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From the comment you're replying to: > Let the people who invested poorly get wiped out-- it's better for the economy. (There are examples of this too - crashe

From the comment you're replying to: > Let the people who invested poorly get wiped out-- it's better for the economy. (There are examples of this too - crashes that happened before the federal reserve which were much worse than the 1929 crash, but which are forgotten to history because they didn't create Great Depressions Of course there were panics and corrections before the federal system - as rothbardrand mentioned, they didn't create events as bad as the depression. The "bonus" you mentioned lasts 3 years, where as the great depression: "started in 1929 and lasted until 1941" (src: https://en.wikipedia.org/wiki/Great_Depression https://en.wikipedia.org/wiki/Great_Depression). Note: "The Depression of 1882-85 was not inaugurated by financial disaster or mass panic, but was rather an economic downturn that came about through a protracted and gradual process". Compare that to https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 https://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929 and tell me where the line between "market corrections" / "downturns" and "financial disaster" / "mass panic". But showing evidence is needless: the federal reserve _necessarily_ aggravates the business cycle by promoting mal-investment. This was Murray Rothbard's mentor Ludwig von Mises' great work "Human Action" (https://en.wikipedia.org/wiki/Human_Action https://en.wikipedia.org/wiki/Human_Action), specifically Chapter XX section 8, "The Monetary or Circulation Credit Theory of the Trade Cycle" - (full text is online here: https://mises.org/library/human-action-0/html/pp/818 https://mises.org/library/human-action-0/html/pp/818). One of the key tenants of Austrian economics and in particular the work of von Mises is that it is deductive from pure logic, rather than from experimental or statistical observations. Austrian economics is more akin to biology than psychology.

mcguire 9y ago
The Panic of 1837 was a financial crisis in the United States that touched off a major recession that lasted until 1843---6 years. The Panic of 1873 was a financial crisis that triggered a depression in Europe and North America that lasted from 1873 until 1879 (1897 (!) in Britain)---6 years. The 1882-1885 depression included a year when "an estimated 5% of all American factories and mines completely shuttered during the 12 months running from July 1, 1884, to July 1, 1885". The panic of 1893 included a depression that extended to 1897, a couple of years with 12-14% unemployment, with peaks somewhere around 17-19% and 25% in Pennsylvania, 35% in New York, and 43% in Michigan, and included the panic of 1896. Keep in mind two things: these occurred in the 19th century, when the United States was largely, perhaps almost completely an agrarian country, and that when banks fail (a common occurrence in many of these), you don't get your money back out. The Great Depression is called that because it was the biggest, but it was hardly a completely new and unique thing. [Now, as to Austrian economics, if "it is deductive from pure logic, rather than from experimental or statistical observations", I would think it had more in common with mathematics than either biology or psychology. Or perhaps alchemy.]
- erulabs 9y ago
  Right, to reiterate, we're saying there _were of course_ business cycles before the federal reserve, just like there was _of course_ monetary intervention then as well. The OP and I are saying that the federal reserve _exaggerated_ the depression. Your pointing to much smaller prior events is a non-starter. And yes, biology is not free of observation, my point was that it is more closely associated with deduction rather than statistical inference - but yes, mathematics would be even closer an analog - if I had said that a mathematician would have argued that some economists use statistical inference - goes on ad nauseum. Still not sure what you're trying to say, but yes, there was a business cycle before a necessarily large increase in mal-investment and there were necessarily larger cycles after said investment.

mcguire 9y ago

The Panic of 1837 was a financial crisis in the United States that touched off a major recession that lasted until 1843---6 years. The Panic of 1873 was a financial crisis that triggered a depression in Europe and North America that lasted from 1873 until 1879 (1897 (!) in Britain)---6 years. The 1882-1885 depression included a year when "an estimated 5% of all American factories and mines completely shuttered during the 12 months running from July 1, 1884, to July 1, 1885". The panic of 1893 included a depression that extended to 1897, a couple of years with 12-14% unemployment, with peaks somewhere around 17-19% and 25% in Pennsylvania, 35% in New York, and 43% in Michigan, and included the panic of 1896. Keep in mind two things: these occurred in the 19th century, when the United States was largely, perhaps almost completely an agrarian country, and that when banks fail (a common occurrence in many of these), you don't get your money back out. The Great Depression is called that because it was the biggest, but it was hardly a completely new and unique thing. [Now, as to Austrian economics, if "it is deductive from pure logic, rather than from experimental or statistical observations", I would think it had more in common with mathematics than either biology or psychology. Or perhaps alchemy.]

erulabs 9y ago
Right, to reiterate, we're saying there _were of course_ business cycles before the federal reserve, just like there was _of course_ monetary intervention then as well. The OP and I are saying that the federal reserve _exaggerated_ the depression. Your pointing to much smaller prior events is a non-starter. And yes, biology is not free of observation, my point was that it is more closely associated with deduction rather than statistical inference - but yes, mathematics would be even closer an analog - if I had said that a mathematician would have argued that some economists use statistical inference - goes on ad nauseum. Still not sure what you're trying to say, but yes, there was a business cycle before a necessarily large increase in mal-investment and there were necessarily larger cycles after said investment.