Prof. Antony Davies: 7 MYTHS You Learned in High School About the GREAT DEPRESSION
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- เผยแพร่เมื่อ 13 มิ.ย. 2024
- If you went to high school in America, you were told a lot of things about the Great Depression. Those things were probably wrong. (And they were based on a poor or nonexistent understanding of economics.)
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In this video, long-time Learn Liberty favorite, Professor Antony Davies of Duquesne University, debunks 7 of the most common myths that are taught in American high schools and universities. To do so, he relies on well-researched data, his career as an educator, and a lifetime of studying economics.
Are there any important myths we should cover in a future video? Chime in below in the comments!
CHAPTERS:
0:00 Introduction
0:18 Myth #1: The Great Depression began with the stock market crash of October 1929.
4:16 Myth #2. President Herbert Hoover's laissez-faire economic policies caused the Depression.
10:39 Myth #3: The Great Depression was a global crisis.
13:18 Myth #4: By joining countries in a fixed currency exchange, the Gold Standard made the Depression spread throughout the world. (via history.com)
14:39 Myth #5: Bank mismanagement and profiteering were responsible for insolvency and bank runs.
19:14 Myth #6: The Only Thing, as FDR Said, We Had to Fear Was Fear Itself.
20:42 Myth #7: World War II ended the Great Depression.
21:24 Summary: The 5 Things that Caused the Great Depression.
#GreatDepression #FDR #stockmarket #GoldStandard #centralbanks
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Interesting how a government can destroy a economy but never seem to lose money personally.
How many politicians lost money money in the Great Depression?
More than a few.
Just like today, if you have a large amount of your savings invested in stock and stock prices fall, you lose value. However, to fully understand it we have to remember these are unrealized losses. You only actually feel them if you sell the stock at the lower price. If you're poor and need money, you have to eat the loss to get money. If you're a poor gambler and you panic and sell, you eat the loss. But if you're very wealthy and have more than enough to live on, you leave the money where it is knowing that it'll eventually recover, and you might even start buying high value low cost stock at a bargain basement price. I have no doubt that insider trading and predatory stock trading was going on among the very wealthy, but as the professor said, a few months' decline wiped out 30 years' worth of value. Everyone lost on that.
probably alot most polticians are getting rich by knowing what companies will be effected by the policys going threw congress. theres litteraly a whole reddit following exactally which stock buys nancy pelosi is making. people have been getting rich by following it.
@@zachemorgan I’m not so sure the politicians of the 20’s were the same as today. A lot of them were old money, and they likely lost wealth because their family businesses lost money.
They got richer. as always.
I don't remember even learning about the Great Depression in high school, but I learned a lot about it from my grandparents who lived through it
This. It was not covered in any great detail. But my grandma and grandpa were little kids when it went down and they still spoke about it even after I came along.
The country was so poor I remember my father saying,, no one even had a football.. So they made one out of old newspaper wrapped with hay bailing wire
You didn't learn it so you won't recognize it's return. Which is now. We are headed for a depression that will dwarf the previous one.
All the policies of our government are geared to destroy this nation. I don't know why or what the end goal is, but nothing being put into law helps individuals live good lives. They ALL make a very few richer and more powerful. All while giving China most of our money - which is the worst thing we should be doing. China wants to take over the world. And need to take out first America to do it. The Soviet's fell because they couldn't afford the game anymore. Soon this will happen here in the US unless some drastic changes are made and we balance the trade deficit and start manufacturing things again.
My kids get taught about MLK about once a week and have never heard of the Great Depression.
Me too ! I remember my grandmother talking about just how hard times were ! Grandfather got a Goverment job , it was like winning the lottery at the time .
Mith 1: it was caused by capitalism
Mith 2: the govt saved everyone
It was definitely caused by capitalism.
Economic crisis is inevitable under capitalism.
@@cat_city2009 yep, capitalism is when govt prints lot of money and inflates the market til it pops.
@@alanhoff89
Well yeah, that's one form of it.
Otherwise you're just saying "It wasn't REAL capitalism".
@@cat_city2009 hmmm central planning, I knew it smelt like capitalism
@@alanhoff89
The state controlling monetary policy is not central planning lol.
The highly idealized version of capitalism you advocate for has never existed, nor can it exist.
FDR also allowed high taxes and lots of new government regulation to dampen the business environment. He created the big socialist state we now have growing, and growing, and growing.
And now Joe Biden and crew are distorting the energy market by regulating dependable energy to death, and pouring money into intermittent supply (wind, solar). Energy is the base economic unit, which is becoming more expensive and unreliable. Aaaaand we still have the socialist state you mentioned. It’s like loading up the trailer with a bunch of useless cargo and using a very expensive tractor to haul it - that only works 1/3 of the time. 😑
The funny thing is that, even with so much government regulation, we still have corporations so massive that any threat to them is squashed. Nobody in government has enough votes to stand up to them. Economic power is centralizing to just a few large companies. Walmart and Amazon alone dominate 1.5% of the U.S. Labor Force, and the revenue of Amazon by itself is equal to roughly 1.9% of the total U.S. GDP. If you think anybody in government would ever try to wrestle that kind of power away from Amazon or Walmart, you’re crazy. Not just crazy, but “Cuckoo for Cocoa Puffs!” crazy.
@@josephhoward4697 That's a feature, not a bug. Those regulations typically hurt small businesses infinitely more than big businesses. Just look at minimum wage hikes as an example. Big businesses can just lay off people until prices rebalance. Small businesses have to raise prices immediately which drives away customers. If they do lay off employees then the few left wind up overworked until they eventually quit. Every time minimum wage goes up small businesses close and millions of low wage employees lose their jobs at least temporarily. But the big businesses lay off employees, cut benefits, and keep going like nothing happened.
@@josephhoward4697 I call that " window licking crazy." From a guy at work who lost it one day and while in the police car was licking the window of the cruiser. I don't want to know what that tasted like.
@@josephhoward4697 And the solution is?
Politicians ALWAYS destroy under the guise of "helping the people ".
I tend to blame Plankton for all economic downturns.
Dinkleberg…
"I tend to blame Plankton" That's what the Federal Reserve and the Federal Government want us to believe!
@Emplemon strikes again!
Wayne Jett "The fruits of graft" went into detail on FDR and his ilk and how badly they damaged USA it was a great history lesson
Heard of the Grapes of wrath.
FDR's Raw Deal
Why?
In Latin America we have a colossal amount of natural resources, copper, oil, rubber, sugar, cocoa, coffee, wheat, corn, everything in unimaginable quantities, but that does not benefit the citizens in the least, quite the opposite, that is It is because we do not have a free economy, in all countries the idea prevails that the government must have control of the economy to favor the poor, as a result we have a capitalism of compadres, the government of the day has a monopoly of the natural resources, grants privileges to certain entrepreneurs and deliberately harms others, the success of a company does not depend on its efficiency, it depends on political contacts.
Yep, that's crony capitalism. Not as bad as communism but certainly an undesirable and unjust system... Also probably one of the most common economic forms in history.
Edit: We are well on our way to crony capitalism here in the USA. It seems like everything is being gobbled up by gigantic corporations with close ties to the government.
In America we have the securities and exchange commission And it’s a revolving door they always leave to work for the same banks and companies they were regulating for better jobs while suing said companies and banks competition while in office Same shit different country
My high school great depression education: "buying on margin." Accurate, but incomplete, it seems.
I'd guesse it was the same as it is now. It was done on purpose so they could roll out "the new deal" now they call it "the green new deal" its all just a power grab! Not everything that is the old way was a worse way 😀
Yes. When the Federal Reserve printed free money it went to the banks. Banks tend to make risks and loan it for more money. Stocks could be purchased with 10% down in the 1920s! So if it doubles in price you get a 1 to 10 discount. At the crash the banks are left with worthless stocks
Maybe the whole point was to destroy all the small banks. A newly established central bank does not want or need competition. Banks are permitted to establish monopolies and exempt from anti-trust laws. One bank makes the rules for all the money in existence. One bank sets the interest rates, whom may be eligible for a loan, how much one can borrow, what qualifies for collateral, duration of a loan. When enough regulations are imposed on everyone. When your only choice is comply. You no longer may act independently. Most of the world has only one bank. The same bank you choose to use, because they all coordinate their actions together.
My grandfather was a Forman during the depression at Eastman Kodak. He worked 3rd shift his whole life. At that time Kodak built homes for there workers. I remember him telling me his home cost $1500.00 at that time. They took money from his paycheck each week. He raised a family in that home. It's still there. It's nice. Lots of great times visiting each week growing up. Wonderful people. Times have changed.
Inflation.
At 56. I see it every ten years.
I can make up to 35n hr. Seems great. Actually itbsucks.
Especially when inwas making 400 a week in 85 as a waiter.
Whats the issue here?
We had a depression in 1921 as well... There was no intervention and the market shook it off within 16 months.
Having a Central Bank was one of our greatest mistakes as a free nation. 109 years of pure distortion.
Can't have the population in control of their own money, that might lead to something catastrophic like a free market with fluctuations.
Thank you Warren G. Harding
One of the most underrated presidents in US history
@@person3070 It's amazing how well things can work out if one doesn't intervene.
@@JM-kq4le
I do have a question though.
The video stated that crisis was averted during the Stock Market Crash of 1987 because the Federal Reserve expanded the money supply
Seeing as though the Fed seemingly saved the day, why should we get rid of it?
I remember the press panicking about the '87 crash. It seems that the panic didn't last very long.
Nice presentation! That being said, he needs to change his bank example. Loans are now created out of thin air and based on the assets put down on the loan, not anyone's savings. That is why they no longer offer competitive rates on any monies held in the bank... your savings/checking is irrelevant to the bank thanks to corrupt new banking laws/policies/etc granted by our corrupt politicians.
As Dr. Ron Paul says: End the Fed!
I’m in agreement. However, if wise agreements aren’t made ; another one will replace it. Financial criminals are very determined to control their investment which is the USA
Most probably do not understand that simply shutting down the Federal Reserve would not be sufficient to end these economic problems. This would still leave a legal basis for the government to run the management of money, and therefore, our economy would still be at the mercy of the worst sort of people who would gladly grow money supply without restraint, only it would not be the nasty "Fed". There were quite a large number of economic disasters which occurred before the Fed was even created or even imagined. Look at the 1800's.
My Great Grandmother who lived through this time as she was born in 1919. Said that their life wasn't affected much by the great depression since there wasn't much money to go around in rural Idaho. The only story that I think that took place then was when her house burned to the ground on April fools day.
April Fools pranks were so much more savage back then!
@@ska4dragons Apparently the fire department didn't even bother to show up until it was to late. The full story of it was my Great Grandmother's little brother was up early to light the wood stove which heated the house. He forgot to put the lid back on bottle of oil when he lit the match and the fumes from the bottle of oil caught fire and it exploded. My Great Grandmother's Grandmother was sleeping downstairs on a cot as she was visiting, she awoke to find her grandson on fire and she put him out with her blanket. She unfortunately got severe burns which she never recovered from.
@@carlindurrant2363 That is an awful story.
@@ska4dragons Well it it kind of is but I at least got to hear it from my Great grandma as she lived to be over a hundred years old. And little brother who was on fire is still alive at like 90 years old.
Did anyone suddenly keel over dead in their teens or early twenties, back in those days?
One of the reasons the 1987 stock market crash didn't stand out is it happened right when the savings and loan crisis was peaking and the government was picking up a half a trillion dollars in bad debt anyway. In 1987 a half a trillion dollars with some serious money. Now it just 60% of the annual defense budget
Elaborate? Not that I disagree necessarily, but a greater explanation would be appreciated.
Sure...but the main reason the saving and loan crisis occurred was that the government was encouraging farmers to borrow heavily against farm land, when land values dropped the S & L s no longer met reserve requirements and thus were not able to loan out any more money
You are a fantastic teacher. Articulate, unbiased, great at simplifying complicated concepts, and your tone is neutral yet serious enough to warrant attention. I've no doubt people like your classes.
ive just learned so much in the last 20 minutes that none of my high school or middle school history teachers could tell me. thank you sir
🔥 For more content like this watch Prof. Antony Davies' Answers to the Most Googled Economics Questions: th-cam.com/video/NVv_StQXHSI/w-d-xo.html 🔥
This reat, infomative video needs to be watched by many more people. It would be nice if there was no background music. It is a bit annoying and the topic itself is interesting enough without needing music.
The remarkable information you provide to your viewers needs to be applauded. I sincerely appreciate your effort to expand your viewers knowledge. A sincere thank you!
Interesting to see that about the number of banks that failed in the Great Depression and the 9 percent decrease in the economy for several years (the first 9 percent decrease is greater than the second 9 percent decrease) or around say 30-35 percent is about equivalent to how much the money supply was contracted by the Federal Reserve.
So, quite literally, as the song goes...
"We'd like to thank you Herbert Hoover far showing us the way...
You made us what we are today."
Looks like both parties took notes.
excellent video, the first time ever i saw someone explain the great depression plausibly
America's Great Depression by Murray Rothbard is a very good explanation too
He gets some key things wrong. Thomas Woods has a much better video about it, and goes into a lot more detail.
Peter Schiff has an interesting take on it as well
@@connorism69 What are those key things he gets wrong?
The Forgotten Man by Amity Shlaes is a nice description of the period too.
19:20 FDR was actually saying that he was afraid of the fear that could cause runs, thus he was going to act to close the banks. It wasn't a statement of stoicism, but of capitulation.
Another Davies mic-drop, love it! thank you Learn Liberty
No one remembers the even greater depression of 1921; only abated by non fiscal panicking.
Also in the late1920s there was a Florida land speculation boon .then a hurricane came in to destroy land prices. This started default in property loans ,starting the bank crisis.
Widespread defaulting on property loans, starting a bank crisis…Sounds like China right now.
Thank you Professor Davies... I always enjoy your videos.
I had no idea how naive I was in high school.
3 words. Fractional Reserve Banking. Banks create money out of nothing and are not legally required to hold all of your cash on hand available to withdraw.
Fascinating to hear an expert explain tge Grrat Depression. The conditions that led to it seem uncannily like those today.
Changing the Gold standard is a debt default
Way over the heads of most people. The supreme court has been in contempt since the federal reserve act was enacted into law.
I have taught high school history for 30 years.
#1: No one teaches the Great Depression began with the stock market crash. I teach that there were many causes.
#2: No one teaches that Hoover caused the Depression.
#3: Everyone teaches that the Depression was a global crisis.
#4: No high school teach even mentions that gold standard as a part of the Depression
#5: No one teaches that mismanagement was responsible for bank runs, unless by mismanaging you mean making bad loans.
#7: I never taught that World War II ended the Depression.
Best engine analogy by an economist - well done!
I think some of this is wrong. The Federal Reserve cannot flood the market with "liquidity"; it simply redistributes liquidity, directing it to the banks (and then to whoever receives loans from those banks). Inflation of the money supply simply redistributes purchasing power and prevents the economy from making the necessary adjustments to weed out the causes of the problem. Praising Greenspan for doing that (i.e., kicking the can down the road and setting the economy up for bigger problems in the future) is silly.
And the account of loans and savings is misleading. Demand deposits should not be loaned out; it should be term deposits that are loaned out. By saying depositors have on-demand access to the entirety of their deposited amounts, while those to whom savings are lent also have access to the same deposits, you have two people with claims on the same money. Insodoing, you have falsely increased the money supply. Fractional reserve banking is not a praiseworthy function of banks; it is an inflationary apparatus that causes long-run problems. Blaming panic and bank runs is completely off-base. In any other context, the bank's looseness would be viewed as what it is. And yet Federal Deposit Insurance adds a moral hazard to this already problematic scenario.
My thoughts as well. He also fails to consider the impact of bretton woods and fiat currency . Context is missing. People today are conditioned as opposed to educated.
Overall a great presentation. I do find point 5 to be lacking in several details.
1) The US Government's creation of the Federal Reserve, which is not under the control of the US Government, set the stage for artificial/fiat currency.
2) The Federal Reserve then relaxed the funds that banks had to have in the vaults (i.e. fractional reserves), thus allowing banks to lend more funds than they physical/fiscally had in their vaults.
3) FDR made things even more painful when he declared a "bank holiday", which closed all banks for 6 days. While that stopped the "run on the banks", it itc only instilled more fear in the depositors that the the financial system was a house of cards.
4) The "bank holidsy" also gave FDR the time to mandate (by executive oder) that all citizens had to turn all of their gold in, under threat of prison time.
The rest of the scam was then easy. The Federal Reserve radically reduced the money supply. FDR's revaluation of gold's price effectively turned the money into a fiat currency. [Note that several country's central banks are quietly telling the world that they can use their gold revaluation accounts to prop up their flailing fiat currencies.]
The last banks which acted strictly as vaults (100% of funds are in vaults) was in medieval times. What we presently call "fractional reserve" banking is 100% of all banking after that time. Islamic banking pretends they have another system, but its bogus, and just sleight of hand. All money through history has been subject to this danger of government "fiat" causing heinous problems. This has to do with political people seeking to spend more than is advisable under sound public policy. One has no problem finding political people who seek to "buy" their citizens support, or who helicopter money upon some project.
Banking accounting professional here. There may be some crypto outfits changing that concept that there are no "money" which have 100% vault concept quite soon. The current obsession with gold backing and fiat is actually lacking in seriousness. Gold has industrial uses and is quite convenient to stamp out coins, but the real merit is it's SCARCITY and like this professor stated, the actual government policies were hideously loose and this was the case for a long, long time, not just during the FDR administration. Any scarce thing can be a control over excessive money creation (back in the 1800's there were battles whether silver and gold should be used, or if it should be only gold). This is why so many look at crypto style constraints today, because math can be employed in this area. . MAYBE. The idea is that it should be hard or really impossible for the money supply to grow out of control.
@@crtune The worst thing that could happen to humanity is a cashless society. Governments have already demonstrated they will shut down the accounts of any who dissent.
The problem isn't fractional reserve per se--the problem is there is no connection between the money supply and the reserve. They can print as much as they want whenever they want. The constitution expressly said congress shall coin money and it will be metal: Handing the printing presses over to the central bank and getting rid of reserves completely (except with hand waving, lies and violence) has brought to fruition all the things that real money protected America from for hundreds of years.
The US also isn't supposed to have a large standing federal army--which has also done nothing but cause problems.
Increasing the money supply *is* inflation. I prefer the Austrian school's analysis on this.
Printing money causes inflation, this is taught in economics courses in all colleges and universities.
And the act of inflation is theft of wealth.
@@robfromvan the act of printing isn't the conclusion of inflation the over printing of a backless currency is direct cause and effect .
Interesting concept for him to say that as long as the government continued to devalue the money we own, the depression wouldn't happen...I believe deflation is good. It increases your purchasing power.
Year 2022 is bad and filled with much uncertainty in which we've seen worse in the previous years. I’m barely 40 with a good 20-25 years to retirement so I’ll stay invested even when I’m losing like $2k per day. I'm going to use the opportunity to buying at cheaper prices. Good investing all.
@Karin Anderson Begwin Although there are supposedly more investing tools than ever before, financial advisors should resume cold calling and free opportunities if they want to stay relevant because I don't think anyone is paying for their services anymore.
Interfering, financial advisors experience substantially more stress than any other profession when dealing with money and assets, but that's good; other from that, I have no problem paying someone for a job well done. In comparison to when I first started investing, I've achieved a lot more financial milestones in a shorter amount of time.
@@hermeschodry2432 I completely agree. If you don't mind, tell me about your experience. Although I don't have the necessary abilities on my own, I'm passionate about investing and want to retire and live off of my investments.
Why is all the world's capital flight coming into the US dollar? Things are not as bad as people say. Otherwise this wouldn't be happening.....
No choice. There’s no where else to allocate and you want to dca to hope things will come back. I don’t think we’ve seen the worst of it yet. A lot of stupid bets still hasn’t capitulated yet.
Astounding. A bran new listener. Love this man. ❤😂👨🎓🙏
The number roosevelt picked was more than the current price of gold. This gave the fed room to print money and incentivized other countries to buy American dollars in gold. This raised the usa gold reserves until ww2 where massive spending would see the usa go into massive debt against its holdings of gold.
👍Thks, you spoke in a very understanding way. Civics and banking should be required subjects taught in our schools. I believe our present generation is ignorant on economics,money,honest history n more. My mother lived through the depression so i got a brief education.
In a sense you shouldn't need to know about these things - except that they tend to become part of politics where people are being galvanized towards facilitating even worse government decisions (while blaming things like the banks or anyone else that can easily be painted as a villain).
The department of education combined history and economics into social studies to ensure students learned neither banking nor history. When the biggest criminal syndicate on earth is the US government the last thing they want to teach kids is how they're enslaved by a corrupted and illegal banking system that only benefits the government and extremely wealthy.
I'm not sure I buy that World War II masked the depression. When war broke out there was demand for soldiers and equipment which created a wartime economy that was fully employed (or something near it), when the war ended, that wartime economy was no longer needed and the economy had to shift to a peacetime economy, which it did relatively quickly. Yes, there was a recession at the end of the war, but I'm not convinced that it was a continuation of The Great Depression. Perhaps the The Great Depression would have persisted if it wasn't for the war, but that is a what if we will never have a definitive answer for.
Millions of men were drafted to fight the war. Unemployment rate is based on how many people check in at unemployment offices. This means the war took them off the unemployment rolls as they were unavailable to go, resulting in an artificially low unemployment rate. To prevent returning soldiers from flooding the labor pool and drastically lowering wages, returning soldiers were put through school so they could be gradually integrated into the labor pool.
Politicians pushed America into that fight. I don't care what anyone says: Nuking Japan's population centers twice and murdering tens of millions happened because the US picked a fight it had no business being a part of.
We fought on the side of the Russians and Chinese communists. How stupid were people back then to believe anything coming out of the propaganda from the Russians or Chinese and now look where it got us..
This seems oddly familar to today... "Those who do not learn from history, are doomed to repeat it."
Wow, good one! Thanks!
Thank you!
I feel that #4 didn't get answered properly. Okay, the gold standard had no teeth. How does that mean the myth is wrong? And would it have been right if the gold standard had had teeth?
My god signs of actual life at an American University? Sad that it's so rare, but it's nice to hear a University Professor actually speak the WHOLE truth instead of just regurgitating what they read in Das Kapital.
I may have missed it, (depending on the subtitles) but I didn't see him mention that the people investing were "buying on the margins" or borrowing money to invest. When the margin call came, the investors couldn't pay and lost everything.
That didn’t cause anything. People getting caught with a margin call was a personal problem that happened as a result of the market crashing.
“People” outside of the equities and commodities markets were not involved. There was no retail investment .
Professor
What percentage of the economy in 1930 had anything to do with foreign trade? 3-12% depending upon what you read. The collapse of the money supply caused the Great Depression and the world's elitists wanted an opportunity to buy at discounted prices..
FANTASTIC video!
Amazing Video
Thank you. I finally get it.
Great video. Straight teaching.
Only thing you get wrong is the money supply stuff. The fed shouldnt be creating bubbles in the first place
Excelent video
History doesn’t repeat, it rhymes. Today we have an unusual problem of a 10 million plus worker shortage.
'The Fruits of Graft: Great Depressions Then and Now' Read it. It cover's the subject in great detail with detailed supporting references.
What part do you think France’s hoarding and sterilizing gold reserves play in the deflation? France went from 7% to 27% of reserves between 1927 and 1932 and pretty much sterilized most of it to keep exports competitive.
The bank doesn’t loan savings out 1:1, it uses fraction reserve lending which GUARANTEES that all loans can’t be repaid!!!
Imagine that!
In psychology, if you try to get people to do one thing, they tend to do the opposite.
Maybe if they didn’t have this bankrupt system of fractional reserve banking the people could take their money out whenever they wanted and if a bank fails then a professional association could take care of depositors thru private insurance or mutual aid without the government intervention that causes the problems in the first place
That would be too much common sense for
Politicians and bureaucrats.
True, but since there would be nothing worth buying with that money, I'm not sure it would matter
21:40 - 3. Wage controls that encouraged businesses not to reduce wages....
21:51 - 4. Immigration controls that prevent lower cost immigrants from providing cheaper labor
How can immigrants work at a lower labor rate with wage controls in place?
So, if reducing the workforce made hiring less affordable during the depression, wouldn't that also mean flooding the country with illegal immigrants reduce the average wages for citizens and make jobs harder to find for everyone?
1929, China was still in the Era of warlords and cliques. They don’t have depression, but they have war, famine, Instability and calamities. Life expectancy was in the 30s.
There was also a bunch of borrowing and buying stocks on the margin by lots of people because the stock market kept going up.
That inflated the market then when a few couldn't make the margin call and the market drops. Smoot hits and it drops more and now more people can't cover the margin and we have a slide
Sooooo close. How do we continue to talk about bank runs without mentioning the Fractional Reserve Requirements?????? (Oh, thats right - such revelation would probably cause a revolution over night.) Branch/diversification is such a small issue in comparison.
This a UNIVERSAL misunderstanding. Almost no post graduates of finance understand how M4 money supply is produced (spoiler, it's not the FED).
Otherwise, fantastic. 👍
Why would fractional reserves cause a revolution? I learned about fractional reserves when in middle school everyone knows about that
@@tristonlacross4275 you don't see a problem with the incentivizing debt in order to create new money, loan out the money you've created, and charge interest on it?
@@tristonlacross4275 I think you think you know what I'm talking about. This is not the federal reserve, but the individual bank reserve requirement of 10% which allows banks to create new money and loan it out (with interest of course) - and the new money can then be deposited elsewhere, and create new loans/money at ~900% this second deposit amount.
@@jacobcastro1885 The reserve requirement was actually removed from US banks on March 26, 2020. There are no more reserve requirements for loans on US dollars anywhere in the world now. The EuroDollar system finally came across the pond.
@@jbrandonporter i think it depends on the size of the bank, but a 0% reserve requirement is even worse! People should be terrified... but sheep will sleep.
good vid, doc
Nice one 👍
Thanks ✌️
Long story short, end the fed!
WW2 brought us out of the Great Depression. There was a temporary relapse when the war ended. But with the money owed to the US gov't and US banks by the European allies started flowing into the banks, the banks started loaning money like never before. We were not only the world's breadbasket, we were the world's factory... Alan Greenspan may have prevented a recession or depression but he set the stage for what we have today. When Greenspan said the Fed would provide all the liquidity Wall Street needed, Wall Street knew them that they could gamble and make fantastic profits. And if they lost that bet, the American tax payer was going to bail the out.
You see, what you failed to account for is that resources are real things. WWII did not bring us out of the depression, especially not because of foreign nations purchasing more. Money coming in does not give us the factors of production to make all these goods. In fact, the destruction of Europe is bad for the US economy because it means there are less capital goods available to produce products. It is logically impossible for people to get wealthier when resources are destroyed.
For all of the mistakes they did in the 1920s, at least they did not transform us into Argentina. Listening to modern economists, especially the ones with Nobel Prizes, we would make that transformation quickly.
Brilliant!!! Thank You!!!
6:00 Conversely, I remember back in the 90's when Govt was telling employers "please don't give your employees any salary increases!" They made this insane request, because they were trying to get high inflation (from their over spending and over issuance of more $$) under control. Notice how govt never suffers and never considers tightening it's own belt'.
YES... This ridiculous nonsense is what our govt has been guilty of and yet, they continue with one insanity after another. In the end, the Real Solution is to dramatically shrink govt, kill reckless spending and lower taxes. That is the only viable solution.
Thanks from Ukraine!
6. Default by English on gold obligations
I'd like to hear more about FDR's arbitrary repricing of gold.
In the end, gold is worth what people agree it is worth. In the mid 19th century the US issued one-ounce $20 coins. How much wheat would that coin buy in 1830 vs. 1860; or any year in between? The coin was still $20 and still an ounce troy (I suppose it was troy). A twenty dollar coin suddenly becoming a twenty seven dollar coin (wink, wink, nudge, nudge) seems to make it all meaningless; and maybe that's your point.
I'd just like to hear more theory, if you please.
Gold has industrial uses. Even if people didn't use it for baubles and status symbols there would be an increasing demand for it because it is a necessary building block of modern electronics.
I think number 5 should have been developed better in order to convince that it was a myth.
The people that discuss monetary economics don't exactly make light arguments about why the gold standard supposedly failed.
Another myth: FDR helped get us out of the great depression in any way.
I have a question. Should people have money in banks with the expected economic reset? I've heard a banker bailout is off the table. It's going to be a bail in. They can legally take your savings to save the bank. Is money any safer in a credit union? And is this reset going to happen for sure?
Actually US economy started booming after WWII. Unemployment did ultimately abate and life was good during the baby boom.
The banks could not loan out more then they have in reserve
The Great Depression was NOT created by a Mistake of Policies rather think of it this way. The stated goals that the reaction by the New Deal or Hoover was to solve the crisis and by that standard one views the events of the Great Depression as a series of failed policies, or at least a degree of failure and success, but the REAL GOALS are not the stated goal, and if one had a real goal to eliminate their competition, creating crisis purposefully to generate opportunities once the dust settled, and what the true nature of purpose the central bank actually serves, then one begins to realize the Great Depression was a raging success in achieving such an outcome.
Along with the social engineering mentioned, which could not happen to the degree they sought without such a crisis, thus another real reason arises as to why such a banking crisis was created. Plainly put, they sought to wipe the map of as many banks as possible, a targeted destruction of competition, and control of the money supply by those who included both a few wealthy Americans and their foreign partners, and benefactors who sought to fleece the American public of its wealth.
Nothing to fear but fear itself.
You can point to the wage floors that Hoover instituted were one of the single biggest factors. As the video says, companies would just lay off rather than make adjustments. Another problem that exacerbated things was the midwest drought. The Dust Bowl. The midwest farm economy was devastated. And I think he's wrong about #7. A rise in unemployment doesn't mean it was a depression. It just means unemployment bumped up temporarily. Women went back to being homemakers and soldiers went back to work at their jobs very quickly. That's why shortly after the war we had one of the biggest economic booms in history.
Tariffs on foreign goods also don't increase the supply of domestic goods which in turn raises the prices of them. It helps no one.
I heard from people who lived through the Great Depression in Germany kids were playing with wheelbarrows carrying one million Deutsche Marks.I missed hearing the name Germany on the list of European countries mentioned here.I always thought Germany was devastated.Amazing.I liked knowing that gov.bad policies exacerbated the problems.Good videeo.Very informative.
Germany was destroyed because they had to inflate their currency to pay war reperations to the allies.
It just occurred to me…maybe I’m wrong, but…if you can create a miniature sun, I think you could also manufacture gold…
I would think that the lack of inflation in the 1920s was due to wide spread expansion of goods and services, rather than due to a bubble in the stock market. Remember inflation is when the money supply increase in comparison to the goods in the economy.
Professor Larry Schweickart's A PATRIOT'S HISTORY OF THE UNITED STATES agrees with that assessment.
For a lay person like me I really appreciate the oil metaphor
The US farm economy had already been in a Depression for most of the Twenties.
You totally missed the fact that so many average people were over leveraged in the stock market. When the the Stock Market crashed, their brokers demanded more money to cover thier stocks they purchased on margin. As more and more people began withdrawing their money from the banks coupled with the bank's practices setup the cascade of bank failures. One of the differences between the 1929 and 1987 stock market crashes were that the average person was not overleveraged in the stock market in 1987. Meaning, the average person didn't have to withdraw money from the bank to cover their margins when the value of their stocks sank. The average person doesn't know much about the 1987 Stock Market crash because it only mostly affected the wealthy unlike the 1929 Stock Market crash.
So what I'm hearing here is that government involvement in the economy is a bad idea. I agree. Let the free market do what it does.
Inflation usually takes five to ten yers to play out after an increase in the money supply
Nice job, but here is my problem with part of the commentary. Given the massive increase in productivity, inflation was seen in the prices of goods. Items that should have dropped by 50% in price only fell by 10%, and others that should have registered mild decreases in price floated near the same levels.
So then how did it really end if it wasn't WW2?
Most everything I learned about the Great Depression in high school was inaccurate, or incomplete. This leant itself to the false narrative that FDR led us out of the Great Depression.
Otro punto para los austriacos: la expansión de la base monetaria a través de crédito barato y tasas de interés bajas provocó el crac del 29.
So Smoot-Holly tariffs were a huge catalyst for the Great Depression, did President Trumps tariff pushes do something similar or was the circumstances such that they could be handled by the markets?
Guess I am asking if tariffs do this significant damage always or just if they’re paired with a perfect storm of precarious positions and decisions?
Trump's tariffs didn't help, but they were far lower and fewer in number than those of Smoot-Hawley.
Tariffs always cause a downturn in GDP because they cause imported goods to be more expensive and also a downturn in exports as other countries retaliate by putting a tariff on our goods also.
What we are facing is more likely caused by the Russian/Ukraine War, increased interest rates, high gas prices, and Covid restrictions.
Trumps tariff's undercut the Chinese economy, from which they are still reeling. This undermines the military funding they might have had. Further, Trump's tariffs, among other things, encouraged companies to move more manufacturing back to the U.S. Supply line issues arising from dependence on other continents are being recognized and US manufacturing is making adjustments. All that to say, there was a lot of benefit to those carefully selected tariffs.