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Thread: What was the over all cause of the Great depression

  1. #1

    Default What was the over all cause of the Great depression

    I've read lots of conflicting theories, but I was wondering if there was a somewhat quick summary. Particularly the role of the Fed Reserve.

    A socialist friend and I were arguing politics over beer. I was holding my own on economics until we came to the depression. He mentioned that the "wealthy capitalists pulled some schemes and got richer."

    To which I responded, "Oh you mean Rockefeller, Morgan, Rothchild... The guys on the Fed..."

    He changed the subject as usual, but I realized I'm very weak here.



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  3. #2

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    Quote Originally Posted by RJB View Post
    I've read lots of conflicting theories, but I was wondering if there was a somewhat quick summary. Particularly the role of the Fed Reserve.

    A socialist friend and I were arguing politics over beer. I was holding my own on economics until we came to the depression. He mentioned that the "wealthy capitalists pulled some schemes and got richer."

    To which I responded, "Oh you mean Rockefeller, Morgan, Rothchild... The guys on the Fed..."

    He changed the subject as usual, but I realized I'm very weak here.
    http://mises.org/rothbard/agd/contents.asp

  4. #3

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    Quote Originally Posted by JosephTheLibertarian View Post
    Right...because the Mises institute is not bias....

    "The essence of the Liberal outlook lies not in what opinions are held, but in how they are held: instead of being held dogmatically, they are held tentatively, and with a consciousness that new evidence may at any moment lead to their abandonment."

    -Bertrand Russell


    I received positive rep for extreme sarcasm from a person who thought I was serious ... please look up Poe's Law

  5. #4

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    Quote Originally Posted by Kade View Post
    Right...because the Mises institute is not bias....
    No, why would they be biased?

  6. #5

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    This is just one take. Very smart people here who are better educated in economics have disagreed with it. But it does serve, I think, as a good background so you can read the rest in context.

    Panics on Wall Street were common and often engineered. Banks like Morgan's were often calling notes (loans which had been used to buy stock) in order to force a correction so the rich could steal from the middle class. I suspect that the October 1929 crash was one of those. One of the main reasons, imo, The Street didn't recover right away was that there was a drought in the Bread Basket of the World (ever hear of the Dust Bowl?). A large part of our national wealth has been our incredible ability to produce food. So, a (possibly forced) correction coincided with a spike in food prices. Not good.

    Someone with more economics behind them please pick up the tale, now... Thx
    The only way--the only way--the Republicans could possibly fail to capitalize on the Obamacare debacle and fail to win the White House in 2016 is by being stubborn and stupid enough to nominate someone besides Rand Paul.

    That's the only way they could possibly blow it. If we nominate Paul the presidency is a lock for the G.O.P. I guarantee it.

  7. #6

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    Actpulsa is partly correct. There are many, many factors...

    Of course the economic liberals will turn to Rothbard and Mises to explain away what was ultimately a failure of wealth distribution attributed to unregulated markets.

    The truth is, Keynesian models and the war saved this country, and failure after failure of attempts to get the private sector to help in both England and the U.S. failed... it was the massive government spending that eventually boosted us to stability.

    Eccles, in his memoirs, said famously:

    As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery. Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.

    Of course, Eccles himself is a biased source... but it was he who placed the blame on the Federal Reserve himself, in his memoirs... a sort of self-blame for the allowing the massive firms to gain such advantage in the market. The irony is that his sorrow is the best resource in this regard because his ego, unlike Rothbard, is non-existent. It was a sad apologetic tone, and one that sheds light on the real causes of the Depression, without political agenda, or face saving.

    "The essence of the Liberal outlook lies not in what opinions are held, but in how they are held: instead of being held dogmatically, they are held tentatively, and with a consciousness that new evidence may at any moment lead to their abandonment."

    -Bertrand Russell


    I received positive rep for extreme sarcasm from a person who thought I was serious ... please look up Poe's Law

  8. #7

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    Increased expansion of the money supply then strong retraction created a speculative bubble which burst.

    The roaring 20's = 2000 housing bubble.

    The weird weather prolonged it.

  9. #8

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    Quote Originally Posted by Allen72289 View Post
    Increased expansion of the money supply then strong retraction created a speculative bubble which burst.

    The roaring 20's = 2000 housing bubble.

    The weird weather prolonged it.
    why should there be any "bubbles"? Why do we need these "planners" in the first place??

  10. #9

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    Quote Originally Posted by Allen72289 View Post
    The weird weather prolonged it.
    ...and ridiculously outdated farming techniques. Much of Oklahoma's topsoil was carried away by the winds because crop rotation was something practiced by "those damned smart longhair type s.o.b. farmers".

    Needless to say, every Oklahoma farmer rotates his crops today.
    The only way--the only way--the Republicans could possibly fail to capitalize on the Obamacare debacle and fail to win the White House in 2016 is by being stubborn and stupid enough to nominate someone besides Rand Paul.

    That's the only way they could possibly blow it. If we nominate Paul the presidency is a lock for the G.O.P. I guarantee it.

  11. #10

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    Quote Originally Posted by acptulsa View Post
    ...and ridiculously outdated farming techniques. Much of Oklahoma's topsoil was carried away by the winds because crop rotation was something practiced by "those damned smart longhair type s.o.b. farmers".

    Needless to say, every Oklahoma farmer rotates his crops today.
    And they build trees now to block the wind....

    Ironically, they could be doing something even better, by building windmills. Yes, weather was one cause, but it was mostly just good (or bad) timing on nature's part.

    "The essence of the Liberal outlook lies not in what opinions are held, but in how they are held: instead of being held dogmatically, they are held tentatively, and with a consciousness that new evidence may at any moment lead to their abandonment."

    -Bertrand Russell


    I received positive rep for extreme sarcasm from a person who thought I was serious ... please look up Poe's Law

  12. #11
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    Dont forget that FDR burned crops and slaughtered farm animals to maintain prices (keep them up instead of letting them drop).

  13. #12

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    The short answer is that the ability to trade on margin was introduced. And margin calls were put in scaring newbies into bailing out. Newbie meaning just about everyone because trading on margin was brand new. And too many did so all at once.

    The movie Zeitgeist will tell you that it was the federal reserve that allowed for this new ability to trade on margin to happen.
    Last edited by Paladin69; 07-17-2008 at 09:31 AM.

  14. #13
    Constitutional Supporter rancher89's Avatar
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    Great grandmother's advice to my mother about the Great Depression, with my addendum:

    Those who went through it with the least impact on their daily lives, meaning the ordinary folks of course, did three things--

    1. No unsecured debt--i.e. credit cards today

    2. The ability and opportunity to grow their own food and the knowledge and ability to store and keep this food.

    3. The willingness to take on cash paying, or bartering, lodgers

    Of course today we face another facet of the depression prism---a government that salivates at the prospect of taking away any and all freedoms at the slightest chance. Thus my addendum:

    4. The ability to defend one's home and self from the government and/or marauders.

  15. #14

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    Quote Originally Posted by Kade View Post
    The truth is, Keynesian models and the war saved this country, and failure after failure of attempts to get the private sector to help in both England and the U.S. failed... it was the massive government spending that eventually boosted us to stability.
    LOL, where did you learn your history

  16. #15

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    Quote Originally Posted by Paulitician View Post
    LOL, where did you learn your history
    LOL, where did you find that avatar?!
    The only way--the only way--the Republicans could possibly fail to capitalize on the Obamacare debacle and fail to win the White House in 2016 is by being stubborn and stupid enough to nominate someone besides Rand Paul.

    That's the only way they could possibly blow it. If we nominate Paul the presidency is a lock for the G.O.P. I guarantee it.

  17. #16

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    Quote Originally Posted by Paulitician View Post
    LOL, where did you learn your history
    Do you actually care to know, or are you trying to look like questioning my analysis by simply laughing and asking a stupid question somehow makes you credible?

    "The essence of the Liberal outlook lies not in what opinions are held, but in how they are held: instead of being held dogmatically, they are held tentatively, and with a consciousness that new evidence may at any moment lead to their abandonment."

    -Bertrand Russell


    I received positive rep for extreme sarcasm from a person who thought I was serious ... please look up Poe's Law

  18. #17

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    The Fed caused it. Bernanke admitted it......... finally.

  19. #18

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    Quote Originally Posted by Truth Warrior View Post
    The Fed caused it. Bernanke admitted it......... finally.
    That was Greenspan I thought.
    Quote Originally Posted by malkusm View Post
    McCain/Obama are two sides of the same coin, and it's a coin minted by the Federal Reserve that's going to lose what little value it has very soon.

  20. #19

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    Come on, econ majors. You just waiting for me to bungle through the rest of the story so you can flame me?
    The only way--the only way--the Republicans could possibly fail to capitalize on the Obamacare debacle and fail to win the White House in 2016 is by being stubborn and stupid enough to nominate someone besides Rand Paul.

    That's the only way they could possibly blow it. If we nominate Paul the presidency is a lock for the G.O.P. I guarantee it.

  21. #20

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    Quote Originally Posted by acptulsa View Post
    Come on, econ majors. You just waiting for me to bungle through the rest of the story so you can flame me?
    I won't flame you.

    And there are no "econ majors" here... only krazy kaju and his fresh new Comparative Economics 101 course at Kettering University, or similar toolshed institute in Michigan.

    "The essence of the Liberal outlook lies not in what opinions are held, but in how they are held: instead of being held dogmatically, they are held tentatively, and with a consciousness that new evidence may at any moment lead to their abandonment."

    -Bertrand Russell


    I received positive rep for extreme sarcasm from a person who thought I was serious ... please look up Poe's Law

  22. #21
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    Quote Originally Posted by Kade View Post
    Actpulsa is partly correct. There are many, many factors...

    Of course the economic liberals will turn to Rothbard and Mises to explain away what was ultimately a failure of wealth distribution attributed to unregulated markets.

    The truth is, Keynesian models and the war saved this country, and failure after failure of attempts to get the private sector to help in both England and the U.S. failed... it was the massive government spending that eventually boosted us to stability.

    Yeah fucking looks like doesn't it Kade! Stability? Is that what you call this clusterfuck?

  23. #22

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    Quote Originally Posted by Kade View Post
    I won't flame you.

    And there are no "econ majors" here... only krazy kaju and his fresh new Comparative Economics 101 course at Kettering University, or similar toolshed institute in Michigan.
    You are amazingly resilient, I'll give you that much.

    It was a bloodbath watching you in that debate and you can actually walk away thinking your dignity was left in tact

    You were asked for a single example and you failed miserably. Th example you did provide was so pathetic it's beyond words.

  24. #23

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    Quote Originally Posted by Kade View Post
    Actpulsa is partly correct. There are many, many factors...

    Of course the economic liberals will turn to Rothbard and Mises to explain away what was ultimately a failure of wealth distribution attributed to unregulated markets.

    The truth is, Keynesian models and the war saved this country, and failure after failure of attempts to get the private sector to help in both England and the U.S. failed... it was the massive government spending that eventually boosted us to stability.
    .
    How did WWII (or any war) bring prosperity to a nation? War tends drains a nation of resources-- as with Iraq today. I believe the propaganda that war brings wealth is the deadliest of all lies.

    Granted, war does enrich bankers, contractors and congressmen.

    As to Keynesian theory, where are you ever going to find a government honest enough to follow the tenents of it? When have they ever reduced spending during a wealthy time?

    BTW with government spending and war, it took fifteen years to make it through the depression. Although production went up, everyone was told to sacrifice. My grandmother said the war years were the toughest
    Last edited by RJB; 07-17-2008 at 12:04 PM.

  25. #24

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    All three of you seem to have missed the point. No matter how hard your kick and cry government spending bailed us out of the Depression. Sorry.

    ARealConservative, please explain to us again why the DRAM cartel was not an example of price fixing.

    I want to believe.


    "The essence of the Liberal outlook lies not in what opinions are held, but in how they are held: instead of being held dogmatically, they are held tentatively, and with a consciousness that new evidence may at any moment lead to their abandonment."

    -Bertrand Russell


    I received positive rep for extreme sarcasm from a person who thought I was serious ... please look up Poe's Law

  26. #25

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    Quote Originally Posted by RJB View Post
    How did WWII (or any war) bring prosperity to a nation? War tends drains a nation of resources-- as with Iraq today. I believe the propaganda that war brings wealth is the deadliest of all lies.

    Granted, war does enrich bankers, contractors and congressmen.

    As to Keynesian theory, where are you ever going to find a government honest enough to follow the tenents of it? When have they ever reduced spending during a wealthy time?

    BTW with government spending and war, it took fifteen years to make it through the depression. Although production went up, everyone was told to sacrifice. My grandmother said the war years were the toughest
    I didn't advocate the war... I merely said that it helped end the Depression...notably by ending unemployment.

    "The essence of the Liberal outlook lies not in what opinions are held, but in how they are held: instead of being held dogmatically, they are held tentatively, and with a consciousness that new evidence may at any moment lead to their abandonment."

    -Bertrand Russell


    I received positive rep for extreme sarcasm from a person who thought I was serious ... please look up Poe's Law

  27. #26

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    Quote Originally Posted by Kade View Post
    All three of you seem to have missed the point. No matter how hard your kick and cry government spending bailed us out of the Depression. Sorry.
    ]
    How?

  28. #27

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    If government spending could take us out of a depression, why didn't the 10 years of WPA and other runaway government spending do the trick?

    More likely it was the one way trade that occurred during and after the war. We sold arms by the boatload under FDR's "Cash and Carry" policies, as well as supplying the allies with food and manufactured goods while their industrial based was burning to the ground.

  29. #28

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    Quote Originally Posted by RJB View Post
    How?
    Helped ensure half the people didn't starve, mainly. He didn't say it helped bring it to a close any earlier. Sometimes bailing out simply keeps one's head above water long enough for a real rescue to be mounted.

    Look at Rancher89's post. Those were real people and the situation was beyond bleak.
    The only way--the only way--the Republicans could possibly fail to capitalize on the Obamacare debacle and fail to win the White House in 2016 is by being stubborn and stupid enough to nominate someone besides Rand Paul.

    That's the only way they could possibly blow it. If we nominate Paul the presidency is a lock for the G.O.P. I guarantee it.

  30. #29

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    Quote Originally Posted by Kade View Post
    I didn't advocate the war... I merely said that it helped end the Depression...notably by ending unemployment.
    Which leads us to where we are now. The U.S. has a very high employment rate, but skyrocketing inflation. War is never good.

    Full employment is not all that great either if you look at totalitarian regimes. Especially the one that used up their wealth in monument building such as Egypt, China, etc. Instead of monuments, we build war.

    This may be the requiem for our country:


    Ozymandias

    I met a traveller from an antique land
    Who said - Two vast and trunkless legs of stone
    Stand in the desert. Near them on the sand,
    Half sunk a shattered visage lies, whose from
    And wrinkled lip and sneer of cold command
    Tell that it's sculptor well those passions read
    Which yet survive, stamp'd on these lifeless things,
    The hand that mock'd them, and the heart that fed;
    And on the pedestal these words appear:
    "My name is Ozymadias king of kings:
    Look on my works, ye Mighty, and despair!"
    Nothing beside remains. Round the decay
    Of that colossal wreck, boundless and bare,
    The lone and level sands stretch far away

    Percy Bysshe Shelley
    Last edited by RJB; 07-17-2008 at 01:52 PM.

  31. #30

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    Quote Originally Posted by acptulsa View Post
    Helped ensure half the people didn't starve, mainly. He didn't say it helped bring it to a close any earlier. Sometimes bailing out simply keeps one's head above water long enough for a real rescue to be mounted.

    Look at Rancher89's post. Those were real people and the situation was beyond bleak.
    My grandfather told me about the dustbowl, but the starvation was due to lack of food. How did a "bail out" feed people?

    I'm not being a smart ass. I'm a well entrenched libertarian and I am enjoying hearing another side.

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