Turns out stock prices are trending down; employment is trending down; there are no profits; GDP is declining; Fed can't get the capital formation economy going again even with the lowest interest rates of the century.
Seems to me these guys are simply wrong.
On the narrow issue of what happened in the 1920's and 1930's, we are dealing with a politically contentious set of issues. Those of us who have studied the question without a predetermined bias to the outcome have generally concluded that the fed created a bubble in the 1920's with an oversupply of liquidity much of which wound up in the stock market through margin debt; all in a similar setting as the 90's with an expectable result in 2000 not unlike the result in the 1930's. Still think that.
Don't know of any good scholars with any good evidence in support of the "short liquidity" defense--what do you think the data is that constitutes evidence in support of this position? I don't think there is any.
As to Dr. Greenspan, I still view him as best known for his assurance to Gerry Ford in 1974 that he (Span) could jawbone inflation down ("Whip Inflation Now") far enough to get Ford elected in 1976--which also proved wrong. History will judge the effectiveness of his term at the Fed because the evidence is going to be much fresher in the historical record than the data in defense of the 1930 Fed.
However his policies so far don't show any sign of success. They look like the same policies the Japanese have been pursuing for the last 12 years with absolutely no success. I expect the same results here.
This preumes that a) you don't have a "predetermined bias" (certainly not apparent from your posts) and b) that the scholars do. Yet KNOWING as I do some of these scholars, who are from a wide variety of ideological and methodological backgrounds, that is purely false and conceptually stupid. The ones I know personally are genuine geniuses, and I certainly trust their judgment more than anyone whose posts I have read on FR.
Likewise, the more recent studies MIGHT be "proven wrong" if we stop today (although already the markets are coming back--I know, I know, some giant phoney liquidity bubble). But we don't stop today. Things could be just as different in two years as they are today from five years ago. When you use trend lines, the magic is all in where you start, and where you end.
I'll say again: there is no reputable scholar since Keynes and Galbraith who argue for a "liquidity bubble" in the 1920s. I'll say again: your positions, whether you desire it to or not, place you suspiciously in line with the liberal wing of economists in the Democratic Party.
Need I really post price data for the 1920s to show the lack of inflation, the absence of a growing money supply? Or will you explain that away also?