Everybody has been talking about the Great depression. Mostly about how to avoid another one. Uncle Ben Bernanke is supposedly an expert on the 1928-1941 period. Unfortunately that means he is supremely qualified to fight the last depression not the next one. And true to form that's exactly what has happened.
I'm not going to lecture on the period. What would be the point? We can't even explain Disco in the 70s. Howinthehell could we explain a worldwide social and economic upheaval 80 years ago? I do want to bring up one aspect that shows some interesting compare and contrasts with today. The picture and title refer to a series of events in the spring and summer of 1932. In conversations I was surprised to discover how very few people knew just how close we were to a socialist overthrow of the Federal government. In a rare instance of encyclopaedic responsibility even wikipedia manages to cover much of the facts. Apparently there must not be an editor of the article diligently scouring the content for any hint of badthink. Doubleplusgood for us. Excerpt:
In 1924, over-riding President Calvin Coolidge's veto, Congress legislated compensation for veterans to recognise their war-time suffering: receive a dollar for each day of domestic service, to a maximum of $500; and $1.25 for each day of overseas service, to a maximum of $625. Amounts owed of $50 or less were immediately paid; greater sums were issued as certificates of service maturing in 20 years.
Some 3,662,374 military service certificates were issued, with a face value of $3.638 billion dollars. Congress established a trust fund to receive 20 annual payments of $112 million that, with interest, would finance the $3.638 billion dollars owed to the veterans in 1945. Meanwhile, veterans could borrow up to 22.50 per cent of the certificate's face value from the fund, but, in 1931, because of the Great Economic Depression, Congress increased the loan value to 50 per cent of the certificate's face value, yet, by April of 1932, loans amounting to $1.248 billion dollars had been paid, leaving a $2.36-billion-dollar deficit. Although there was Congressional support for the immediate redemption (payment) of the military service certificates, President Hoover and Republican congressmen opposed that, because it would negatively affect the Federal Government's budget and Depression-relief programmes. Meanwhile, veterans organisations pressed the Federal Government to allow the early redemption of their military service certificates.
Imagine that. The people rising up in protest over tricky Federal financing that denied them their promised benefits. I mention this because of what the protests wrought. Roosevelt instituted work programs that dispersed the working age population to remote locations like Central California and Hoover Dam and Tennessee Valley. The idea was to keep them out of the cities, the public works projects were secondary. Chairman Mao learned the lesson and used his far more brutal progrom for the same ends.
We really really don't want to keep trying to replicate the solutions that almost failed 80 years ago.