I don't really understand the US economy or know much about the Great Depression, but that doesn't mean I don't have an opinion
I think fear is what caused the run on the banks when the bubble burst in the stock market. And, for good reason. There was no SEC back then and there was a lot of stock market scams. There also was no FDIC. Once the run on the banks occurred, the bankers started calling due mortgages! Back then, a bank could recall a mortgage and ask for the balance due on the loan immediately, which caused a lot of farmers and home owners to lose their property.
The thing I worry about now is the level of debt we have going into this. There was no income tax back then and I don't believe the national debt was very high. Now we have the twin deficits and a heft tax rate. Add in inflation to service the debt and we are stretching our limits.
In regards to the Depression, I think the Government did all the wrong things initially. They raised interest rates to squeeze liquidity out of the economy and slapped on tarriffs.
What we are up against right now seems opposite to me. It has felt for a long time that we have had too much liquidity in the economy. I wish I had a better understanding of both the Great Depression and the current economic situation.
Has anyone read a really good book on the Great Depression? I have read a few books about it, but nothing I would say offers a good explaination.
I believe Bernanke has put a lot of effort into understanding the Great Depression.
My Dad graduated from college in 1930 and was one of three people in his class to get a job. He said in the class of 1931, no one got a job. He went to an engineering school. I always tried to pump him for information on what the Great Depression was like, but he never had much to say except, "Hey, it was an awful time". He was definately frugal in his later years.
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