2 comments:

Anonymous said...

Actually you are wrong. The great depression was sparked by the contraction of the money supply after a period of very loose credit during the roaring twenties. The currency leading up to the great depression was actually
deflating...
"By 1928, the Federal Reserve was raising interest rates and choking off the money supply. For example, its discount rate (the rate the Fed charges member banks for loans) was increased four times, from 3.5 percent to 6 percent, between January 1928 and August 1929. The central bank took further deflationary action by aggressively selling government securities for months after the stock market crashed. For the next three years, the money supply shrank by 30 percent. As prices then tumbled throughout the economy, the Fed’s higher interest rate policy boosted real (inflation-adjusted) rates dramatically."


"For the next three years, the money supply shrank by 30 percent"

-You are saying that the government increased the money supply which led to the great depression? I think you need to do some research, because the facts are completely opposite of what you are saying...


Also the great depression was already well under way when Roosevelt took office. Don't get me wrong I believe Roosevelt perpetuated the misdeeds done by Hoover when he created the Smoot-Howley Teriff, but in no way was it Roosevelt who started it...he was not even president yet.

January 9, 2009 7:41 AM

Sam said...

I agree with most everything you are saying, so maybe there is a disconnect somewhere. My video was just a very short introduction to general things that happen during a depression. I agree that there was loose credit during the roaring 20s, and there was also large inflation of the money supply to inflate US dollars together with the British Pound in an attempt for the Central Bank of England to hold its monetary power. Then, yes, in 1929, the money supply was contracted by the Fed, and there was a market crash, which only caused a recession. I agree, yes, Hoover started to make things worse by raising taxes and implementing the first socialist government programs. Roosevelt then followed in his footsteps and created many programs, raised taxes even more, and as a result, there was enormous inflation. However, inflation was not until around 1933 or 1934, I don't currently have my books on me, they are at school. So, I think we can agree on quite a bit. I'm sorry if there was any mix-up.

January 9, 2009 5:51 PM

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