Contrasting Views of the Great Depression | Robert P. Murphy

[@grantl1569]

The more that I learn about Keynesian economics the more that I come to realize that it is basically a theory built central planning as one of it's core tenets. And if the 20th century demonstrated nothing else, it demonstrated that central planning does not work.

[@DynastyJr]

but it has been working

[@RabeltCorez]

@@DynastyJr as a destroyer of wealth and human happiness, yeah

[@Nielsio]

Very informative. Great lecture!

[@webnetinternet]

Thomas Sowell also mentioned alot the 20-21 recession

[@utkarshanand9706]

Nice video 👍🏼 I agree with Rothbard’s explanation, that Hoover spent a lot. Interestingly enough, I guess even Thomas Sowell of Hoover Institution agrees that the spending problem began with Hoover himself. What I did find a bit awkward was Friedman’s explanation. While watching him talk about free markets, I’ve seen him talking against government spending, saying that running huge deficits is very bad for the economy and people end up paying for it and if the government doesn’t run deficits and still spend, they end up paying the inflationary cost. Their saved money becomes worthless. Even though the government isn’t taking away from them, it’s making the money that they’ve stored less worthy, which is the same as taking away from them without changing the worth. (Of course it misallocates later on). But, here it seems as if he’s worried about liquidity an is calling for inflation. I guess he might as well have been a victim of misinterpretation.

[@GoosewithTwoOs]

I can say as I sit in history class that this is what I was thought, the bad teachers persecutive.

[@flyhalfjack]

The Hoover Dam was built from 1931-1936.

[@thermionic1234567]

I suspect the most salutary aspect of the WW2 period was that there was very little frivolous investment and this was combined with a much-more-tolerable period of consumer consumption deferral because of the long-term goal of Victory.

[@klaptongroovemaster]

@cruiscinlan He stated at the beginning of his lecture that he did not intend to be very technical, and that some people would find it too elementary. Bob Murphy is not lacking in education and is not poorly informed. He is presenting a non-mainstream version of the Great Depression. For more detailed information on these things your public school teacher and/or keynesian econ teacher never taught you, visit mises.org where there are entire books available to download on the topic.

[@JakeNonphixion]

@cruiscinlan I didn't mean to imply that Murphy is relying solely on Rothbard's account, but merely offered it as a suggestion of a much more thorough discussion on this topic. I am quite confident that Murphy has done extensive research on the depression. He does have a PhD and has written a book on the topic "The politically incorrect guide to america's great depression". But despite the Austrian position being contrarian, he clearly takes time to describe and refute the opposing theories.

[@thermionic1234567]

I read that it took 25 years for the Dow to recover to its 1929 peak. Has anyone done an analysis of the Dow compositions at both points? I’m asking, as I am wondering what the ratio of speculative/unsound investment to solid investment was.

[@shawn576]

Interesting presentation.

[@stealthswimmer]

@klaptongroovemaster I just finished reading a macroeconomics textbook, and surprisingly the conclusions from the models used by them and other Neoclassicals (IS-LM model and Aggreggate Demand - Aggregate Supply model) show things that Austrians should agree with. Where they differ seems to be on why the stuff happens and on the policy prescriptions that should/should not be used in response.

[@gwho]

good speaker.

[@SaulOhio]

You can find what he is talking about if you read Rothbard's book "America's Great Depression". And you can find a lot of it if you want to dig deeper by reading Hoover's own memoirs, and records of the 1920 Presidential Conference on Unemployment. Or do you think what you read in high school history text books is "the historical record"?

[@GeoffBosco]

"Anytime you can put Cameron Diaz in a power point...ya do it!" Bob is BAMF!

[@thermionic1234567]

Couldn’t this glut of savings also cause a beneficial deflation?

[@JakeNonphixion]

@cruiscinlan He's mostly simplifying Murray Rothbard's America's Great Depression, which can be found for free here: mises . org/rothbard/agd . pdf And is one of the most critically acclaimed and well researched accounts ever written.

[@bearsrule865]

@H1TMANactual Friedman was the first to advocate that the government support large deficits with increases in M1 and M2 to boost aggregate demand. In the 2000's, however, he realized how impractical it was in practice. But he did support increases in the money supply at first in the 70's

[@rockandrock44]

@SvrchovaneCechy Nice, articulate response.

[@torontotomtom]

I dont understand what he says at 48:10 about the real gdp figures for the war years being wrong because of price controls. If there is no inflation to adjust for then nominal figures are indeed the real figures arent they? Even though the inflation is just hidden and the monetary base is actually expanding like mad. But maybe that’s what I’m getting wrong

[@sangeetasharma5435]

thomas there If you don't allow inflation, it occurs in form of scarcity and rationing but it doesn't show up in any data.

[@eriknelson2559]

Richard D. Wolff stated during his SOHO debate with Gene Epstein that the 1930s were the greatest decade of Labor movements & Unionization. In addition to the request of President Hoover to business leaders not to reduce wages, such developments plausibly contributed to "stick wages & prices" (corporations forced & implored to maintain wages then had to maintain prices to make production worthwhile).

[@stealthswimmer]

Thing is that Schwartz and Friedman considered the Depression as a problem with lack of liquidity, so they believe the Fed should've expanded the money supply. Schwartz said in an interview with Wall Street Journal that the recent recession was a problem with solvency (some banks were not in condition to continue business operation). If I recall correctly, she also believes insolvent banks should've been allowed to fail because the Fed should lend to solvent banks

[@Leofus1986]

Bob Murphy: THA BAUS!!!

[@spencerantoniomarlen-starr3069]

Where are you getting your info on Hoover from?

[@rbarnes4076]

It is historical research. Speeches, looking at presidential actions, looking at passed legislation. It is all there. The issue is that basic history texts have it backwards, which breeds folks who don't look further.

[@YanraOnesja]

@@rbarnes4076 i havent seen the sources.. but lets check babs work eh?

[@lylecosmopolite]

Compute the percentage change in the monthly monetary base, over the its value 12 months prior. Monetary base = US currency outstanding + bank reserves held at Federal Reserve banks. I use the historical data prepared by the St Louis Fed, that adjust for changes in reserve requirements. Between December 1926 and December 1930, the time series I have just described had an average value of -0.8%. This 4 year slow contraction of the base, during a time of significant economic expansion, planted the seeds of the Great Depression. The Fed should have reversed course dramatically by Thanksgiving 1929, once it was clear that stock market had deflated. The Fed raised its discount rate to 6.5% in the spring and summer of 1929. A similar brutal contraction of the monetary base in 1937, triggered the recession of 1938. The Fed opened its doors in early 1914. It lacked the knowledge and experience to navigate the shoals of the interwar world. It wrongly saw its role as defending the gold exchange standard. Its governance structure was weird until a major 1935 reform. The Fed as we know it emerged under W M Martin, Governor 1951-70. I let history judge whether the tripling of the monetary base, 2008-10, prevented another Great Depression from starting in 2008. It also remains to be seen whether the huge monetary base can be "unwound" should inflation appear. The bad consequences of central banker stupidity can be colossal.

[@YanraOnesja]

~can be! lol

[@tallswede80]

Certain.

[@polarbearanne]

When he talks about Friedman, he must not have heard the interview with Friedman about six months before he died when he said that he thinks the Federal Reserve should be closed. He must have reconsidered his opinions that the Federal Reserve was too tight on money, but sadly he is not around to elaborate. I love Milton Friedman, and like to believe that he was educable till the very end, and mended his opinion on the Fed.

[@pipem4n]

Moreover, Austrians do not agree with aggregate model at all. There is no magical line between certain scales that suddeenly changes laws of economics, so there is no need for a new domainof economics. Thats in huge contrast with Austrians who say that it's precisely this kind of policy created Great Depression. Perpetuated malinvestment and resource squandering, accompanied by capital consumption and heavy constrains on economy - sovietisation in a degree. But we have to aggreggately spend bla

[@H1TMANactual]

Friedman has always been for closing the Fed.

[@rockandrock44]

It's not an ad hominem, it's a statement of fact.I didn't say "Bob Murphy is ugly, therefore he's wrong."

[@mulllhausen]

federal banks have indeed made interest rates negative in the past en.wikipedia. org/ wiki/ Interest_rate #Negative_interest_rates

[@djoshuave]

The lecturer's point at 30:48 makes no sense. I don't defend the "standard story" that he presents leading up to this, but it's no stretch at all to say that the bubble that burst in 1929 was a good 7+ years of "normalcy" and the Associated State in the making, going back to previous administrations. It's not that Hoover was or wasn't a spendthrift, but that Hoover/Coolidge/Harding spent public money through a supply-side corporate cronyism. For nearly the whole decade, the two biggest industries in the US were finance and marketing, aka (over)saturating a market with overproduced non-necessities that were often bought on credit by consumers falling prey to the psychological machinations of Edward Bernays' new PR. Hyperspeculation and mass consumerism were out of control for nearly a full decade, the Fed was run by Wall Street and the press was usually on Wall Street's payroll, culminating in Hoover's expressed gratitude to the country's business leaders for turning American citizens into "happiness machines." This was the deep-seeded mentality and political culture that mere economic theories (apparently) can't or don't account for.

[@judd73]

I think I'm becoming a Robert Murphy zombie.

[@rockandrock44]

Good video, but Dr. Murphy doesn't understand Monetary Equilibrium Theory.

[@pipem4n]

he ment something like: you know, if all you have is an ad hominem, than it must be bullshit - but he shortened it :D

[@Monopolist91]

The conservative gotcha on big government spending in WW2 as a reason the Great Depression ended is a bit disingenuous. Conservatives would say it wasn't the spending per say, but simply 16M working age Americans fighting in WW2 would have a big impact on the unemployment statistics at home. Also to further drive home the unemployment point through the depression, you could break it down by month. Unemployment got down to 6.3% in June 1930, 8 months AFTER the stock market crash the previous October. Months later the Smoot-Hawley tariffs were passed which >1,000 economics objected to and unemployment was never below double digits for the rest of the decade.

[@pipem4n]

Yes it is. If you say that I don't understand economics and that's all you have than I have no interest in talking to you. Why would I? You clearly are trying to insult me. I am allmost 100% sure Murphy understands more than you can comprehend - now that's not ad hominem what I just said? Come on. Why am I wasting time :/

[@tallswede80]

Most likely he does understand it, and it is you who doesn't understand it.

[@robertormiston5765]

Where is John Maynard Keynes book to answer why failure of 36-38 stimulus failure and Keynesian economics hikacked by English economic Marxist Professor Joan Robinson

[@H1TMANactual]

Doesn't go into the role of gold in the Depression especially around the world.

[@YanraOnesja]

what happened?

[@robertormiston5765]

Strange that my written postings morph into bad grammar and language- I am saying that artificial intelligence will prove faulty history of Keynesian economics and will enable African American people to sue Democrat Party for their setbacks they suffer from incorrect economic application in inner cities !!!

[@Daski69]

Surely government regulation affected the stock market crash. Bubbles are inevitably inflated by cheap money. Still, American mentality will always lead to crashes. If people lived by their means and saved for bad times like in Scandinavia, depressions wouldn't occur as frequently.

[@idarusskie]

Its not so much as people living beyond their means it government policies that prevent people/companies from going bankrupt. Thus creating a bubble that pops all at once. Notice how they said world war I and World war II was paid partly by inflation. in other words printing money. If you do not go to war you do not have big bills to pay. If wars had to be fraught with gold... less would be fought.

[@2tycade]

Hoover did not go fishing to not deal with the economy. Hoover's strategy was to leave the economy alone and let it take care of its self. Had the federal reserve done its job we would have had a short term depression. They should have increased the money supply. Roosevelt changed the gold standard and thereby took a lot of the wealth from the nation causing the depression to last a lot longer. Then WWII came along and the German's saved us.

[@kamilpawlowski6576]

There is a lot of good information here. however if the audience is as varied as the presenter suggest then the approach of contradicting specific theories about specific events leaves the less conversant listener with out a narrative foundation on which to hang these points.

[@klaptongroovemaster]

@cruiscinlan You can be sure that Murphy has read all these things himself. If you want to judge the quality of his scholarship, I suggest you read some of his books. You will find all the notes and citations there you might desire. Mises.org is indeed "slanted." Their purpose is to promote the "Austrian School of Economics" which conflicts with mainstream Keynsian economics. This ends up including non-mainstream interpreations of history as well.

[@lizardofahaz]

Well considering Hoover's grand idea for solving the great depression was to go fishing and let money "trickle down" from the rich to the poor (Early Reaganomics) letting matters get worse I think we have a clue where the problem was. The way in which FDR fell short was in failing to promote an SBA to help generate small businesses.

[@Alfie-ni7lx]

Jee that exact same "grand idea" worked in 1920's recession do nothing let the market sort it out and that only lasted a year or so despite initially being a very deep recession it worked itself out because thats what markets do. Look what happens when the government gets over involved you get 1929.

[@YanraOnesja]

intervention was the problem, fishing did not have the affect that many claim

[@randymorris8213]

@@YanraOnesja No intervention was the solution arrogance and lack of regulation was the problem just like it is today. Idiots who talk about "open markets" or "free markets" or grunting "socialism bad" ungrammatically need to realize that right now their markets have been subsidized by several trillion dollars this year alone and if it were not for those subsidies jackasses like the people running the Mises Institute would be out of a job and likely homeless because the wealthy pieces of shit paying them to make up and crank out this crap would be broke and unable to fund them....

[@YanraOnesja]

@@randymorris8213 subsidizing is bad umkay

[@randymorris8213]

@@YanraOnesja Then why do you support it?... Oh yeah you are a moron who is to stupid to understand what he is talking about..... Tell you what let's cut the sugar subsidies it will save tax payers a couple hundred million a year then we can cut the oil subsidies and save taxpayers billions each year....

[@marcusporciuscatotheyounge5795]

too funny

[@marcusporciuscatotheyounge5795]

The main cause of the Great Depression was the fed not acting, increasing the money supply, caused the great depression. As usual, Government caused the Great Depression . And the excessive length of Great Depression, was Government caused: FDR setting prices too high or too low, for example. Note; Capitalism worked fine. In 1918 ( date from my memory, could be off by a year) there was a deeper Depression than the great Depression. Since the government left the economy alone, it lasted only a little over a year.

[@immaculatesquid]

Marcus Porcius Cato TheYounger 1919/1920 Woodrow wilson was too sick to act lol. well not lol cuz i would not wish illness on anyone even that crooked fuck. ok maybe i would but dont tell my mom i said that. Warren G harding continued the policy of doing nothing and the roaring 20s were one of the greatest decades ever

[@rockandrock44]

Doubtful.

[@RebelConserve]

krugmandebateDOTcom!!!!!!!!

[@jayb-clay2724]

This dude completely turns what Friedman says on it's head. So wrong

[@lizardofahaz]

Presenting the viewpoints of others is not "good scholarship" it is a silly waste of time. His promoting of his viewpoint is nonsense when you take the long view of history and see all the past failures caused by the stupidity he promotes.

[@davejohnson7423]

This is the most ahistorical straw man rubbish I have ever heard from an ‘academic.”

[@evil1143]

What's your opinion on why the great depression happened?