On Tue, 14 Jul 2009 19:20:37 GMT, Richard the Dreaded Libertarian
wrote:
snip
Try taking Santayana's advice, why don't you? In the 1920s the "fedgov"
kept
completely out of American biz. The result was the Great Depression.
snip
Check your facts. This is another myth. While the banks and
brokerages had minimal domestic regulation at this time, the
major portion of the depression as opposed to the stock market
break/collapse in 1929 was the direct result of "FedGov" playing
financial games to help the major banking houses recoup the loans
they had made to the Allies in WW1.

There were two distinct and separate phases to this disaster.

(1) The Stock market crash, which as you note was in the process
of correction, and mainly resulted in the loss of "paper
profits."

and

(2) The big one which was the collapse of the international
banking system began when the UK had to abandon the gold
standard, and as the Sterling was *THE* global reserve currency
at that time, crashed the other central banks. The global
economy at that time appears to have been a house of cards built
on German war reparations, and the huge internal/external debts
run up to fight WW1 by all combatants. See the Dawes and Young
plans for how this "debt" was first monetized and then used to
drive a "magic money machine" before it exploded taking down the
banks globally, much as the current Credit Default Swaps and
other derivatives just did.
http://en.wikipedia.org/wiki/Dawes_Plan
http://www.u-s-history.com/pages/h1371.html
http://en.wikipedia.org/wiki/Young_Plan

The FedGov was deeply involved in phase 2, as the U.S. banks and
brokerages were making enormous profits from their international
operations such as lending Germany money at high rates so she
could pay war reparations to the Allies, who in turn could then
repay their war loans to the same U.S. banks and brokerages. US
companies were also deeply involved in the governmental finance
of Latin/South America with the assistance of the FedGov. Almost
all of this money was lost when the global economy collapsed, but
by this time most of the bonds and other obligations had been
unloaded on the widows, orphans and other trusting small
investors. [sound familiar?]



Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).