Jackson50 said:
Yes, the policies of Hoover and FDR prolonged the GD The cause was simple. There were other minor contributing factors (inane policy of the SEC), but the loose monetary policy was the main cause of the crisis.
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While I don't necessarily agree that the fiscal policies of those presidents prolonged the Depression (well, maybe if you want to argue that FDR trying to balance the budget in the middle of the Depression caused it to get even worse), but I agree as to the cause of the Great Depression.
It really revolved around monetary policy and the banking system. Two main things caused the Great Depression.
1. Jackson is right that the "loose money" played a big part, just like it did recently. The Fed had the wrong priorities.
2. The collapse of the banking system. People shit bricks when they feel like their money isn't safe. It cause mass panic and encourages people to act more irrationally than they already do. Over 19,000 banks failed under Hoover's watch, around 50% of the banks in the ENTIRE COUNTRY. Letting the banks fail was what turned what would have otherwise been a depression into the Great Depression.
A third relevant cause was the recklessness of people's economic choices, also very similar to the recent crisis. This is sort of engendered but also somewhat distinct from the 1st cause.
We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls. The only thing that really worried me was the ether. There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke
It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...." Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson
