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There were massive bank failures during the great depression. And, no FDIC type insurance. So depositors entirely wiped out. So conservative families, not spe

There were massive bank failures during the great depression. And, no FDIC type insurance. So depositors entirely wiped out. So conservative families, not speculating in the stock market or otherwise and "safely" saving their money in banks were simply wiped out. Stock investors also wiped out due to equity market downturn. Farmers wiped out due to food/commodity prices dropping. Every single asset class took its turn. Job losses quickly followed and then fed back on the stuff above to cause even more mayhem. There is no doubt that things like bank regulation and FDIC insurance made a massive difference and at least partly kept the great recession from becoming like the great depression.

ty6853 2y ago
FDIC would have solved the issue of contracting money supply, but the more direct cause was the federal reserve contracting money supply in the first place assuring bank failures in a fractional reserve system. FDIC is a bandaid for having a centrally planned fed rather than free market banking with private deposit insurance.
- mmooss 2y ago
  And lack of bank regulation to prevent their failures rather than just clean up after them. Even with all the tools, 2008 caused great harm.
  - hcknwscommenter 2y ago
    Yes the loose regulations of the Bush era led to the 2008 crisis. It took two consecutive presidential terms by the GOP, but they got there. Will Trump's speed run lead to even worse results? We shall see.
- hcknwscommenter 2y ago
  I don't understand what you are saying. We do have free market banking. Are you suggesting totally unregulated banking would work better? Literally we tried that, it was a huge contributor to the great depression.
  - ty6853 2y ago
    We do not. A banking company recently applied for a banking license to provide full reserve banking ('narrow banking') and their license denied. The government makes it illegal to make a bank immune to failure when they contract supply. >was a huge contributor to the great depression. ... the great depression happened under a central bank system, within 15 or 20 years of this industry becoming far more regulated.
    - hcknwscommenter 2y ago
      Under a central bank system that did not have FDIC insurance. You are deliberately eliding my point. Not cool. And the idea that a completely free market banking system where "narrow banks" can literally compete with the Fed makes any sense in the modern world is insane. Go to Somalia. Have fun staying alive and keeping any of your money.
      - ty6853 2y ago
        On the contrary, FDIC encourages more reckless banking. Customers chase riskier high interest deposits knowing they cannot lose the deposit and that the 'insurance' is already baked in at a public loss if their gamble loses. The customer has little incentive to monitor underlying banking of these insured funds. This isn't just my words, the fdic has written of the moral hazards themselves. And the same principle applies to the central bank encouraging risky bank behavior by bailing them out as a lendor of last resort.
        hcknwscommenter 2y ago
        Most people have better things to do than individually monitoring the underlying banking of insured deposits. And they lack the expertise to do so anyway (I certainly wouldn't know how to accurately price or create a CLO, some complex structured note, swap, CMBS transaction, etc.). That's why we have regulators, and the benefit/cost ratio is phenomenally high.
- SideQuark 2y ago
  Independent central banks have such solid empirical support for making economies more stable that all 200+ countries in the world chose them. As a simple entry into the evidence start with https://cepr.org/voxeu/columns/recent-trends-central-bank-independence https://cepr.org/voxeu/columns/recent-trends-central-bank-in..., and follow up via google scholar.
  - ty6853 2y ago
    I have no trouble beleiving having a central bank that can buy government debt with newly created money, essentially taxing the populace via inflation without exposing representatives to voting on a tax, might be highly attractive to governments worldwide. It is a fairly reliable way to burden the populace under an illusion they don't well see through.
    - SideQuark 2y ago
      > I have no trouble beleiving having a central bank that can buy government debt with newly created money, essentially taxing the populace via inflation without exposing representatives to voting on a tax, might be highly attractive to governments worldwide. Then I recommend you learn some economics and how to look at past evidence. First, it's not taxing people - pretty much zero people hold all their money in cash. Without targeted low inflation, countries run the risk of a deflationary spiral, which means massive unemployment and wealth destruction. At no point did a person pay them a tax. And any govt debt they buy is exactly the result of elected officials spending more than they take in. Don't want the Fed buying govt debt - tell your politicians to raise taxes to pay for what they use, or to cut (and note - the current DOGE idiocy looks at best to cut a fraction of a percent of the budget, while the GOP looks, once again, to add trillions to the debt under the never-once-worked belief that somehow tax cuts will pay for themselves... That is sheer idiocy of the highest form: not a single time has that done it, yet they and their ignorant followers try and try and try.... - this is where your debt comes from). Assets other than cash inflate along with inflation, which is where most people hold assets (houses, stocks, pension funds, pretty much everything). Inflation also lowers payments for fixed loans, like mortgages, so inflation generally gives value to borrowers (they have less effective to pay back over time) at the cost to lenders. So most people at some point have a longer term loan (house, education), and inflation adds to their wealth by making them owe less. So your argument is both ignorant and doesn't understand basic econ or reality. It's this ignorant, self-righteous and frankly incredibly stupid view nearly unique to Americans that is right now destroying trillions in wealth for Americans through equivalently stupid, ignorant, and short sighted policy. So congrats - you are the problem for America. I do not understand how the US went from an economic powerhouse with decent policy and an educated populace to support itself to the current idiot cycle of discredited ideas and such ignorant masses thinking they understand topics they clearly do not. Good luck tanking your economy. It looks like your health system is going along with it.
UncleOxidant 2y ago
Right, so as the OP said above: half of the GD was caused by Smooth-Hawley - the implication being that the other half was caused by other things - most likely the massive bank failures. By letting banks play with crypto we seem to be trying to speed-run a new great depression.

ty6853 2y ago

FDIC would have solved the issue of contracting money supply, but the more direct cause was the federal reserve contracting money supply in the first place assuring bank failures in a fractional reserve system. FDIC is a bandaid for having a centrally planned fed rather than free market banking with private deposit insurance.

mmooss 2y ago
And lack of bank regulation to prevent their failures rather than just clean up after them. Even with all the tools, 2008 caused great harm.
- hcknwscommenter 2y ago
  Yes the loose regulations of the Bush era led to the 2008 crisis. It took two consecutive presidential terms by the GOP, but they got there. Will Trump's speed run lead to even worse results? We shall see.
hcknwscommenter 2y ago
I don't understand what you are saying. We do have free market banking. Are you suggesting totally unregulated banking would work better? Literally we tried that, it was a huge contributor to the great depression.
- ty6853 2y ago
  We do not. A banking company recently applied for a banking license to provide full reserve banking ('narrow banking') and their license denied. The government makes it illegal to make a bank immune to failure when they contract supply. >was a huge contributor to the great depression. ... the great depression happened under a central bank system, within 15 or 20 years of this industry becoming far more regulated.
  - hcknwscommenter 2y ago
    Under a central bank system that did not have FDIC insurance. You are deliberately eliding my point. Not cool. And the idea that a completely free market banking system where "narrow banks" can literally compete with the Fed makes any sense in the modern world is insane. Go to Somalia. Have fun staying alive and keeping any of your money.
    - ty6853 2y ago
      On the contrary, FDIC encourages more reckless banking. Customers chase riskier high interest deposits knowing they cannot lose the deposit and that the 'insurance' is already baked in at a public loss if their gamble loses. The customer has little incentive to monitor underlying banking of these insured funds. This isn't just my words, the fdic has written of the moral hazards themselves. And the same principle applies to the central bank encouraging risky bank behavior by bailing them out as a lendor of last resort.
      - hcknwscommenter 2y ago
        Most people have better things to do than individually monitoring the underlying banking of insured deposits. And they lack the expertise to do so anyway (I certainly wouldn't know how to accurately price or create a CLO, some complex structured note, swap, CMBS transaction, etc.). That's why we have regulators, and the benefit/cost ratio is phenomenally high.
SideQuark 2y ago
Independent central banks have such solid empirical support for making economies more stable that all 200+ countries in the world chose them. As a simple entry into the evidence start with https://cepr.org/voxeu/columns/recent-trends-central-bank-independence https://cepr.org/voxeu/columns/recent-trends-central-bank-in..., and follow up via google scholar.
- ty6853 2y ago
  I have no trouble beleiving having a central bank that can buy government debt with newly created money, essentially taxing the populace via inflation without exposing representatives to voting on a tax, might be highly attractive to governments worldwide. It is a fairly reliable way to burden the populace under an illusion they don't well see through.
  - SideQuark 2y ago
    > I have no trouble beleiving having a central bank that can buy government debt with newly created money, essentially taxing the populace via inflation without exposing representatives to voting on a tax, might be highly attractive to governments worldwide. Then I recommend you learn some economics and how to look at past evidence. First, it's not taxing people - pretty much zero people hold all their money in cash. Without targeted low inflation, countries run the risk of a deflationary spiral, which means massive unemployment and wealth destruction. At no point did a person pay them a tax. And any govt debt they buy is exactly the result of elected officials spending more than they take in. Don't want the Fed buying govt debt - tell your politicians to raise taxes to pay for what they use, or to cut (and note - the current DOGE idiocy looks at best to cut a fraction of a percent of the budget, while the GOP looks, once again, to add trillions to the debt under the never-once-worked belief that somehow tax cuts will pay for themselves... That is sheer idiocy of the highest form: not a single time has that done it, yet they and their ignorant followers try and try and try.... - this is where your debt comes from). Assets other than cash inflate along with inflation, which is where most people hold assets (houses, stocks, pension funds, pretty much everything). Inflation also lowers payments for fixed loans, like mortgages, so inflation generally gives value to borrowers (they have less effective to pay back over time) at the cost to lenders. So most people at some point have a longer term loan (house, education), and inflation adds to their wealth by making them owe less. So your argument is both ignorant and doesn't understand basic econ or reality. It's this ignorant, self-righteous and frankly incredibly stupid view nearly unique to Americans that is right now destroying trillions in wealth for Americans through equivalently stupid, ignorant, and short sighted policy. So congrats - you are the problem for America. I do not understand how the US went from an economic powerhouse with decent policy and an educated populace to support itself to the current idiot cycle of discredited ideas and such ignorant masses thinking they understand topics they clearly do not. Good luck tanking your economy. It looks like your health system is going along with it.

UncleOxidant 2y ago

Right, so as the OP said above: half of the GD was caused by Smooth-Hawley - the implication being that the other half was caused by other things - most likely the massive bank failures. By letting banks play with crypto we seem to be trying to speed-run a new great depression.