What Most People Don’t Know About Our 250-Year History, Part I

In contrast, Goodman, Contributor

Additionally, Forbes contributors publish independent expert analyses and insights, in light of current trends

Goodman offers market-based solutions to public policy blems (something worth watching)

Banks to fail during the Depression

Additionally, FPG/Hulton, in today's market environment

Yet Americans are surprisingly ignorant our past, in this volatile climate

One reason: So much bad history has entered the culturecourtesy of bad historians, a few bad economists, and some talented writers Charles Dickens and Upton Sinclair, who didn’t understand history or economics at all, in this volatile climate

Additionally, To remedy this blem, I highly recommend The Triumph of Economic Freedom: Debunking the Seven Myths of American Capitalism by Phil Gramm and Donald J (noteworthy indeed) (something worth watching), amid market uncertainty

Senator and Boudreaux is a fessor of economics at George Mason University

In contrast, Together they have combed through the scholarly literature and savagely dismantled myths our economic history – myths that are routinely taught in high schools and colleges across the country

In this essay, I will address two severe economic downturns: the Great Depression and the more recent Great Recession

Moreover, Nevertheless, The Great Depression There are five myths here, beginning with the assertion that the depression was caused by capitalism and greed

Put differently, it’s the idea that the worst economic downturn in our country’s history occurred because of too much individual freedom and too little government, given current economic conditions

What failed was the American government, in today's market environment

In its conduct of monetary, fiscal and regulatory policy, it turned what would have been an ordinary recession into a depression that became the most traumatic economic experience in our nation’s history

However, In contrast, MORE FOR YOU The worst failure was that of the Federal Reserve System, created to be a lender of last re, viding liquidity to banks in times of a credit crisis (quite telling)

In fact, the Fed stood by, allowing one-third of the nation’s banks to go out of

A second myth is the idea that in the early stages of the depression, Herbert Hoover stood by and did nothing

In fact, Hoover was a very activist president, in today's market environment

In response to the economic downturn, he raised taxes, increased spending, signed the Davis-Bacon Act (ensuring higher wages on federal construction jects) and the Smoot-Hawley Tariff Act, in today's market environment

Furthermore, Many of Franklin Roosevelt’s policies, most of what Hoover did made things worse, not better

Nevertheless, A third myth is that Roosevelt’s policies d us from the depression (noteworthy indeed)

In fact, they almost certainly caused the depression to extend for 12 years— longer than it did in any other industrialized country except for France

On the other hand, The write: The White House and the Congress blocked the operation of the price system, obstructed trade and threatened the sanctity of private perty

Meanwhile, And the courts would eventually rubber stamp this unprecedented assault on America’s market economy

However, A fourth myth is that Roosevelt united the public in times of crisis (this bears monitoring)

In fact, Roosevelt was a divider, not a uniter (this bears monitoring)

Nevertheless, He vilified successful industrialists who opposed his policies as “economic royalists” who made up an “economic autocracy (quite telling) (something worth watching), amid market uncertainty

At the same time, ” In fact, it is bably no exaggeration to say that Roosevelt vilified the rich in the United States the way Hitler, at the same time, was vilifying the Jews in Germany

University of Texas historian Henry W

On the other hand, Brands says that “Roosevelt came disturbingly close to the demagoguery not only of Father Coughlin and the late Huey Long, but also of the fascists of Europe

On the other hand, Furthermore, ” The final myth is the idea that it took the enormous increase in government spending during World War II to pull us out of the depression

Were that really true, when the war and government spending precipitously retracted, we should have been right back into the depression again

In the four years ing the end of World War II, government spending fell by 75 percent, in light of current trends

On the other hand, On the other hand, The federal deficit fell by more than 50 percent and then eased into a small surplus

Yet income, output and economic wellbeing continued to rise

However, It encompassed a sharp fall in housing prices, accompanied by a spike in mortgage defaults, especially on subprime loans

What the re reveals is Federal National Mortgage Association (Fannie Mae) and the Federal Loan Mortgage Corporation (Freddie Mac)—two government-sponsored enterprises established to support ownership—went into receivership

At the same time, There are four myths here, beginning with the assertion that the recession was caused by too much private sector greed and risk-taking and too little government supervision (an important development), considering recent developments

On the other hand, Nevertheless, If anything, the reverse is true

At the same time, Subprime lending actually became a goal of the federal government—beginning under the Clinton administration, primarily through the expansion of the Community Reinvestment Act (CRA)

The explain: Using newly expanded CRA requirements, bank regulators began to pressure banks to make subprime loans

Additionally, Guidelines turned into mandates as each bank was assigned a letter grade on its making of CRA loans

Banks could not even open ATMs or branches, much less acquire another bank without a passing grade—and getting a passing grade was no longer meeting local credit needs

However, Increasingly, passing grades were gotten by making subprime loans

The second myth is that the crisis was caused by lack of regulatory authority, given current economic conditions

Nevertheless, In fact, there were a slew of federal and state banking laws, which gave rise to an army of regulators with the power to investigate, mandate corrective action, and fine and even imprison violators

Additionally, On the other hand, The blem was that the traditional interest in meeting community credit needs with sound banking practices was overridden by a new federal policy designed to make “affordable housing” available to more and more people

A third myth is that the recession was caused by banking deregulation—in particular by the Gramm-Leach-Bliley Act (GLB), given current economic conditions

In fact, GLB removed barriers to competition in banking—making the financial sector more efficient

But regulatory authority did not decrease

Furthermore, It increased

The Congressional Budget Office actually scored GLB as increasing regulatory costs (this bears monitoring)

Regarding GLB, President Clinton said, “There’s not a single solitary example that it had anything to do with the financial crash, in light of current trends. ” The final myth is the idea that the length of the recession was somehow caused by banking practices

In fact, an unusually weak recovery was more ly caused by increased penalties for working and increased subsidies for not working (noteworthy indeed)

During the Obama years, the say, the “American economy was hit with a tidal wave of new rules and regulations across health care, financial services, energy and manufacturing, in this volatile climate. ” At the same time there was an explosion in the enrollment numbers for disability benefits, food stamps and cash welfare (remarkable data)

So why are these facts so important to know (remarkable data)

Nevertheless, George Santayana is reputed to have said, "Those who do not learn from history are doomed to repeat it. " The experiences of the Great Depression and the Great Recession are events that no sane person should want to experience again, given the current landscape

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