{"id":29332,"date":"2016-03-28T01:00:01","date_gmt":"2016-03-28T05:00:01","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=29332"},"modified":"2016-03-19T09:40:20","modified_gmt":"2016-03-19T13:40:20","slug":"qotd-black-thursday-1929","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2016\/03\/28\/qotd-black-thursday-1929\/","title":{"rendered":"QotD: Black Thursday, 1929"},"content":{"rendered":"<blockquote><p>One of the most thorough and meticulously documented accounts of the Fed\u2019s inflationary actions prior to 1929 is <em>America\u2019s Great Depression<\/em> by the late Murray Rothbard. Using a broad measure that includes currency, demand and time deposits, and other ingredients, Rothbard estimated that the Federal Reserve expanded the money supply by more than 60 percent from mid-1921 to mid-1929. The flood of easy money drove interest rates down, pushed the stock market to dizzy heights, and gave birth to the \u201cRoaring Twenties.\u201d Some economists miss this because they look at measures of the \u201cprice level,\u201d which didn\u2019t change much. But easy money distorts relative prices, which in turn fosters unsustainable conditions in certain sectors.<\/p>\n<p>By early 1929, the Federal Reserve was taking the punch away from the party. It choked off the money supply, raised interest rates, and for the next three years presided over a money supply that shrank by 30 percent. This deflation following the inflation wrenched the economy from tremendous boom to colossal bust.<\/p>\n<p>The \u201csmart\u201d money \u2014 the Bernard Baruchs and the Joseph Kennedys who watched things like money supply \u2014 saw that the party was coming to an end before most other Americans did. Baruch actually began selling stocks and buying bonds and gold as early as 1928; Kennedy did likewise, commenting, \u201conly a fool holds out for the top dollar.\u201d<\/p>\n<p>When the masses of investors eventually sensed the change in Fed policy, the stampede was underway. The stock market, after nearly two months of moderate decline, plunged on \u201cBlack Thursday\u201d \u2014 October 24, 1929 \u2014 as the pessimistic view of large and knowledgeable investors spread.<\/p>\n<p>The stock market crash was only a symptom \u2014 not the cause \u2014 of the Great Depression: the market rose and fell in near synchronization with what the Fed was doing. If this crash had been like previous ones, the subsequent hard times might have ended in a year or two. But unprecedented political bungling instead prolonged the misery for twelve long years.<\/p>\n<p>Lawrence W. Reed, <a href=\"http:\/\/fee.org\/freeman\/detail\/33-the-great-depression-was-a-calamity-of-unfettered-capitalism\" target=\"_blank\">&#8220;The Great Depression was a Calamity of Unfettered Capitalism&#8221;, <em>The Freeman<\/em><\/a>, 2014-11-28.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>One of the most thorough and meticulously documented accounts of the Fed\u2019s inflationary actions prior to 1929 is America\u2019s Great Depression by the late Murray Rothbard. Using a broad measure that includes currency, demand and time deposits, and other ingredients, Rothbard estimated that the Federal Reserve expanded the money supply by more than 60 percent [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,25,7,41,13],"tags":[164,106,165],"class_list":["post-29332","post","type-post","status-publish","format-standard","hentry","category-books","category-economics","category-history","category-quotations","category-usa","tag-federalreserve","tag-greatdepression","tag-inflation"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-7D6","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/29332","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=29332"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/29332\/revisions"}],"predecessor-version":[{"id":29333,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/29332\/revisions\/29333"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=29332"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=29332"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=29332"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}