Milton Friedman explains the role of gold in the
Great Depression.
Note: I absolutely DON'T agree with the
theory of Keynes (an British government bureaucrat in those days) nor the theory
of Milton Friedman but the video clip is reasonably good. Therefore the video
clip should be looked at only out of a historic point of view.
Few people that actually
experienced the great depression are still alive. Only months ago, I talked to a
lovely old lady running an antique shop in Vero Beach, Florida. She remembers it
all to well and she knows better. She explained to me that often she and her
daughter had arguments about the way people are living today and she feels sad
because her daughter doesn’t seem to understand nor wants to admit what is about to
happen.
It is a pity that today's youth but
also the generation that was born after the Great Depression like the baby
boomers are still in a stadium of denial. The situation makes me think of
Galbraith's book: "The age of uncertainty" where the writer describes the three
generation cycles .
________
The US economy had
experienced rapid economic growth and financial excess in the late 1920s, and
initially the economic downturn was seen as simply part of the boom-bust-boom
cycle. Unexpectedly, however, output
continued to fall for three and a half years, by which time half of the
population was in desperate circumstances (map1). It also became clear
that there had been serious over-production in agriculture, leading to falling
prices and a rising debt among farmers. At the same time there was a
major banking crisis, including the "Wall Street Crash" in October 1929. The
situation was aggravated by serious policy mistakes of the Federal Reserve
Board, which led to a fall in money supply and further contraction of the
economy.
Agricultural marketing act:The Act was not beneficial; as the inflation
ran deeper than the value of the money, the real value of the half a billion
dollar fund started sinking and the losses of the farmers were getting bigger
and bigger.
(15 June 1929)
This law created an eight-member federal farm board. The board promoted
organization of agricultural cooperatives that could stabilize farm prices. The
cooperatives could win voluntary agreement from farmers to reduce commodity
surpluses by reducing land under cultivation, or they could purchase large
amounts of commodities and hold them from sale until market prices rose. The sum
of $500,000,000 was appropriated to loan to cooperatives for such purposes. In
1930 the Federal Farm Board set up its own marketing cooperatives to buy and
hold cotton, grains, and wool. By 1931 the US was holding large amounts of these
commodities, which could not be sold without large losses, but had failed to
halt the steady decline in crop prices because it could not prevent
overproduction by the majority of farmers, since the act's crop-limitation
programs were entirely voluntary.
___________
Here
is another testimony of an old WWII veteran:
You ain't seen nothing yet".
Born in 1922 I remember the `Great Depression` vividly. It has shaped my entire
life. I lived in a small local shop located about one mile from a large
shipyard.
In 1929 everyone was unemployed
without any cash or sustenance. However no-one had personal debt. There were no
robberies because no-one had anything worth stealing, That depression lasted
until 1937 when rearmament became necessary. Apart from our first house
purchased in 1950 I have never had any loans or personal debt. Today I see
similarities except that most people have huge personal debt I hate being a
pessimist but can visualize the coming depression to last for many years or
cumulating into WW3. I just hope that my predictions are incorrect. I was born
in a depression and guess that I am to die in a depression. Sad!
I could write so much about this subject but will spare readers such doom and
gloom.
+1
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