Why You’ve Never Heard of the Great Depression of 1920 | Thomas E. Woods, Jr.
Presented by Thomas E. Woods, Jr., at “The Great Depression: What We Can Learn From It Today,” the Mises Circle in Colorado; sponsored by Limited Government Forum of Colorado Springs and hosted by the Ludwig von Mises Institute. Recorded Saturday, 4 April 2009.
Tags: Thomas, Woods, Heard, Never, Depression, 1920
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@acefabo no i really think bernanke is doing the right thing. How could this economy function with high rates? If we had a interest rate of 10% how much would the interest on the national debt be? Probably a trillion dollars a year. Where are we going to get that money? The tax revenues are only about 2 trillion. I think low rates are the way to go. Raising rates would be a killer to this fragile ecoonomy
@fasteddie847 The problems associated with the bust occurred because of the artificial lowering of interest rates by the Federal Reserve. This in turn created a series of huge malinvestments that must be liquidated. Higher interest rates are necessary in order for this process to occur. Without said correction, one might eventually experience mass or perhaps even hyperinflation if low interest rates are artificially held down by fiat.
@fasteddie847 You’re kidding, right? Were u paying attention? I may go bankrupt if they tightened up credit/interest rates as was done in 1982, but the whole reason I got myself in so much debt in the first place was because the artificially low interests took away all my incentive to SAVE, and instead consume. That is Woods’ whole point, you can’t just have a guy sitting on a throne somewhere issuing decrees of what interest rates will be. In the long run, there’ll be bad consequences.
austrian economy is superior
@fasteddie847 Im assuming sarcasm?
hello
Yeah but what this guy is saying doesn’t make sense to me. I like the idea of interest rates being low. I like the idea of free easy loose money. Fuck what’s wrong with that? If this guy had his way interest rates would be very high. How could this economy function with high interest rates? If we had a interest rate of 10% how could anyone live or survive. If we did what this guy said it would plunge us into another great depression. I think Bernanke is doing the right thing
Well the demand created by the governments is “real”
I think that is being missed by the speaker here.
It is a completely different argument as the rights or wrongs of this demand.
So i think he has rolled two completely different arguments into one.
To simplify my point.
If a government department orders 100 boxes of pens, this is real demand.
If the army orders 100 boxes of ammunition, this is real demand.
Peter
@chrissimms So you are saying that if the government were smaller we’d have less problems? Yet you are probably opposed to small government, huh?
@OttoPaert My friend is in serious debt OttoPaert, what should he do? I told him to spend more money, but it just made it worse. Another friend said he just needed to cut spending and save money but that would NEVER work, right? Right?
@darkreign16 Go fuck yourself.
@OttoPaert Yes, you are.
Try learning about REAL economics, not this stupid snake oil.
@chrissimms maybe we need to shrink government back down to 3% for real recovery, which happened in 1922, to happen today =)
This guy is a fucking moron.
Tom Woods rules!
My god, what a wanker.
I wonder why he doesn’t address the biggest flaw in his argument — in 1920, the federal government was tiny (perhaps 3% of the GDP) and therefore changes in federal spending would have a small affect on the economy.
@LordAgonis @LordAgonis In fact, I’ll save you the trouble. Here’s a graph of the monetary base. As you can see, the decline was not reversed until bottom was reached in 1922, by which time the NBER says the depression was already long over.
tinyurl dot com/3ae8rmw
@LordAgonis No, you are mistaken. Rothbard focuses on 1924 and 1927-28. Joseph Schumpeter says this episode alone proves the economy is self-correcting without interventionist policies, so he likewise views the Fed’s role as trivial in this case. And by all means check out the data at the St. Louis Fed. It does not support what you are saying.
@LibertyWins2012
I am disappointed that you would make a text-book fallacous arguement and appeal to some sort of authority. The Fed purchased all the bonds and securities it needed during the height of the short 1921 Depression, as their records cross-examined with history indicate, and these operations were what blew up the bubble and caused the Stock Market Crash and Ultimately the Great Depression.
@brown55061
as a matter of fact, the Open Market OIperations that they engaged in to recover from this crisis is what inflated the bubble in the 1920’s that led to the Stock Market Crash and and Great Depression, Read Rothbard’s “America’s Great Depression”, theres a chapter on how the Bubble got blown up. Go the the Fed’s website and look through their records and you’ll see all the securities/bonds they bought.
@LordAgonis
Okay, so you will just call out someone over a technicality? What his point stressed was not error. People need to stop looking for reasons to discredit and worry more about the big picture and actually focus on how you can help. The only thing pessimists win is a pitty party.
@LordAgonis Your comment is based on an incorrect premise. According to the NBER, the economy had already recovered by the time the Fed engaged in any open-market operations in this case. I am disappointed that you would accuse Mr. Woods of being wrong without first researching your claims. So I guess we are both disappointed.
Mister Woods, you are wrong. You chose the first time that the Fed used Open Market Operations–their trial run, if you will, so it wasn’t exactly a free-market recovery. You should have looked at the recovery from the 1837 crash or another free market recovery. I’m very disappointed that you would choose the very first time they used Open Market Operations.