Screamin Scott Loc: Marshfield Wi, Baltimore Md, now Dallas Ga

Here is a link to a very informative analysis of the Great Depression & it's causes...
http://www.fee.org/articles/great-myths-of-the-great-depression/

And about comparing the Great Recession to the Great Depression

http://www.thefreemanonline.org/columns/our-economic-past/comparing-the-great-depression-to-the-great-recession/

jim charron Loc: Ontario Canada

Here's a myth,that it happened in the 50's

It actually happened in 2010-2012.

jim charron Loc: Ontario Canada

sorry 4 typo, depresson in the 20's.

ole sarg Loc: south florida

The depression started in 1929 and went to about 1938. If you don't know the dates of the depression after your correction it is hard to take you seriously.

ole sarg Loc: south florida

The depression started in 1929 and went to about 1938. If you don't know the dates of the depression after your correction it is hard to take you seriously.

HEART Loc: God's Country - COLORADO

Thanks, Scott. Lots to mull over. Appreciate the post.

gsrunyan Loc: Aurora, CO

I am trained as a historian and did a thesis on the Depression. I read through a lot of the cited works and they are not good history, just political polemics.

1) The Depression began in 1926 with the collapse of agricultural prices and land values.

2) Small banks began to fail as farmers failed.

3) The stock market fall began in 1928 and the crashes came in 1929. Half of the decline in the Dow-Jones had been recouped by 1930.

4) Unemployment peaked much higher than though: the Government stopped counting at 25%.

5) Much of the breakdown was due to structural weakness in the system: for example, amortizing mortgages didn't come about until after WWII.

6) The Federal Reserve did not put on the breaks until 1938 because it feared inflation as prices improved as economic activity improved.

7)Congress raised tariffs, not the President, and it was done in response to tariff increases in Europe.

8) Milton Friedman was proposing a counter theory to Keysian economics, that monetary policy was the greatest influence on growth.

I could point out more errors but I don't think most of you will listen.

ole sarg Loc: south florida

A good supply side interpretation of events. Of course the supply siders fail to mention that it was their policies that got us into this mess.

I think the analysis provided is rather narrow and uninformed. By the way I teach this stuff at the university level.

Much of the debate is did the new deal work.

I think this has to be addressed in both economic and political terms.

Europe reacted to the Depression with communism, fascism, Nazism and totalitarianism. Of the big powers only Great Britain and to a certain extent France preserved democracy and capitalism.

FDR knew what was happening in Europe and his New Deal was designed to preserve capitalism and democracy. He realized the need for a social net and created SS to provide for it. He put people to work through things like the CCC, NRA, etc.

For the economic success see:

http://money.usnews.com/money/business-economy/articles/2008/04/11/did-the-new-deal-work?page


Here is another and much more complete set of reasons for the Great Depression:

1. Stock Market Crash of 1929
Many believe erroneously that the stock market crash that occurred on Black Tuesday, October 29, 1929 is one and the same with the Great Depression. In fact, it was one of the major causes that led to the Great Depression. Two months after the original crash in October, stockholders had lost more than $40 billion dollars. Even though the stock market began to regain some of its losses, by the end of 1930, it just was not enough and America truly entered what is called the Great Depression.

2. Bank Failures
Throughout the 1930s over 9,000 banks failed. Bank deposits were uninsured and thus as banks failed people simply lost their savings. Surviving banks, unsure of the economic situation and concerned for their own survival, stopped being as willing to create new loans. This exacerbated the situation leading to less and less expenditures.

3. Reduction in Purchasing Across the Board
With the stock market crash and the fears of further economic woes, individuals from all classes stopped purchasing items. This then led to a reduction in the number of items produced and thus a reduction in the workforce. As people lost their jobs, they were unable to keep up with paying for items they had bought through installment plans and their items were repossessed. More and more inventory began to accumulate. The unemployment rate rose above 25% which meant, of course, even less spending to help alleviate the economic situation.

4. American Economic Policy with Europe
As businesses began failing, the government created the Smoot-Hawley Tariff in 1930 to help protect American companies. This charged a high tax for imports thereby leading to less trade between America and foreign countries along with some economic retaliation.

5. Drought Conditions
While not a direct cause of the Great Depression, the drought that occurred in the Mississippi Valley in 1930 was of such proportions that many could not even pay their taxes or other debts and had to sell their farms for no profit to themselves. The area was nicknamed "The Dust Bowl." This was the topic of John Steinbeck's The Grapes of Wrath.

I would add the following. between the end of WWI and 1921 the nation shifted from being an agricultural economy to an industrial one. Prior to WWI some 80 percent of labor worked on the farm and as industrialization took hold only 20% were needed on the farm. Many of those who came from the farm were not equipped to work in a factory. Thus, endemic unemployment became a problem. Something that is happening now. Many of those in our labor force are not equipped to work in biotechnology, silicon valley type industries, etc.

for an analysis of the FDR response see:

http://www.nytimes.com/2008/09/18/business/worldbusiness/18iht-strategy.4.16288248.html?_r=1&pagewanted=all

Also see:

http://lachlan.bluehaze.com.au/books/galbraith_1929crash.html

Danilo Loc: Las Vegas

Thanks for posting this, Scott. It took me a long time to get through it, but I didn't want to hurry. Could we have the wrong people writing our history...? Can't be; I learned it in school!

HEART Loc: God's Country - COLORADO

Regardless of the history, what has been learned in the present economy? What can/should be done? No politics, please.

ole sarg Loc: south florida

What can should be done?

1. Accept the fact that we will have endemic unemployment in the 8% range. We have an unskilled labor force that numbers that many, are middle age, and cannot compete for waiters jobs or retail sales jobs.

2. Invest in our children by infusing money into the education system. Reinstitute courses in history, civics, introduction to business, art & music (these teach one think creatively) make algebra/trig a requirement to graduate, and literature it gives an insight into the minds of people etc.

3. Invest in infrastructure build bridges, roads, public buildings if needed and or rehab old ones. This will create at least 1 million jobs.

4. Increase R&D budgets for prim research - only with an understanding of the basic science of things can applied technology emerge.

5. Create free trade zones in both the port cities and in the interior of the nation.

6. There are lots of old regs on the books that are no longer needed and they should be done away with and ones that are needed put in place.

7. Get rid of the causes of divisive issues like immigration and the war on drugs. More businesses are started by immigrants than by any other group.

8. Get realistic about the military.

9. Reform the tax system, but keep a progressive system. Like it or not everyone uses the infrastructure of the nation and those who have profited most from it, should be willing to pay a bit more. Without a middle class market we have nothing.

10. Remain skeptical but acknowledge that there is a need for government and a need to help those less fortunate than others. It is the basis of our culture.

That is for starters. I am sure others have ideas too.

Blurryeyed Loc: NC Mountains.

Hmmm... You know sarg... this could be the beginning of a good discussion, but I am too tired for political a dialogue at the moment, but will come back to this when I am more in the mood.. I actually like many of your bullet points, and would love to discuss them hear more about them.

I have been reading posts here over the last several days and they turned so sour and silly that I did not care to engage.. but this looks like a good topic and post..

ole sarg Loc: south florida

Did you get the rains today?

Hot and muggy down here. The dog doesn't even want to go out

ole sarg Loc: south florida

Did you get the rains today?

Hot and muggy down here. The dog doesn't even want to go out

Blurryeyed Loc: NC Mountains.

Really pretty all day, until now the storms are building... It was hot but blue skies and light winds... We are currently under a Sever Weather Warning... but we get those almost daily as the storms roll in, I am probably 5 or 6 miles from the coast.