international trade, and worsening the Depression.[42]

...Hoover in 1931 urged the major banks in the country to form a consortium known as the National Credit Corporation (NCC).[45] The NCC was an example of Hoover's belief in volunteerism as a mechanism in aiding the economy. Hoover encouraged NCC member banks to provide loans to smaller banks to prevent them from collapsing. The banks within the NCC were often reluctant to provide loans, usually requiring banks to provide their largest assets as collateral. It quickly became apparent that the NCC would be incapable of fixing the problems it was designed to solve, and it was replaced by the Reconstruction Finance Corporation.

By 1932, the Great Depression had spread across the globe. In the U.S., unemployment had reached 24.9%,[46] a drought persisted in the agricultural heartland, businesses and families defaulted on record numbers of loans, and more than 5,000 banks had failed.[47] Tens-of-thousands of Americans who found themselves homeless and began congregating in the numerous Hoovervilles (also known as shanty towns or tent cities) that had begun to appear across the country. The name 'Hooverville' was coined by their residents as a sign of their disappointment and frustration with the perceived lack of assistance from the federal government. In response, Hoover and the Congress approved the Federal Home Loan Bank Act, to spur new home construction, and reduce foreclosures. The plan seemed to work, as foreclosures dropped, but it was seen as too little, too late.

Prior to the start of the Great Depression, Hoover's first Treasury Secretary, Andrew Mellon, proposed and saw enacted, numerous tax cuts, which cut the top income tax rate from 73% to 24%. When combined with the sharp decline in incomes during the early depression, the result was a serious deficit in the federal budget. Congress, desperate to increase federal revenue, enacted the Revenue Act of 1932, which was the largest peacetime tax increase in history.[48]. The Act increased taxes across the board, so that top earners were taxed at 63% on their net income. The 1932 Act also increased the tax on the net income of corporations from 12% to 13.75%.

Actually, FDR's New Deal has been described as largely Hoover's programs much larger. I don't think that's quite fair, but there's some truth to it.

I note the top tax rate slash from 73% to 24% just before the Great Depression began.

Hoover wasn't the simpler President like his two predecessors; he said he was against laissez-faire economics and was in favor of regulation and called himself a 'progressive' (!).

To digress further, there were charges in the 1932 campaign of the opponent wanting to 'lead the country to socialism' - but they were FDR attacking Hoover!

Ah, the good old days when ridiculous use of the word socialism to win elections went both ways.

Anyway, Hoover supported some things - but did not seem to support the 'stimulus' idea much. That happened more with things like FDR's work programs.

Now, your second paragraph just sounds like more proselytizing against the Fed.