The 7 Stage Pattern That Destroyed 89% of Wealth in 1929 -- We Are Now at Stage 5

YouTube ^ | November 5, 2025 | Economy Rewind

[Whatever Works]

This is a pretty good review of economic crashes.

[central_va]

Did you not watch the video? Smoot Hawley had nothing to do with the crash or the depression, get it? Tariffs did cause the GD.

[RckyRaCoCo]

Could have just stopped at “the Federal Reserve was created”...

[Rockingham]

Quite true, but the Fed did not operate in a vacuum. Hoover was consulted, and in a sulk due to his defeat by Roosevelt, declined to back the Fed acting as the lender of last resort. FDR was also consulted and, believing that a trap was being set for him, also declined to endorse action by the Fed.

The ill effects of this long and confused interregnum led to the constitutional revision that moved the date of the Presidential inauguration from March 4 to January 20.

[Maine Mariner]

Excellent observations.

Also the untimely death of Benjamin Strong, the head of the New York Fed, may have been a major factor in the Great Depression become Great.

[sauropod]

.

[volare737]

Agreed. Smoot-Hawley was passed after the market crash.

[Fiji Hill]

I thought the whole problem was Smoot Hawley!

The Tariff Bill Song--Al Craver [Vernon Dalhart] (1930)

[Fiji Hill]

The Cascade (1930-1932): The crash triggered cascading failures across the entire system.

Ballyhoo--Phil Spitalny's Music (1931)
The world's in the red; we're better off dead.
Depression, they say, is in session to stay.

The Panic Is On!--Hezekiah Jenkins (1931)

[Soul of the South]

“Smoot/Hawley certain reduced our imports, unfortunately it reduced our exports even more.”

Smoot became law in June 2030, 8 months after the 1929 stock market crash. At the time foreign trade, represented 5% of US GDP, almost equally divided between imports and exports. So import trade was 2.5% of the entire economy. Duties placed on 2.5% of GDP did not cause or contribute significantly to the Depression. The agriculture sector of the US economy was already in a severe recession at the time of the stock market crash. The market crash then decimated the financial industry plus resulted in the collapse of consumer confidence.

With consumers not spending, retailer sales and manufacturing production dropped 47%. Even if 100% of manufacturing exports had been lost to Smoot (they were not) it was the collapse of demand in the domestic economy that created the Great Depression.

[Raycpa]

A system. Next up the roulette wheel.

[KamperKen]

“I didn’t watch the video, but stock prices fell back to reality in 1929.”

The stock market had regained virtually all of its losses a year later. The straw that broke the camel’s back was a retroactive income tax passed in 1932 on the 1931 incomes. The top marginal rate went from 25% to 63% and the depression ensued.

[ConservativeMind]

Smoot Hawley was nothing but tariffs, but you say tariffs didn’t cause the Great Depression, but also tariffs did cause the Great Depression?

That makes no sense.

[Snowybear]

Someone literally fed this crap into ChatGPT or Grok and the AI tried to lay out the scenario as best it could. The two eras cannot be compared. Note in the description, “(Optimized for Algorithm & Engagement)”.

The voice isn’t real either.

-SB

[KarlInOhio]

We Are Now at Stage 5

Stage 4 - Peak Valuations & New Era Thinking (September 3, 1929)

Stage 5 - The Crack (October 24-29, 1929):

You can only know you've hit a peak in retrospect. The way up to a new high is a trail of old highs and if you ran at every one of those you would be a lot poorer.

[Rockingham]

Economic historians nowadays tend to see the Great Depression as due to inflation and too easy credit in the 1920s, a policy pushed by Benjamin Strong through low interest rates. This was followed by the stock market crash, a collapse of bank credit, and a hard recession made especially severe due to debilitating monetary deflation and bank failures.

Just as a recovery began, a second recession followed though due to the burdens of the New Deal regulatory enactments and FDR's policies. The US finally recovered due to the mobilization for WW II.

Strong is a disfavored figure for Austrian school economists. In the 1920s, in a period of declining prices due to post WW I demobilization and innovations in technology and manufacturing, Strong was a major advocate for price stability. In policy terms, this meant meant spurring inflation through low interest rates and credit expansion.

In the reckoning of the Austrian school, the inevitable result of such policies is poor lending decisions and a cascade of bad loans and business failures as money and credit exceed what the economy can properly absorb and put to good purpose. This seems correct to me, and I have lived through enough economic cycles to look for signs of excessive credit and lending as indicating that a downturn will soon ensue.

[DoodleBob]

Federal Assets Above and Below Ground (worth more than all of the outstanding Treasury securities)

Institute for Energy Research ^ | JANUARY 17, 2013 | N/A

IER estimated the worth of the government’s oil and gas technically recoverable resources to the economy to be $128 trillion, about 8 times our national debt...IER estimated the government’s coal resources in the lower 48 states to be worth $22.5 trillion for a total worth to the economy of fossil fuels on federal lands of $150.5 trillion, over 9 times our national debt. Most of the coal resources in Alaska are deemed to be federally owned and are estimated to be 60 percent higher than those in the entire lower 48 states but are not included in these estimates.

https://freerepublic.com/focus/f-chat/3944410/posts

[central_va]

I ment to say:

“Tariffs did NOT cause the GD”

Fixed it.

[TBP]

It is and was deliberate.