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Old 10-09-2008, 04:37 PM
 
Location: San Diego
940 posts, read 2,949,307 times
Reputation: 456

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hear me out and correct me if i'm wrong on anything....

the roaring 20's were a time when everyone was making money in stocks because the stock market rallied like crazy, right? just like the early 1900's. people were making so much money that brokerage firms were allowing people to use margins to speed up the process of making money, usually at a ratio of 9:1, meaning, for every 9 dollars they loaned to you, you needed $1 on hand. well, as the markets rallied to highs in 1929, these brokerage firms were calling in their margins, thus, crashing the stock market. banks were going under because of the lack of cash in reserves and so people panicked and took part in run on the banks. many banks collapsed, and money wasn't backed by the fdic and so many families lost everything. this caused more fear and panick and consumer spending dropped like crazy, and unemployment skyrocketed.

the only thing that makes today different then the 1920's is that we now have the fdic that will back lost deposits, but only up to a certain point. what happens when the fdic runs out of money? anyway, as it appears, runs on the banks is currently taking place. margins are being called in, and the stock market is gradually crashing; moreso this week. this is a replica on a much more massive scale compared to 1906 and 1929 first of all, because we have 15 times as many people in this country now and over 50% of people have money invested in stocks. also, back then, there was no such thing as credit, nor were their second mortgages and equity lines, etc...

we have run up the deficit so high and so quickly, that panic is now official. as people pull their money out of banks, banks don't have much to lend since for every dollar they have in deposits, they can loan $9 more to someone who wants a loan. credit is tighter... the fdic can dry up. what will happen when foreign countries do a run on the dollar because of its hyperinflationary vulnerability due to all these bailouts and the war in iraq and the fed dropping the interest rate back to 1.5%? what's going to happen? tell me why we shouldn't panic? tell me how this can't cause a depression?
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Old 10-09-2008, 04:41 PM
 
Location: Oz
329 posts, read 1,170,831 times
Reputation: 200
Interesting theory - so what's the solution
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Old 10-09-2008, 04:57 PM
 
Location: San Diego
940 posts, read 2,949,307 times
Reputation: 456
Quote:
Originally Posted by KansasChick View Post
Interesting theory - so what's the solution
that's the trillion dollar question, i don't know. i don't think anyone does!
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Old 10-09-2008, 04:59 PM
 
Location: Oz
329 posts, read 1,170,831 times
Reputation: 200
Quote:
Originally Posted by SouthCali4LifeSD View Post
that's the trillion dollar question, i don't know. i don't think anyone does!
Sad but true!
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Old 10-09-2008, 05:03 PM
 
19,346 posts, read 17,006,685 times
Reputation: 7519
Its not about a solution as if its not know. Depressions are caused by a restricted money supply. I could teach a 3rd grader how to prevent one. If there is a depression its because those pulling the strings at the treasury want one.

Most money is electronic. Here, pass this around
$1,000,000,000

Problem solved.

Make sure these are treasury notes
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Old 10-09-2008, 05:04 PM
 
Location: western East Roman Empire
8,070 posts, read 11,872,707 times
Reputation: 8068
Look at the measures that Mexico announced this morning.

Very basic: put people back to work in something productive.

Look, the government is taking over the banking industry, sooner or later the government will be ordering infrastructure projects, retooling factories for basic produdction, and the like.

This is what they should have done after 9/11, instead of allocating resources to inefficient housing and cars and encouraging people to go on a shopping spree.

I don't like it, but the majority of the people are not mature enough for a free enterprise system, it's a shame for those who are. An injustice that we'll have to bear.
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Old 10-09-2008, 05:04 PM
 
Location: Raleigh, NC
9,043 posts, read 12,038,700 times
Reputation: 1395
Quote:
Originally Posted by KansasChick View Post
Interesting theory - so what's the solution
Wow, maybe let the free market work instead of having a command and control economy like the 30's?

Notice the more government intervention occurs, the deeper the s*** we get into.
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Old 10-09-2008, 05:06 PM
 
Location: Oz
329 posts, read 1,170,831 times
Reputation: 200
Quote:
Originally Posted by ViewFromThePeak View Post
Wow, maybe let the free market work instead of having a command and control economy like the 30's?

Notice the more government intervention occurs, the deeper the s*** we get into.
I agree - I was being sarcastic
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Old 10-09-2008, 05:07 PM
 
Location: San Diego
940 posts, read 2,949,307 times
Reputation: 456
Quote:
Originally Posted by gwynedd1 View Post
Its not about a solution as if its not know. Depressions are caused by a restricted money supply. I could teach a 3rd grader how to prevent one. If there is a depression its because those pulling the strings at the treasury want one.

Most money is electronic. Here, pass this around
$1,000,000,000

Problem solved.

Make sure these are treasury notes
granted, it won't be the same depression as in 1929, because in 1929, we had a deflationary depression.

however, keep printing $1,000,000,000 to try and solve the problem and see what we get; the exact opposite of a deflationary depression... by the way, $1,000,000,000 is nothing these days to meet the needs of a country as large and powerful as the united states. you would need to print $1,000,000,000,000...

we would fall into a hyperinflationary depression!
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Old 10-09-2008, 05:09 PM
 
Location: SoCal
316 posts, read 655,364 times
Reputation: 69
Quote:
Originally Posted by ViewFromThePeak View Post
Notice the more government intervention occurs, the deeper the s*** we get into.
I Agree ! Many believe thats what caused 30's Great depression!



Houston we have a problem!
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