- Aug 26, 2017
It'll be around. Just hopefully controlled. Hopefully,lessons were learned:like I’ve repeatedly said, if corona Is still around come September we’ll be in a depression worse than the 30’s.
Fed's five critical mistakes:
The Fed began raising the fed funds rate in the spring of 1928. It kept increasing it through a recession that started in August 1929.
When the stock market crashed, investors turned to the currency markets. At that time, the gold standard supported the value of the dollars held by the U.S.
government. Speculators began trading in their dollars for gold in September 1931. That created a run on the dollar.
The Fed raised interest rates again to preserve the dollar's value. That further restricted the availability of money for businesses. More bankruptcies followed.
The Fed did not increase the supply of money to combat deflation.
Investors withdrew all their deposits from banks. The failure of the banks created more panic. The Fed ignored the banks' plight. This situation destroyed any of consumers’ remaining confidence in financial institutions. Most people withdrew their cash and put it under their mattresses. That further decreased the money supply.
The Fed did not put enough money in circulation to get the economy going again. Instead, the Fed allowed the total supply of U.S. dollars to fall by a third.
FDR came to office and influxed millions into Federal programs (WPA) and got Social Security passed.