What was so great about the first one?
That means Obama is going to need a war to get us out of the next depression, and save his ass.
The article said — “Five months after the Smoot-Hawley tariffs, the unemployment rate hit double digits for the first time in the 1930s.”
We don’t have to have anything like Smoot-Hawley tariffs now — because the banking and financial system is doing the same thing that Smoot-Hawley did before. Look for the double digits unemployment to happen in 2009 and the Great Depression to take hold then...
bump
Barack Obama: Re-arranging deck chairs on the Titanic...
These government interventions are scaring the heck out of me. I have no doubt if it continues, there will be another great depression. Sadly, a great last line by Dr. Sowell.
In 1924, Calvin Coolidge’s son got a blister on his foot after playing on the White House tennis court without shoes and died after it became infected. The death took its toll on the President and he declined to run in 1928. If he had, I wonder if the depression may not have been “Great.” Coolidge never cared for Hoover’s interventionist tendencies much...”for six years that man has given me unsolicited advice—all of it bad.”
The difference between then and now is that america actually had manufacturing and a labor force then. Now we have trade deficits and undocumented workers and american owned factories all over the planet.
Why do we think Roosevelt's spending on the economy worsened the depression, but the war spending helped lift us out? What's the difference between spending on roads and spending on planes and bombs when they both create jobs and are paid for by the government? I'm under the impression that we weren't paid a lot of money by other countries even with lend/lease, etc, so wasn't the money coming out of our coffers?
I’m surprised Thomas Sowell would write an article on The Great Depression without mentioning the fact many now consider the most damaging of all: the Federal Reserve, through their tightening policies, shrunk the money supply by 30% over about three years. That led to many of the bank failures and a slow down of all aspects of the economy.
Bernanke is a big believer that the Fed mostly caused the GD, and, of course, now the approach is to “flood the streets with money” when a serious recession or depression is possible. That’s what happening now, though the toxic debt problem complicates things well beyond any recent recession.
Sowell makes good points, but leaves out the factor many now believe was the most damaging.
Ok, what are we going to do about it?
I think the only way to prevent major credit bubbles in the future is to set interest rates to no less than what is offered as return on widely available investment. As soon as money is cheaper than the returns in a widely available “investment” people borrow (leverage) themselves so they can “invest” more and when it goes wrong, it goes real wrong...
In this case cheap money was chasing ever increasing cost real estate. As more money flowed in the demand for more real estate increased, increasing the price of what was available. As the price rose it appeared to be providing high returns on the borrowed money and so more people jumped in to get their share while the getting was good.
Depression ping
Making money is the essence of human morality, but now the looter's credo is that making money is immoral. The result of this belief will be destruction, since if you do not use money as the basis for dealing with other human beings, the only other alternative is violence.
~Ayn Rand~ Frisco's wedding speech.
Thanks for posting the article.
Barack Obama already has his Herbert Hoover to blame for any and all disasters that his policies create: George W. Bush.
That fact screams out at me, too. FDR had one all-purpose get-out-of-jail-free card: blame Hoover. And Bush has allowed the Democrats to demonize him for 8 years without really standing up to their fatuous criticisms. Now with the financial meltdown it appears that they actually have something on him - even if it is actually the fault of Barney Frank, Chris Dodd, et al.
Obama will use adherence to his eco-religion as his Smoot-Hawley tariff act. Except I think it will be even more destructive to the economy.
The major problem with going thru a major economic depression today is that most inter-cities (Obamanistas) have no Idea what being civilized really means. (You see the truth of this statement each night on the evening news) We can expect these freeloader types to go progressively more nuts when the social services checks food stamps they get each month stop or inflation makes them all but worthless. Christmas 2009 may see these dregs Christmas shopping in our front room.