Thanks for a reasoned response. I guess we will not agree on Keynsian economics b/c I think he was a hack and I know an admirer of Stalin's Russia.
As far as the 30s what caused them was the excess of the 20s. Just like other crashes such as the South Sea Bubble it takes time to work off. Interventionists seem to think adjustment periods should be eliminated but when we interfere we either make the adjustment period last longer or we build up the bubble even more (like the tech bubble under Clinton and the housing bubble now).
I would lay the blame far more on Greenspan kept on spiking the punch bowl with liquidity. Only this insane world would actually give him a knighthood.
I think the whole world wanted the game to continue and pretend it could go on forever with no consequence.
I believe the US Dollar is still under support. It is being supported more by Europe and Japan who do not want to lose their trade advantage they had with a strong dollar. Whether the US steps in the give support as well is hard to prove.
Favouritism I guess was my problem with airline, steel and farm bailouts. Airlines cried 911 bankrupted them. But who runs a business that can't endure 3 months of unusually slow sales? Why didn't Bob's camera shop 1 block from the towers get bailout money? GM and Ford get bail out money for the promise to not cut jobs, and they go ahead and cut jobs anyways.
It would be quite the scandal if what you said could be proven true - that dot coms were bribing Clinton to keep the party going.
"It would be quite the scandal if what you said could be proven true - that dot coms were bribing Clinton to keep the party going."
It would be interesting to know the conversations between Rubin and the dot commies in 1999-2000, because I feel sure he knew very well that a bubble was forming. But there doesn't have to be a conspiracy to make my observation right. Let's just say that the dot commies supported Clinton because his policies were good for them. Just as the farmers supported Dole because his policies were good for them.
Greenspan certainly was not part of this game. He blasted the "irrational exhuberance" right as the bubble began to form in 1996 (IIRC). He could only have killed the bubble through massively jacking up interest rates, and, in the absence of inflation that was not part of his mandate. Similar to the 1920's the strong currency actually kept a whiff of deflation in the air. Jacking up interest rates would have made the dollar soar, compounding the problem.
The right medicine was a corrective in fiscal policy (slashing taxes, creating a fiscal deficit and driving the dollar down).
By the way, I think the Bush team's economic management has been supurb. The stock market decline was deep enough to get rid of the crazy valuations and excesses, but not so fast as to destroy confidence. The decline in the dollar has been steady but measured. The damage to the real economy from popping this bubble has been so small as to be almost miraculous. A correction is a proper event in a market economy, to get rid of excesses, and that is what we have had. A DEPRESSION, on the other hand, is an altogether bad thing were matters spiral downward out of control and damages the real economy.