The Great Depression: Part IV

Let's jump ahead in our on again off again trip down history lane. I promised a multi-part history of the Great Depression and that continues today. Let's just go forward into the 1930s before we return to the 1920s.
The money supply is the product of the monetary base times the money multiplier. Here are the sad pictures from the Great Depression. As you can see on the left, the money supply crashed and burned because on the right, the excess reserve and the currency holding ratios both increased and crashed the money multiplier. The Fed did nothing to the monetary base and the money supply fell by about 33%.

Here are similar graphs today. As the money multiplier has crashed and burned (on the left), the moneary base has increased like it was shot out of a cannon.

This is one of the main reasons why we have not slipped back to the 1930s. All you have to do is eyeball it to see. See?

Insight from a good friend and Randy Parker Hall of Fame member: James Butkiewicz

www.funnyeconomist.com/Jim.doc

The New Deal's Economic Legacy

The attached web site is a link to the Conference I was a part of last Monday as an invited guest of the CATO Institute. Also on the program was the very capable Hal Cole of the University of Pennsylvania and the very capable Price Fishback from the University of Arizona. Hal Cole's presentation starts at the 1:35 minute mark. I start at the 21:21 minute mark. Price Fishback's presentation starts at the 32:12 minute mark. The question and answer session starts at the 49:05 minute mark.

http://www.cato.org/events/newdeal/index.html

Not a war on terror? Go ahead and play cops and robbers. Watch what happens.

http://online.wsj.com/article/SB10001424052748704680804574620931268246094.html

They were delicious.

Merry Christmas!

This is why we love dogs and kids.

Merry Christmas to all!

This annual editorial from the Wall Street Journal is what Christmas is all about.

http://online.wsj.com/article/SB123008054671531917.html

Looks like they are gonna get it Dan.

Wall Street Journal gets it right again.

R.I.P. dynamic American economy. Hello Euro-dependency. Read about it here: http://online.wsj.com/article/SB10001424052748704398304574598130440164954.html

R.I.P....D.C. Vouchers

The poor kids in the inner city are having their last best hope taken from them.


http://www.washingtonpost.com/wp-dyn/content/article/2009/12/13/AR2009121302440.html

There is now over a trillion dollars sitting in bank excess reserves. As James Hamilton called it, that is a "live bullet"!