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Originally Posted by rubecube
I guess we should forget that reliance on the gold standard was a major factor in the Great Depression, or that it flies straight in the face of Keynesian economics. |
The easy credit promoted of the "Roaring 20s" flew in the face of the gold standard.
Not that I like to quote Wikipedia as a source, this does summarize the situation:
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In 1920–1921 there was an acute recession, followed by the sustained recovery throughout the 1920s. The Federal Reserve expanded credit, by setting below market interest rates and low reserve requirements that favored big banks, and the money supply actually increased by about 60% during the time following the recession. By the latter part of the decade "buying on margin" entered the American vocabulary as more and more Americans over-extended themselves to speculate on the soaring stock market and expanding credit. Very few expected the crash that began in 1929, and none suspected it would be so drastic or so prolonged.
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Sound familiar? If you think that depression was big, you ain't seen nothing yet.... We are living through the exact same thing right now.
Thanks to Keynesian economics, ever increasing bubbles have and will develop. The Nasdaq bubble/crash, the recent housing bubble/crash and the soon to come US dollar crash from its current bubble.
Just because Keynesian economics has been the recent flavour of academics and has been pushed onto students for decades, does NOT mean it is correct.
When one looks at the whole picture, our current welfare/warfare culture is driven by that type of monetary policy, and it is propelling us to the edge of a financial cliff rapidly.