11-14-2016, 02:22 AM
(11-14-2016, 01:35 AM)Warren Dew Wrote:(11-14-2016, 12:34 AM)pbrower2a Wrote: There's a big problem with the Harding-Coolidge 'miracle' of maintaining Gilded-Age norms of politics and economics. It was the Hoover crash.
The Hoover crash was a result of Hoover's permitting bank failures actually to destroy money. I think even Hayek would agree that actively and aggressively contracting the money supply is not a good course of action. Possibly he would have supported it had it been part of a strategy to eliminate fractional reserve banking on a permanent basis, but that was neither what Hoover was doing nor trying to do.
There really was no mechanism for preventing bank failures at the time. I don't really think Hoover had much choice in the matter. My personal take is the bank failures were consequence of the debt implosion and the effects of leverage going into reverse. Even if the banks were saved the bad debts that disappeared would still have imploded the money supply.
Democracy is the theory that the common people know what they want, and deserve to get it good and hard. -- H.L. Mencken
If one rejects laissez faire on account of man's fallibility and moral weakness, one must for the same reason also reject every kind of government action. -- Ludwig von Mises
If one rejects laissez faire on account of man's fallibility and moral weakness, one must for the same reason also reject every kind of government action. -- Ludwig von Mises