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A popular right wing myth is just not true. The Great Depression was not caused by the Federal Reserve contracting the money supply. The contraction of the money supply was a more natural process attributed to the loss of wealth.
Item 1: Four months from the crash of the stock market 40 billion dollars in wealth disappeared from the American economy. This is a tremendous amount considering the fact that the GDP was a single trillion dollars.
Item 2. Within two years thousands of banks went out of business because they were heavily invested in Wall Street. This was the clincher. Millions of people lost their bank deposits. Businesses closed, and businesses that survived curtailed spending.
Item 3. The FED stepped in 1932 and expanded the money supply.
Why would Bernanke lie like this. Perhaps to decrease confidence in the FED and thus open the door to unprecedented deregulation.
A popular right wing myth is just not true. The Great Depression was not caused by the Federal Reserve contracting the money supply. The contraction of the money supply was a more natural process attributed to the loss of wealth.
Item 1: Four months from the crash of the stock market 40 billion dollars in wealth disappeared from the American economy. This is a tremendous amount considering the fact that the GDP was a single trillion dollars.
Item 2. Within two years thousands of banks went out of business because they were heavily invested in Wall Street. This was the clincher. Millions of people lost their bank deposits. Businesses closed, and businesses that survived curtailed spending.
Item 3. The FED stepped in 1932 and expanded the money supply.
Why would Bernanke lie like this. Perhaps to decrease confidence in the FED and thus open the door to unprecedented deregulation.
Why in the world do you think right wingers think The Great Depression was caused by the Federal Reserve contracting the money supply? Right wingers? Vs a school of economic thought?
A popular right wing myth is just not true. The Great Depression was not caused by the Federal Reserve contracting the money supply. The contraction of the money supply was a more natural process attributed to the loss of wealth.
Item 1: Four months from the crash of the stock market 40 billion dollars in wealth disappeared from the American economy. This is a tremendous amount considering the fact that the GDP was a single trillion dollars.
Item 2. Within two years thousands of banks went out of business because they were heavily invested in Wall Street. This was the clincher. Millions of people lost their bank deposits. Businesses closed, and businesses that survived curtailed spending.
Item 3. The FED stepped in 1932 and expanded the money supply.
Why would Bernanke lie like this. Perhaps to decrease confidence in the FED and thus open the door to unprecedented deregulation.
I think you are conflating "cause" (start) of the Great Depression with something that "exacerbated" (made a problem that already existed worse) the Great Depression.
I've never seen any serious historian or economist claim that the Great Depression was started by a contraction in the supply of money, but rather that it was made more severe.
You are also oversimplifying the issue and pretending that the Fed didn't make decisions and choose to not make other decisions, which intensified the deflation.
Are you honestly saying that the Fed had nothing to do with the contraction in the supply of money and that it didn't deepen the problems that already existed?
This isn't right wing conspiracy...this is mainstream economics.
From the Federal Reserve's own website on its history:
Quote:
These differences of opinion contributed to the Federal Reserve’s most serious sin of omission: failure to stem the decline in the supply of money. From the fall of 1930 through the winter of 1933, the money supply fell by nearly 30 percent. The declining supply of funds reduced average prices by an equivalent amount. This deflation increased debt burdens; distorted economic decision-making; reduced consumption; increased unemployment; and forced banks, firms, and individuals into bankruptcy. The deflation stemmed from the collapse of the banking system, as explained in the essay on the banking panics of 1930 and 1931.
The Federal Reserve could have prevented deflation by preventing the collapse of the banking system or by counteracting the collapse with an expansion of the monetary base, but it failed to do so for several reasons. The economic collapse was unforeseen and unprecedented. Decision makers lacked effective mechanisms for determining what went wrong and lacked the authority to take actions sufficient to cure the economy. Some decision makers misinterpreted signals about the state of the economy, such as the nominal interest rate, because of their adherence to the real bills philosophy. Others deemed defending the gold standard by raising interests and reducing the supply of money and credit to be better for the economy than aiding ailing banks with the opposite actions.
You talk about the difficulty of banks and how that played into the great depression, but then you fail to connect the dots of how deflation hit banks and made life more difficult for them in that environment while the Fed made choices that allowed for the deflation to grow.
A popular right wing myth is just not true. The Great Depression was not caused by the Federal Reserve contracting the money supply. The contraction of the money supply was a more natural process attributed to the loss of wealth.
No, it was not. Only a small percentage of Wealth exists as cash. The overwhelming majority of Wealth is in the form of stocks, bonds, treasury notes, other financial instruments and real estate.
Loss of Wealth ≠l Contraction of Money Supply.
Quote:
Originally Posted by Tonyafd
Item 1: Four months from the crash of the stock market 40 billion dollars in wealth disappeared from the American economy. This is a tremendous amount considering the fact that the GDP was a single trillion dollars.
The US GDP never included economic activities that do not pass through regular markets.
Quote:
Originally Posted by Tonyafd
Item 2. Within two years thousands of banks went out of business because they were heavily invested in Wall Street. This was the clincher. Millions of people lost their bank deposits. Businesses closed, and businesses that survived curtailed spending.
Banks were not "heavily invested in Wall Street."
However, banks did happily loan money to people for the express purpose of purchasing stocks, which were held as collateral. When the stocks became devalued, banks were not able to recover the loans they had made.
Why in the world do you think right wingers think The Great Depression was caused by the Federal Reserve contracting the money supply? Right wingers? Vs a school of economic thought?
I've been told this by at least two people that I know to be Trump Republicans. They also blame the FED for causing the recession of 2008.
I've been told this by at least two people that I know to be Trump Republicans. They also blame the FED for causing the recession of 2008.
lmao@ two tools you know = all right wingers
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