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Should monetary crashes be stopped????

J

JD Seller

Well-known Member
What I mean is should the Government try to stop/regulate economic crashes??? Since the Depression of the 1930s the government has manipulated the economy and the banking industry to stop/soften major crashes.

I enjoy studying history. The economies of the world have always cycled. The US economy did as well. There where depressions/recessions every so often all during the history of this country. I felt these cycles actually helped in the long run. The down times redistributed the wealth in the general economy.

I would have let the BIG banks and the car companies fall in 2008. This would have helped in the long term.

The bailouts rewarded companies that behaved badly. That should be left to the market and share holders.

The resulting banking laws actually helped the bad eggs and penalized the smaller banks that did not cause the original problem.

There is the trouble with the Government "helping/saving" businesses. The best business will not always get the help. The most politicially connected will always get the help.

So the BIG banks got Government money and then rewarded the politicians that gave them the money with part of that money. Neat little legal SCAM!!!

GM should have crashed!!!! There would have been some kind of company come out of the wreckage. The new company would have been better in the long term than the "rewarded" lousy company that survived.

The same way with the big banks. Let them fall. Then that keeps the next generation of them in check about making "bad" loans/rules.

You make the landing too soft and then they will not worry about crashing the next time.

Why do you think the generation after WW II did so well??? They KNEW the lessons taught by the depression of the 1930s.

Today's generation is soft in that they have rarely had economic hard times. They are making " bad" monetary decisions with few consequences.

The current personal and governmental debt is out of control. A good crash could very well be the teacher of better personal and national monetary policy.
 
Without a doubt the biggest fraud perpetuated on the voting populace in the 20th century was the claim that FDR ended the great depression, the easily verifiable truth is that FDR's attempted manipulations and actual policies extended a deep recession and transformed it into the depression which was fianlly ended by WWII. All governmental meddling in private enterprise injures the economy, the many attempts by our federal government to reverse economic downturns have all been miserable failures, either immediate, or in the long term consequences. Everything that has been done since the fall of 2008 has only slowed the recovery and impeded US economic growth and job creation, basically, the free market forces that are left in the US lifted the nation out of recession in spite of the current administrations best efforts to crush free enterprise and capitalism once and for all.
 
Bingo, LAA.

The "great depression" was great only in the US, and great only due to the policies of the FDR administration.

Dean
 
LAA I absolutely agree with your statement. A big irritation to me is how the Feds have manipulated interest rates. This greatly penalizes retirees and people that like to save for the future. There should have been a law passed capping interest rates both ways to preserve a healthy medium point for interest rates while still allowing the feds to move the prime to stimulate the economy. The interest rates could not go to high or to low and would have to always return to the base rate within a set time frame.

By keeping the rates at such an unhealthy low rate they have really only shifted economy in the favor of the less prepared people at the expense of the older generation.
 
On GM:

JD I hear you man, but can you picture the president of THE United States visiting a foreign dignitary with his specially flown in (at tremendous cost to us taxpayers) limousine(s)...one to ride one back up, with a logo on the grille of a zero with cows horns on the top (Toyota if you missed it) rather than the supposedly Made in the USA Cadillac Crest with gold leaf borders.

Or how about the SS and all the "Goberment" helpers running around in a Corolla rather than their super black Chevy Suburbans.

Just doubt that would be allowed to happen.

Not that I support it, but the GM truck I am driving was built while the Goberment had the reins and it the best GM I ever had and GMAC is now a full fledged bank: Ally.

Other than that, especially Wall street, let the suckers sink.

Mark
 
No.Monetary or " money crashes" as you put it are the result of runaway inflation through excessive money printing or "quantitative easing"as Janet Yellen likes to call it. The federal reserve will attempt to postpone the day of reckoning until the dollar finally collapses.JDSeller search the web for the Mises Institute.Started by Ludwig Von Mises an Austrian economist.Lots of good info there and they explain the history and roots of the federal reserve bank.
 
You wrote it well, JD, couldn't agree more. Answer to your orig. question...absolutely NOT ! Failure is the great "income redistributer" as external_link calls it. Without the ability to fail , a better idea won't be found. Applies to anything/service/product or whatever. I hate to say it on here but the same applies to Government subsidies to farms. Not only are they being grossly abused (by greedy corporations not even related to farming but buying up large farms to get the $$$$) but go against the very fabric that made this country.
 
My gut feel on what you say is that it allows the FED/Goberment to borrow to their heart's content for little of nothing. Agree with you on retiree lack of interest on IRAs and such. Can't afford to play the market; can't afford to lose. But anything else with little or no risk is just a joke. Thanks FED.

Mark
 
I think there's more it it than letting the banks and big businesses fail.

The banks got into trouble because laws were passed in the 1990's requiring them to make those risky loans. The administration thought it would spread the wealth around, but it had unintended consequences.

And remember that the reason GM got into trouble was because they had a huge liability in the form of lifetime healthcare and full pensions for union workers who had a "30 and out" contract. Whether that was the company's fault or whether their hands were tied by labor laws is a topic for another discussion.

Bottom line is that if you want the government to allow businesses to fail, it also has to let them to succeed on their own. It can't meddle sometimes and then let them suffer the consequences.

The next big bust we could see is the healthcare system. There are many politicians who would like to see all hospitals and health insurance companies in the US go bankrupt so the government can take over the entire system.
 
We"re told that some companies are too big to fail, so they get bailed out. Just once, I"d like to see what happens when they don"t get bailed. Perhaps we"d find out that the world won"t come to an end.
 
JD, pretty much agree with everything you said. Market forces and bad things are only allowed to happen to people who aren't politically connected.

GM is a good example. I lost everything on my GM stock which was a substantial part of my retirement plan. However, external_link did not make the unions take the same hit as I did. in fact, he REWARDED them by giving them a big chunk of the company to be used to pay for their lifetime health care (another benefit that very few of us get).

He touts that GM was "too big to fail" but the reality is that the pieces would have been bought and cars would still have been made under the same brand name as before. Chevy is a very valuable brand name. Instead, external_link ignored bankruptcy law, kept the UAW members whole (their contracts should have been ripped up), protected them over SECURED CREDITORS. Oh yeah, ask a UAW member and they'll tell you about their "sacrifices" of a 2 tier wage (doesn't affect them one bit) or loss of a few vacation days or holidays(out of the dozens they get.

Same thing with the banks. Every bank that made poor decisions should have been allowed to fail. Unfortunately, a lot of the "poor decisions" related to the housing bubble (sub-prime loans) were forced on them by Congress. I believe that's why they were bailed out (because Congress would have had egg on their faces for the bad results initiated by the CRA).
 
*On FDR. He did put policy in place that favored steady long term growth over short term profits. Regan had some good ideas on taxes and regulations but went too far.
 
Got to agree with you generally. The depression of 1873 was based on the railroad bubble. Similar to the housing bubble since railroads spent a decade being a guaranteed investment like housing was. The bank Jay Cooke and Co failed when foreign money dried up. This failure spawned a failure on wall street and the New York stock exchange was shut down for 10 days to control panic selling. Within 2 years of Cooke's failure almost 20,000 businesses were lost and a third of the railroads went bankrupt. Unemployment was high and wages lost up to 45% which in turn spawned the rise of labor unions.
This particular depression lasted 6 years but some think that the US didnt actually recover until 1897.
I'm not sure there is a good side to the involvement or lack of. I think the involvement has done away with the smaller recessions which in turn build up to big ones. A problem is that with the economy so globally connected the businesses need to be so big to remain competitive. So while I agree with the sentiments I'm personally not sure that it is totally the right way, which is why the government doesn't pay me for economic advice.
 
(quoted from post at 17:25:00 01/10/15) Without a doubt the biggest fraud perpetuated on the voting populace in the 20th century was the claim that FDR ended the great depression, the easily verifiable truth is that FDR's attempted manipulations and actual policies extended a deep recession and transformed it into the depression which was fianlly ended by WWII. All governmental meddling in private enterprise injures the economy, the many attempts by our federal government to reverse economic downturns have all been miserable failures, either immediate, or in the long term consequences. Everything that has been done since the fall of 2008 has only slowed the recovery and impeded US economic growth and job creation, basically, the free market forces that are left in the US lifted the nation out of recession in spite of the current administrations best efforts to crush free enterprise and capitalism once and for all.
Click to expand...

You are absolutely correct. But as long as there is a government department of education there will always be false history taught to our children. It will be left up to us to make sure at least some of the kids hear a different history lesson.
 
"Just once" these are once in a lifetime things for the most part. They did not do it for the Banks/GM. They did it because history tells us it takes decades of recovery. They did it partly for you and me and our kids. That's what they mean by to big to fail. It hurts everyone more than the punishment to them to let them fail.

JD Seller's twenty word paragraphs are mostly factual but each require 10,000 words of on the one hand and on the other hand.

I think a mild recession/pullback every 3 or 4 years instead of 10 or 12 will wash out most of the bad behavior. By Consumers, farmers, bankers, politicians, business, blah blah. The fed trying to stop the recessions might be the root of the problem.

It was a PERFECT STORM.

National dept leaves us no buffer for another disaster be man made or natural.
 
The whole US economy is living off Gov't money thats being printed up and borrowed.Bank Bailouts,
Welfare,Food Stamps,Farm Subsidies,$$$ for college professors to 'study' things,the list goes on and on.All amount to the same thing.
 
Just my opinion, having dealt with a lot of divisions of the "Old GM" a whole bunch of the guys there wouldn't have a clue what it would be like to work someplace where the object was to get the task done, not try to hide. Any organization that big with that kind of philosophy ingrained in it is bound to fail. Probably that should have happened, but maybe they can pull it out under new management. I'm not buying any GM stock though.
 
I'm wondering if any of you guys personally knew anyone who lived through the Depression that started in '29.

It totally changed the way everyone I personally knew in that generation thought.
 
Yes I knew and talked to a lot of them in my family and neighbors. My grandfather was so happy to get work on the Civilian Conservation Corps so he could feed his family.Living in tents gone for a month at the time. The great Depression was bad enough but it didn't rain for 3 years in that time either. Back then a good 90% of the population were on farms.

My other grandfather said it was so dry that the last cultivation they made in the tobacco fields with the mules was in May. The tracks the mules left in May could still be seen in Sept. Tobacco what little was made was taken to market and buyers wouldn't buy it. So they brought it back home and spread it on the land.No crop no pay. No crop insurance and no subsidy no money.

Only crop that was made in that 3 years was wheat. It did rain some in the winter. All summer crops died. Creeks dried up.

I worked with an older gentleman in the early 70's at the Lane Co. in Altavista Va. Mr. Littles told me his family had eaten rats because they had killed all the squirrels and rabbits. Again no place to work, no money and no food in many cases. Electricity didn't get here until 1947-48.

My grandfather that lived in the house I'm in now would give folks work on the farm and pay them with wheat. Was no money here. Two of the black men(Dal and Jimmie Lee Panel) I new as I grew up told me about being paid wheat and they were proud to get it.
They would get their wheat and walk to the old mill that's still being run today at Cedar Forest Va. to get the wheat ground. Then walk back home with flour. 9 miles there and back.

All these folks were ready for any help they could get from anywhere. No bail outs back then and there was a surplus in the national budget at the beginning of the depression.

Careful what you wish for. Don't think for one second it couldn't happen again. It's history and don't forget about it.
Cedar Forest mill
 
LAA has it right. Periodic crashes and recessions/depressions are to the economy as fires are to forests - necessary to clean up the old deadwood and allow future healthy growth.
 
JD Seller and others. Since 1913 The FEDERAL RESERVE determines Monetary Policy. The government can advise to a point. The Federal Reserve is owned by the banking system and answers to no one. It is PRIVATELY OWNED and not government. The Teasure Secretary is pretty much controlled by the Fed.
When you deposit a dollar in the bank it becomes a promissary note. If things get tough the bank does not have to give it back to you
The Big Banks CAN NOT fail because 5 or 6 banks own a large portion of our debt, business loans, money in circulation, etc. It really is not a pretty picture.
Some key dates are the creation of the
Federal Reserve, FDR devaluating gold, and the President Nixon taking us off the gold standard and LBJ Guns and butter policy was the beginning of what we have today.
If you read on FED POLICY and Guys like David Stockman and other former government and Fed officials you will be told Dollar will fail. When it hits the wall nobody knows.
If anybody has questions, I can remember monetary policy and significant events back to the mid 1950s
 

Yup, my mom was born in a coal mining camp in Bonny Blue, Va. She told me about her dad getting paid in script to buy whatever they needed at the store that was owned by the coal company.

Pic is not my pic (dwnld from net) of the place and time she was born.
mvphoto14854.jpg
 
Its a house of cards.

Prop it up when it crumbles.

While you can.

The most visible get help. Too big to fail.

I agree with you JD. That won't get either of us very much.

Paul
 
I remember when the Guberment got in back in early '60,s with the "soil bank" scheme. Pay you to set aside acres but in order to get it you had to fill out the forms and also tell them exactly how many acres of what crops you had planted. So for "peanuts" the farmer gave the govt./ commodities traders ALL the info they needed to manipulate the prices to THEIR advantage,not the farmers. So to answer your question...NO the Govt. shouldn't be in farming. There is absolutely no reason for it accept to gain information/control. They are NOT doing it for the farmer and those who think they are , have been in the trap too long.
 
All my grandparents lived thru the depression as they were born 1884-1902 raised kids and didn't live off the Gov't either.They were serious folks that worked hard and made everything they had count.They wasted nothing and could make something out of almost nothing. They would be appalled at how the country has been run into the ground and the amount of assets everyone wastes.To me they were
"The Greatest Generation"
 
It ain't worked too well really since the Federal Reserve Notes were created in 1913 they have lost
around 97% of their value against Gold.Not far to go really to be worthless.Heck face value the Confederate Dollar is worth more than Federal Reserve Notes you could buy a whole lot more with a Confederate $10 bill than a so called US 10 Dollar bill.
 
JD, if one of your cows kicks you in the leg, do you shoot her dead on the spot, or do you limp off with the expectation she will produce another calf or two? I think you're equating what you think is morally justified with what is in the best interests of our country. Sorry, but it seldom works out that way. Certainly a lot of very highly paid people in the financial sector behaved badly and should have been punished. But does that mean everyone associated with them, including their employees, customers, and business partners are also guilty by association? More importantly, should the country at large suffer in order to punish a few people who behaved reprehensibly?

The idea that we would have been better off in the long run if the financial crisis had gone unchecked is a bit of Monday-morning quarterbacking that isn't supported by the facts. We don't know for sure what would have happened if the government hadn't stepped in and just let the dominoes continue to fall. But considering the fact that the crisis affected just about every American (and a lot of people overseas), it seems pretty likely there would have been a lot of suffering on the part of average people without the various bailouts and stimulus packages.

By the way, the government actually made money on TARP. $54 billion to date. <a href=" http://projects.propublica.org/bailout/">http://projects.propublica.org/bailout/</a>
 
At least ONE person gets it....^^^^^^

The reality is, probably less than 1 in 10,000 actually understands how the US economy works. Many of the comments in this thread make me think that number may be more like 1 in 1,000,000.
 
My Parents and my Grandparents were all born, raised and lived in the deep south, my Father was born in 1919 and told me the depression affected little in North Louisiana in the 30's because nobody had any money to start with, they farmed and logged and did without when necessary way before the depression hit. My Mother was born in 1921 and raised in south georgia, she never had a pair of shoes, until she started school in 1927 when she was 6 years old, 2 years before the stock market crash, up until that time she had rags tied around her feet in winter because she was the baby and there were no hand me down shoes left. All of my paternal and maternal aunts and uncles were raised the same way, both sets of my grandparents worked until the day they died and all of their children were successful in life. My paternal Grandparents were in their 50's before they had enough saved to buy their own farm but they never gave up and soon had that farm paid off, they bowed their heads at every meal and thanked the good lord for his bounty and the chance to earn it.
 
The first bailout I know of was for $1.5 billion loan package to the Chrysler Corporation Loan Guarantee Act of 1979.

Like it or not, government did it in the past. So it's a no brainer for them to do it in the future.

The Fed determines interest rates, which controls the economy. If the economy isn't kept under control things would get very ugly.

Yes, I think there are somethings that are too big and we can't let them fail or everyone could loose everything. The whole world would have been looking at another GREAT WORLD WIDE DEPRESSION.

At the time of the last bailout I was very concerned it would work. Some of it did work and some of the money in friend's pockets.

That said, look at the market, $8k in 08 to over $18k. Some may say that proof it worked, some say the sky if falling. Only time will really tell.

I see the necessity of our government keeping the ship from sinking. Let the stock market sink the ships that need sinking.
 
So Mark if something effect a lot of people then it is OK to let wrong doings go unpunished????

In a way that is what your arguing.

My point is that trying to "bailout" everything is not the Governments place. Business should raise and fall on its own merits.

Also there have been ups and downs forever in the economies of the world.

I was trying to say that stopping the smaller "corrections" will eventually lead to a larger crash.
 
The problem is that the US economy is entirely smoke and mirrors. There's nothing backing it other than the agreement among the international banks that our reputation or credit is good. IIRC there isn't enough gold in the entire world to cover our national debt. It's all fiat currency and electrons. That can't last forever. You cannot borrow your way to prosperity if you never pay the money back. Thats about where we're at now. I really don't know why it hasn't collapsed yet.


As far as "too big to fail", that's a whole 'nuther issue. Mismanagement is not a reason for gov't to step in and bail anyone out. Stupidly generous union contracts that cripple a company are not a reason. Yes, the ripple effect would be serious and in at least one case the loan has been repayed. The problem is that the precedent is set and now the expectation of a gov't bailout is a real thing. People seem to forget that every dollar "the gov't" spends comes from your pocket and mine. gov't has no money of it's own, not one red cent. That particular chicken is going to come home and roost pretty soon. The uber wealthy are protected, the poor are provided for. Those of us in between are stuck with the bill. If you're making over $35 or 40K a year on up into a few million you are in the same boat. The class warfare minions will tell you that "the rich" need to pay more. Well, the really rich are never going to pay in the same terms as we do. Warren Buffet doesn't even consider taxes except as a tool to be used. fact is that there is no way to fund the gov't in perpetuity at the present rates of spending. So keep supporting the idea of bailouts and stupid gov't "investment" (ie- payback for campaign contributions) and all the other ideas where "the gov't" pays for it. In the end you or your kids or grandkids will get the bill.
 
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