This is one of the best documentaries on the Crash of 1929 if you wish to get a feel for the times. You may find it interesting to watch the whole thing below.I have posted the entire documentary twice before: once, on the 80th anniversary of Black Thursday in 2009, and once before in December of 2007.
I remember the Summer of 1929 being described as unusually hot, with the stock market going up and down like a roller coaster, making investors and pundits almost dizzy. That is, until the great push up to the very height of the market in early September.
It was the laissez-faire abuses of the 1920’s, the reign of supply side economics, the institutionalized political corruption of easy money, an oversized, overly influential and powerful financial/industrial sector that set the stage for the terrible Depression of the 1930’s.
It also gave rise to the many reforms introduced by the FDR administration.
Most of which have been steadily overturned, one by one, by the big money interests who care for nothing but themselves, and would do it again, and again, if allowed to do so.
Most of the scams of the moneyed interests are remarkably simple, and the same over time. At least they are once you scrape away the jargon, the bells and whistles, and paid for policy theories of pedigreed prostitutes.
The titans of Wall Street are no smarter than many smart people who do much more difficult jobs and lead simple, honest lives. But they are driven, they are insatiable, and they are shameless.
Enough people are easily fooled in each generation by well scripted ideological PR campaigns, clever revisions and misrepresentations of history, and the steady drumbeat of slogans and propaganda to allow the same old scams and abuses to come back again. And unfortunately even very smart and powerful and greatly advantaged people are always willing to do anything for money.
Here is a link to the transcript of this documentary.
Narrator: At sea and on land, everyone seemed to be making money. It was a stampede of buying. And major speculators like John Jacob Rascob whipped up the frenzy. He told readers of The Ladies’ Home Journal that now everyone could be rich. September 2nd, Labor Day. It was the hottest day of the year. The markets were closed and people were at the beach. A reporter checked in with astrologer Evangeline to ask about the future of stock prices. Her answer: the Dow Jones could climb to heaven. The very next day, September 3rd, the stock market hit its all-time high.
Ben Karol, Former Newspaper Delivery Boy: My father and I had an ongoing discussion about the stock market. And I used to say, “Pop, everybody’s getting rich but you. You know, you work so hard and you’re never going to make a nickel. All you do is you keep delivering these newspapers and that’s about it. The guy who’s shining shoes is in the stock market, the grocery clerk is in the stock market, the school teacher’s in the stock market. The teller at the bank is in the stock market. Everybody’s in the stock market. You’re the only one that’s not in the stock market.” And he used to sit and laugh and say, “You’ll see. You’ll see. You’ll see.”
Narrator: On September 5th, economist Roger Babson gave a speech to a group of businessmen. “Sooner or later, a crash is coming and it may be terrific.” He’d been saying the same thing for two years, but now, for some reason, investors were listening. The market took a severe dip. They called it the “Babson Break.” The next day, prices stabilized, but several days later, they began to drift lower. Though investors had no way of knowing it, the collapse had already begun
Narrator: In the weeks to follow, the market fluctuated wildly up and down. On September 12th, prices dropped ten percent. They dipped sharply again in the 20s. Stock markets around the world were falling, too. Then, on September 25th, the market suddenly rallied.
Reuben L. Cain, Former Stock Salesman: I remember well that I thought, “Why is this doing this?” And then I thought, “Well, I’m new here and these people” — like every day in the paper, Charlie Mitchell would have something to say, the J.P. Morgan people would have something to say about how good things were — and I thought, “Well, they know a lot more about this market than I do. I’m fairly new here and I really can’t see why it’s going up.” But then, when they say it can’t go down or if it does go down today, it’ll go back tomorrow, you think, “Well, they really are like God. They know it all and it must be the way it’s going because they say so.”
Narrator: As the market floundered, financial leaders were as optimistic as ever, more so. Just five days before the crash, Thomas Lamont, acting head of the highly conservative Morgan Bank, wrote a letter to President Hoover. “The future appears brilliant. Our securities are the most desirable in the world.” Charles Mitchell assured nervous investors that things had never been better.
Craig Mitchell, Son of Charles E. Mitchell: Practically every business leader in America, and banker, right around the time of 1929, was saying how wonderful things were and the economy had only one way to go and that was up.
“Running for President under the slogan “Rugged Individualism” made it difficult for Hoover to promote massive government intervention in the economy. In 1930, succumbing to pressure from American industrialists, Hoover signed the Hawley-Smoot Tariff which was designed to protect American industry from overseas competition. Passed against the advice of nearly every prominent economist of the time, it was the largest Tariff in American history. (at that time the US was a large export economy with a trade surplus).
Believing in a balanced budget, Hoover’s 1931 economic plan cut federal spending and increased taxes, both of which inhibited individual efforts to spur the economy.
Finally in 1932 Hoover signed legislation creating the Reconstruction Finance Corporation. This act allocated a half billion dollars for loans to banks, corporations, and state governments. Public works projects such as the Golden Gate Bridge and the Los Angeles Aqueduct were built as a result of this plan.
Hoover and the RFC stopped short of meeting one demand of the American masses — federal aid to individuals. Hoover believed that government aid would stifle initiative and create dependency where individual effort was needed. Past governments never resorted to such schemes and the economy managed to rebound. Clearly Hoover and his advisors failed to grasp the scope of the Great Depression.”


Hmmm, no tetrad in '29, well there goes that theory.
FDR's bold and persistent experimentation (central planning) made that recession "Great" in length and depth. And wrecked the Republic with just the type of vote buying regimes the founders warned against.
Sorry...All wrong. As in ALL WRONG here.
Jude Wanniski. Polyconomics.com, the Way the World Works.
Start there. Come back later when you've learned something.
CW
So, so wrong, IMHO. Jesse, you're better than this.
Summer of 37' is more appropriate; 1837 that is.
The precursor to one of the largest collapses of US Fiat currency in history.
Jesse's blog isn't better than this. This is actually what he believes. I stopped reading him many years ago...
Jesse doesn't allow comments because then he would have to moderate them. Typical progressive, he has to censor opinion. Wimp. Besides that, he is an unreformed FDR lover and a progressive (crypto communist). Take this for example:
"It was the laissez-faire abuses of the 1920’s, the reign of supply side economics, the institutionalized political corruption of easy money, an oversized, overly influential and powerful financial/industrial sector that set the stage for the terrible Depression of the 1930’s."
Yes Jesse, the FED had nothing to do with it, Nor JPM. Nor Hoover, FDR and the progressives like you. Nor the Jews starting WWI in order to, among other things, force the world off of the physical Gold Standard.
Just like the academics he worships, Jesse will never admit he was wrong.
Nice try CW, but no cigar ! Since you're such a big fan of economics history, you might what to read about "The Crash that Cured Itself" between 1920-21.
Here's a good start:
http://www.amazon.com/The-Forgotten-Depression-Crash-Itself/dp/1451686455
Knock yourself out...
Been there, Done that...
I understand what you are saying. Post hoc ergo propter hoc. Just don't go telling me that goods piling up on docks, unable to be shipped is "Insufficient Demand". Schwartz and Friedman have a thing or two to say about this and the Austrians as well.
Just don't set up a puke argument to justify Demand Arguments and Roosevelt killing livestock when people are hungry and on and on and on and on and on... See: The New Dealers' War.
Wanniski's argument gives the correlative reasoning as to why the Depression occurred.
The article was poor. Leave it at that.
CW
This article has a wonderful vid embedded for the nubes, Nothing But Blue Skies...
http://www.pbs.org/wgbh/americanexperience/films/crash/player/
...from now on...lol...and then, just over a decade later...Jesse Livermore shot himself in the head.
“My dear Nina: Can’t help it. Things have been bad with me. I am tired of fighting. Can’t carry on any longer. This is the only way out. (Edit: Meaning, I'm a fucking coward.) I am unworthy of your love. I am a failure. I am truly sorry, but this is the only way out for me. Love Laurie”
History rhymes ;-)
Lighten up Francis. Sometime you just get very tired. Until you have walked in his shoes, shut up.
Even the Romans knew how to fall on there swords.
Double Santa. Tax cuts are schemes to buy back the votes "bought" by extremely popular leftist social programs. Deficit spending as a political tool. The opposite of leadership.
My mother was 5 in 1929. She lived in Oklahoma just outside of the Dust Bowl area. She grew up seeing starving, listless, vacant eyed people. She also saw people getting to eat because of that central planning. She saw people get jobs and regain their confidence, their integrity because of that central planning. Now I agree it was WW2 that reset the economy, but those people could've cared less about economic theory! And it wasn't FDR who presided over the excesses that caused the GD.My mother said "to us, FDR was a savior". And had you been one of them, you would've thought the same.
FDR, mostly driven by his wife, had compassion for the nobody's. He also was caught between bankers and an exponentially growing undercurrent of communism. Shit, the parallels to then now are eerie. The difference is, that the "central planning" has been done by the bankers this time.
Ahem.
How did she end up there in the first place? Therein lies part of the answer as to why the Dust Bowl was so bad in that region, an area that didn't have farms two generations previous.
Speculative booms came crashing down from 1929-33. One of them was the speculation on farm land in western OK, which ended up causing erosion and depletion of the soil. Ever hear the song Okie from Muscogie (sp?). People like those in Merle Haggard's family fled western OK after the bust.
Fuck FDR and his commie central planners.
Unless you are one of the few in this country who are entirely self sufficient as far as food goes, then you're eating food grown in a desert! And those Okies fled to THAT desert! As far as Merle, tho popular, one of his weakest offerings. Ever hear of Woody Guthrie?
The bankers began the central planning in 1913 and have been running the show ever since.
They have no problem with others being in poverty - I think most of the mega-rich feel even better when they can enjoy their ill-gotten gains while looking down on their victims.
They have a problem when there's not enough for them to plunder, so they need a productive economy at a level that provides for their required level of plunder.
It's a fine line - take too much, the plebs wake up.
My mum was born 1924 too. She was a very frugal person all her life.
Time for a reset.
The banker's (owners) knew exactly what they were doing, after all they had a few decades to engineer the outcome which was pretty easy to grind up-then down. We HAD to get into a 2nd WW which would ultimately divide the west from the east for years (cold war), give the USA global currency power & create a "legal" mafia land in the ME called ISRAEL.
You're leaving out the most important point, that the whole event was a creation of an interventionist regime...
and I once saw a baby stop crying because of a lollipop......who gives a flying fuck?! Stealing is wrong period, doesn't matter what a planner or his political whores think.
My father was born in 1919 and saw it up close and personal. He watched as government stepped in and trampled free markets with wasteful and profligate spending that only created jobs that produced nothing. He lived his life with my mother never investing in "the market" for as he told me....he had seen the corruption that only grew from government policies and he NEVER thought it would last. We only read about what he actually lived. People knew what was happening then as they do now and they understood that they could stand on the side of truth, or join in the corruption that was emanating from Washington....just like now. If we had not had war that killed millions and destroyed productive assets everywhere else in the world, America would have drowned in their progressive policies well before the USSR did.
Do we see similar solutions now?
Did you mother see the price controls, wage controls, excise taxes as well as the highest peacetime taxes (among other things) courtesy of Roosevelt as well?
Compassion for the nobody's? Roosevelt, KNEW the Japanese were going to attack Pearl Harbor. Do you think he had compassion for the 2400 Americans that died there?
Do you think he had compassion for the nobodys after he confiscated their gold and destabilized their paper money with his gold purchases on the open market?
http://tinyurl.com/py8yyxd
http://tinyurl.com/prtbnty
http://tinyurl.com/nk975e3
Roosevelt was an elitist (among other things) who never let a crisis go to waste.
TBT or not TBT, that's what the bankers want the masses to believe anyway. The total sum of all of FDR's policies had zero effect on the whole thing. It was all monetary related. The Fed reeled in the money supply, and caused the depression. When the monetary system was repopulated, the economy recovered. All of the other stuff is used as smoke and mirrors
“Sooner or later, a crash is coming and it may be terrific.” He’d been saying the same thing for two years, but now, for some reason, investors were listening.
That sounds familiar -
I think I'm gonna party, like it's 1929...., Oh Yea !!!!
"Brokers' loans reached four billion on the first of June 1928, five billion on the first of November, and by the end of the year they were well along to six billion. Never had there been anything like it before..."
https://books.google.com/books?id=YoXZWqBIIE8C&printsec=frontcover&dq=J....
The Summer of '29?
Just finished reading a wonderful book about that year, 1929-30 but the events occured in Siberia. Made my adventures as Alaska commercial fisherman seem tame. The whaler, Nanuk (polar bear in Eskimo lingo) got stuck in ice for a whole year and by the time the boat was freed, fur prices had started to fall. Probably LOTS of prices for luxuries fell too.
ICEBOUND IN THE SIBERIAN ARCTIC . FUR SCHOONERI read a book about the first white man to enter Timbuktu. Travelling is a wonderful adventure.
What laissez afire system?
Complete laissez fairer would have no fiat money, no Federal Reserve, no regulation of the banking system, etc.
No Smoot-Hawley.
And no depressions.
I'm not defending FDR (he merely saved capitalism from itself, which should have been a short-term rather than long-term fix before a better system could be devised). And the system you reference, which took place during the Free Banking Era of the United States, had depressions roughly every 10 years as the debt-backed monetary system collapsed on itself. All current money is bank-created fiat, and the Federal Reserve is just first among equals.
Bull, FDR just continued the interventionist policies of the previous administration. Had they not intervened the excesses would have washed themselves out of the system and it would have been a quick recession instead of a prolonged depression. Instead they decided to keep meddling and prolonged the agony for everybody. The only thing that "saved" what was left of capitalism was the breakout of war.
Read "the forgotten man" by Amity Shlaes if you want a better understanding of the depression and FDR. A how there was nothing they were not willing to stomp out of our constitutional freedoms in order to save "capitalism", which is much a joke then as today. FDR surrounded himself with devout socialists, people who had actually traveled to Russia to witness and give testimony to the superiority of communism. And as we see today, FDR funneled "stimulus" into districts around the country that ensure democratic dominance. This is a very old game, as is rewriting history to glorify your destroyers.
Yea, Fed founded in 1913, and then the roaring 20's. Fuck this article and the syphilis riddled whore it rode in on.
Ben Shalom has studied the period well, and has surely passed on his recommendations to Mr. Yellen
That chart is sorta bullshit, many of those metrics either did not exist at the time, or if they did it took so long to derive that the information was no longer of use. Like talking to Casey Stengel about wins-above-replacement or OPS, he wouldn't know what the hell you were talking about.
I don't know how they could come up with UE or CPI stats when many people not living in a city were without electricity.
What many people fail to recognize is the low hit in July 8, 1932 (41.22) is about equal to the low hit on November 9, 1903 (42.15)
Thus, nearly 30 years worth of gains were wiped out.
Imagine if the "market" would revert back to ca. 1985 - 1986 pricing (DJIA 1500 - 1800)
Fortunately, that can never happen again, right?
Anything that is not impossible has a finite probability of occurring.
Something can happen once in a gazillion years, maybe never to happen again, just by fluke.
Twice in 30 years is a differnet thing all together
That would be a welcome washout, a reset to sanity.
In essence little pieces of paper called "stawks", which never had any intrinsic value except In the imagination, would release an ocean of money which could be deployed in useful enterprise and investments in the productive part of the economy
There is a a lot of fraud, inaccurately rated "assets", and debt to be unwound.
If we are able to return to a stable Glass-Steagall financial system and markets where SEC rules are enforced and apply to everyone equally, I expect somewhere in the 5,000 range in today's dollars.
However, I think "Just Us" and their minons would rather burn the nation to the ground than return to fiscal and economic stability.
It would have to go down to say Dow 300....
At lease in 1929 the dollar was still on the gold standard so wiping out 30 years of gold backed gains meant something....
The money supply has been blowing up since August 15, 1971 so you'd have to take into account all the extra currency sloshing around....
That would be the dow back to 300-400.
But as you say, that could 'never' happen, right?
Squid
And, for the rest of the story,,,https://mises.org/library/americas-great-depression
Capitalism requires property rights and redistribution through monetary policy is the polar fucking opposite. Laizze Faire means leave it alone and that goes for the value of money as well.
These phenomenon are so obvious. Behave irrationally, cause dislocations and inefficiencies that look or feel good in the short term so others pile in and loop a few times until pretty much everyone is in who is stupid enough to join the party. At which point, just about anything will pop the bubble.
This was why so many of us knew without a doubt the housing bubble would collapse. We knew "few people can even make the freaking mortgage payments if prices rise any further, so buying with the assumption prices would rise further is inherently impossible". Plus our add-on "insurance" that "this would all end" was the fact that the inflated prices of homes (the largest expense for most folks) consumed so much more of income that little was left for "everything else". Well, that "everything else" is the freaking economy, so the housing bubble was also sure to crash the economy.
I mean, this was totally obvious to anyone who would look at reality and think with their own mind. Unfortunately, that is such a tiny percentage of humanity, it hardly made a difference. And when those who did see and did think warned others (plenty far in advance), that did no good because everyone else would not see and not think, they only accepted the nonsense they heard from mainstream media and their friends who watched mainstream media.
Well, now everything is in bubble, so the collapse of everything is near. Including the collapse in civility and "civilization". So get ready.
It was all China's fault.
so much crap...i don't know where to start. just as today, government interventions (verse laisse faire) created the problem and turned what should have been a natural recession into a three term depression.
we're living the ramifications of the authors delusions today, those who formerly woulda been on soup lines now have shopping carts full of junk food and steaks, the time formerly spent standing in line is spent hanging out or sitting at home watching flat screen tvs...all courtesy of uncle sam. FDRs work programs were little different than baracks community organizations, used to intimidate opposition.
subtract new debt from gdp and it doesn't take long to figure out we've been in steep decline for several years
Best to watch Bill Stills "The Money Masters" to find the real causes. FDR had nothing to do with it.
Just finished read madness of crowd by c mackay. I have a great feeling we are in the same position as before crash of "29. Can't wait to see the whole market crash to the ground as i'm sitting on piles of cash waiting to invest after the crissis :)
You'll know we're there when you're eating your FRN for dinner...
Bubbles usually have something "real" underlying them. For example, the 20's did have invention and creativity driving that era. Same goes for the high tech 80's, as computers and high speed communication were bringing efficiencies.
The bubble is always a distortion though in that it channels incorrectly, it is a credit phenemon where postitive feedback pushes prices, which then signal "growth" which makes more credit, which pushes prices.
Eventually the real economy cannot support the false prices, the bubble collapses, asset prices fall - but the debt instruments remain. Said debt then begin to recall and harvest the real economy.
In the 20's the FED kept interest rates low, which then affected gold price. The low gold price allowed Britain and France to buy back gold lost to U U.S during WW1. There is congressional testimony detailing the scam, which I've posted on ZH before.
With the low rates, and the underlying innovation in the economy, people would go out and take out loans, to then buy stocks. Some banks even engaged in this, and hence their capital position was based on stock market paper.
In a private banking world, credit creation originates in banks. In other words, banks manufacture money as ledger entries at moment of hypothecation. These money creating factories kept rates LOW on purpose to help out their "brothers" in England and France, and to a lesser extent Germany.
Interest rates are usually a lagging indicator. Economy is overheating, then raise rates to cool it off...that didn't happen in the 20's and worse, the extra credit creation vectored into financial games, rather than into real production.
1929 or not...
...explain the last couple of days.
Something of a magnitude not around in 1929 is at work successfully stopping a fall, or else, the last couple of days couldn't have happened...
m
"The titans of Wall Street are no smarter than many smart people who do much more difficult jobs and lead simple, honest lives. But they are driven, they are insatiable, and they are shameless."
The other thing is the scale of temptation. A potentially crooked electrician is looking at making maybe 100s of extra dollars, a crooked accountant maybe 1000s but the banking mafia - millions or even billions.
#
There's obviously a lot of people here who dont want to face reality.
The problem is and always has been the banking mafia for a very simple reason: if the people controlling the money supply have a financial interest in expanding the money suppply (i.e. through the interest on loans) then they will constantly *over* expand it leading to a constant cycle of medium sized boom and bust and the occasional massive boom and bust like now and the 1920s.
The free market people would have a point *if* the banks were allowed to fail every time they did this but they almost never are. They always bribe, bully or baffle the politicians and public into bailing them out and it's the policies adopted to bail the banks out and rebuild their balance sheets after the bust that causes the depression (plus the lack of investment while the banks are in their zombie state).
And these banking mafia caused depressions nearly always lead to world war so it's becoming vital that people get it - the banking mafia having control of the money supply is just WWIII waiting to happen - it may even alrready be too late but if not this time then the next.
To repeat: if the people controlling the money financially benefit from expanding the money supply then they will constantly over expand it causing constant boom and bust.
double post
Stopped reading here:
It was the laissez-faire abuses of the 1920’s...
At that point I knew it was complete bullshit.