Posted on 01/20/2010 5:31:51 PM PST by Comrade Brother Abu Bubba
Or maybe the Feds shouldn’t have been forcing banks to make mortgages to people who couldn’t afford to pay them back, instead of making us pay higher rates to pay for the program.
For one thing, you are not measuring severity-- the Gould-U.S. Grant scandals which led to a severe downturn in the mid-1870's (arguably the worst recession in the 1857-1912 period) did not even begin to compare to the Hoover-FDR depression six decades later.
For another, you are comparing two entirely different economic structures. Emerging economies typically have more boom and bust cycles (especially the later) than fully developed economies. After 1912, you have an America which is clearly the leading economy in the world and a highly industrialized and diverse economy. From 1857-1912, you have an America which is mainly agricultural, and is emerging as an industrial power, but isn't even close to being the world's top economic power until the end of that era.
This isn't to say that the Fed hasn't done some good, sometimes even by design, but more often by coincidence and the luck of good timing. When they screw up, they tend to screw up big-time such as reducing the money supply at the beginning of the 1930's recession (as it was thought to be at the time) or providing too easy credit prior to the start of the current recession. Much the same arguments can be made about the virtues of planned economies versus free market economies.
Planned economies DO tend to smooth out the economic cycles somewhat. That is, until the planners screw up big time. That being said, would you prefer to live in a nanny state Europe where unemployment, even in good times, is around 10%? Or in a pre-nanny state America where the cycles may be a less predictable but the overall standard of living is far higher?
Here was your original claim.
Once the Fed seized the role of setting interest rates, downturns can last much longer, sometimes
Here was my response.
I thought the downturns were less frequent and shorter, on average, after the Fed was created compared to before.
It looks like I was right. Do you disagree?
For one thing, you are not measuring severity
If you have that information, I'd like to see it. I think the severity of downturns was also less, on average, since the Fed, but if you can show that's not the case....
Severity: Can you find anything in the 1857-1912 era which even comes close to matching the big one which lasted 1929-1941? Will you now give me the same courtesy which I gave you? Or, are you a proponent of managed economies?
If you learned something, I feel better.
Can you find anything in the 1857-1912 era which even comes close to matching the big one which lasted 1929-1941?
I thought the Panic of 1873 was pretty bad. A 5 year contraction followed 3 years later by a 3 year contraction. The Panic of 1893 led to a 17 month contraction and 18 months later we started an 18 month contraction followed 2 years later by another 18 month contraction followed 2 years later by a 2 year contraction.
I hope you don't think I'm defending the Feds response during the Great Depression. And I'm sure you'll have to admit they haven't made the same mistake since.
Will you now give me the same courtesy which I gave you?
You bet. If you show me that the severity of the contractions after the Fed was created were worse than those before the Fed, I'll be happy to admit you were right.
Or, are you a proponent of managed economies?
Excuse me?
Financial collapse and recession. Just earlier and shallower.
It sounds like you are defending the Fed because they supposedly learned the lessons of the 1930's.
However, just because they haven't duplicated the exact same mistakes doesn't mean that they've made plenty more. Including the current mess which is the topic of this thread.
I'll be the first to admit that free market capitalism is far from a perfect system. But it has a far better track record than any of the alternatives tried thus far.
What do you think the Fed did wrong in the 1930s?
You are right, WIN was actually announced by Ford.
http://www.presidentprofiles.com/Kennedy-Bush/Gerald-R-Ford-Congress-inflation-and-energy.html
Bernake is a joke. Remember the 60 minutes interview with Steve “Softball” Croft a few months ago? When Croft asked him why regualr American taxpayers should bail out Wall St bankers Ben said:
“If your neighbor smokes in bed and starts his house on fire, do you want the fire dept to come or would you rather the whole house burn down?” Softball Steve then changed topics.
The proper response that a REAL journalist would’ve asked is:
“Gee Ben, what if my neighbor wasn’t smoking in bed, but instead dumping gasoline on his house to burn it down and collect the insurance money? Isn’t that perhaps a better anaolgy? Shouldn’t arsonists go to prison instead of collecting money for the havoc they’ve wreaked?”
This bailout/TARP/ Fed secret $$$ printing is a disaster. All of the big banks should’ve been left to fail, the shareholders wiped out, and the buildings/assets/office equipment liquidated at a fire sale. Then the perps should’ve done serious prison time. Make no mistake, we’re back in moral hazard land again and when the CRE and alt-arm loans start resetting (as they are now) we’ll be looking at Bailout 2.0.
Fact is, we overbuilt residential and CRE to an absurd extent and the values of most of these properties will NEVER recover to anything close to what was expected. This economy will continue worsening and by 2012 we’ll be in the iron grip of what trends seer Gerald Celente calls the “Greatest Depression.”
It's true that a lot of Americans played with fire when they bought houses they couldn't afford. The government, Bush, Clinton and Congress played a part in that.
Shouldn’t arsonists go to prison
You want to throw defaulting home buyers into prison?
This bailout/TARP/ Fed secret $$$ printing is a disaster.
Why?
All of the big banks should’ve been left to fail, the shareholders wiped out, and the buildings/assets/office equipment liquidated at a fire sale.
Because we know that would have occurred at zero cost to the taxpayer?
Then the perps should’ve done serious prison time.
What did the perps perp that deserves jail time?
Make no mistake, we’re back in moral hazard land again
Obviously banks are climbing all over each other to lend to deadbeat home buyers again.
and when the CRE and alt-arm loans start resetting
Because resetting when rates are at record lows is a bad thing.
For starters, there was that little problem of reducing the money supply just when liquidity was needed the most. But it did help ensure the election of FDR, so maybe it was intentional.
Just out of curiosity, are you really comfortable having a private, unaccountable group of bankers controlling our monetary system?
For starters, there was that little problem of reducing the money supply just when liquidity was needed the most. But it did help ensure the election of FDR, so maybe it was intentional.
Just out of curiosity, are you really comfortable having a private, unaccountable group of bankers controlling our monetary system?
So when the money supply shrank dramatically and thousands of banks failed, the Fed didn't loan to the banks to help keep their doors open? The Fed didn't provide new liquidity to counteract the liquidity drain caused by waves of bank failures?
Just out of curiosity, are you really comfortable having a private, unaccountable group of bankers controlling our monetary system?
Control our monetary system? What do you mean?
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