The Irreverent Economist

History Speaks for Itself

People are beginning to compare the current era to the onset of the Great Depression.  So let's hear from those who were in the thick of it:

"A giant suction pump had by 1929 to 1930 drawn into a few hands an increasing proportion of currently produced wealth. But by taking purchasing power out of the hands of mass consumers, the savers denied themselves the kind of effective demand for their products, which would justify reinvestment of the capital accumulation in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When the credit ran out, the game stopped”

-- Marriner Eccles, chairman of the US Federal Reserve, 1934-1948

"We had to struggle with the old enemies of peace–business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob. Never before in our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me–and I welcome their hatred.”

-- Franklin Delano Roosevelt, October 1936


And this came yesterday from my old boss at Harvard, Mohamed El-Erian who, like me, is no socialist:

“With the economy under such pressure, the continued co-option of the Fed by markets risks fueling more criticism that the central bank cares much more about Wall Street than Main Street and much more about the rich, who disproportionately own financial assets, than the less-fortunate segments of society.”


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