-- At 12:04 PM 10/14/2000 -0700, Richard Fiero wrote:
With respect to equilibria, it's an unwarranted assumption that a market has just one stable point. Certainly the Great Depression was a stable but undesirable situation.
James A.. Donald wrote:
It was only stable thanks to massive government intervention.
Jah jah, Herr Donald. Yes, the stupid and pampered working class caused businessmen to not invest in production and wages sufficient to consume the output. Haha!
You are presupposing the Marxist explanation of depressions, an explanation that Lenin abandoned in 1910.
As Herbert Hoover later wrote: : : "The 'leave-it-alone liquidationists' headed by Secretary of : : the Treasury Mellon felt that government must keep its hands : : off and let the slump liquidate itself. Mr. Mellon had only : : one formula: 'Liquidate labor, liquidate stocks, liquidate : : the farmers, liquidate real estate'.
President Herbert Hoover, evidently, was not of the leave it alone philosophy. During the Asian economic crisis, a crisis very similar to that which Hoover faced, Clinton WAS of the liqudidate and leave it alone philosophy, perhaps because the world has seen the consequences of Hoover's philosophy. Everyone commended the Hong Kong approach, instant liquidation for any insolvent enterprise, with the bailiffs taking the pictures off the boardroom walls and cleaning out the liquor cabinent, while the Indonesian approach of resisting liquidation was met with hostility and eventually the foreign encouraged overthrow of the then Indonesian government. The key reason the Indonesian government was overthrown was that it was stiffing Hong Kong creditors in the same way that President Hoover was stiffing American creditors. Hoover's meddling had utterly disastrous and counterproductive results. The result, as usual with government programs that fail catastrophically, was for the government to react to failure by escalating the program. Stiffing creditors of course instantly dries up private credit. Everyone stops lending, which produces a dramatic fall in privately issued liquidity, a catastrophic fall in the volume and velocity of money, which of course swiftly turns a modest recession into a major depression. Of course that was only a minor catastrophe compared to wage and price control policy practiced first by Hoover and then far more forcefully by his successor. --digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG Q/jE+dKkT0Z6VKG21oD8CkhHtBpvihdy+jG+g+lq 4C3pJhlLPi6Jgc5i7eeGS9OZSmeM50dJAcMcrn9di