{"id":26043,"date":"2017-09-24T10:20:30","date_gmt":"2017-09-24T15:20:30","guid":{"rendered":"http:\/\/olduvai.ca\/?p=26043"},"modified":"2017-09-30T13:04:40","modified_gmt":"2017-09-30T18:04:40","slug":"the-sermon-on-the-mountain-of-debt","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=26043","title":{"rendered":"The Sermon On The Mount[ain Of\u00a0Debt]"},"content":{"rendered":"

The Sermon On The Mount[ain Of\u00a0Debt]<\/a><\/h3>\n
\n

\u201cBlessed are the young, for they shall inherit the national debt.\u201d \u2013 President Herbert Hoover<\/a><\/strong><\/em><\/p><\/blockquote>\n

The Hoover administration thought there was no room and was ideologically opposed to fiscal expansion to stimulate aggregate demand. \u00a0Furthermore, Keynesian theory was not even developed at the time. \u00a0The General Theory of Employment, Interest and Money<\/a>\u00a0 was not published until February 1936.<\/p>\n

A policy error, partially due out of \u00a0ignorance, that led to the Great Depression, though it was monetary policy and the Fed\u2019s failure as \u201clender of last resort\u201d that \u201cput the Great in the Great Depression.\u201d<\/p>\n

\u2026what happened is that [the Federal Reserve] followed policies which led to a decline in the quantity of money by a third. For every $100 in paper money, in deposits, in cash, in currency, in existence in 1929, by the time you got to 1933 there was only about $65, $66 left. And that extraordinary collapse in the banking system, with about a third of the banks failing from beginning to end, with millions of people having their savings essentially washed out, that decline was utterly unnecessary \u00a0\u2013 Milton Friedman<\/a><\/strong><\/em><\/p><\/blockquote>\n

Here is Ben Bernanke,<\/p>\n

The problem within the Fed was largely doctrinal: Fed officials appeared to subscribe to Treasury Secretary Andrew Mellon\u2019s infamous \u2018liquidationist\u2019 thesis, that weeding out \u201cweak\u201d banks was a harsh but necessary prerequisite to the recovery of the banking system. Moreover, most of the failing banks were small banks (as opposed to what we would now call money-center banks) and not members of the Federal Reserve System. Thus the Fed saw no particular need to try to stem the panics. At the same time, the large banks \u2013 which would have intervened before the founding of the Fed \u2013 felt that protecting their smaller brethren was no longer their responsibility. Indeed, since the large banks felt confident that the Fed would protect them if necessary, the weeding out of small competitors was a positive good, from their point of view. \u2013 Ben Bernanke<\/a><\/i><\/b><\/p><\/blockquote>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Sermon On The Mount[ain Of\u00a0Debt] \u201cBlessed are the young, for they shall inherit the national debt.\u201d \u2013 President Herbert Hoover The Hoover administration thought there was no room and was ideologically opposed to fiscal expansion to stimulate aggregate demand. \u00a0Furthermore, Keynesian theory was not even developed at the time. \u00a0The General Theory of Employment, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1035,951,195,303,16124,383,458,534,536,3650],"class_list":["post-26043","post","type-post","status-publish","format-standard","hentry","category-economics","tag-cash","tag-currency","tag-debt","tag-fed","tag-global-macromonitor","tag-great-depression","tag-john-maynard-keynes","tag-monetary-policy","tag-money","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/26043","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=26043"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/26043\/revisions"}],"predecessor-version":[{"id":26044,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/26043\/revisions\/26044"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=26043"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=26043"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=26043"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}