Keith Smith via PLUG-discuss said on Sun, 01 Jan 2023 02:47:39 -0700
>I agree the fed is a big part of the problem. The people who created
>the fed are all probably dead. The question that goes in concert with
>that question is how has Washington DC used the Fed and spending bills
>to cause these issues and past issues.
Fed-bashing is, and always has been, very popular. Me, I'm glad for the
fed, because I know, in my bones, the horror of the Great Depression.
My dad was shaped by the Great Depression, and in almost every
conversation something would come up about its horrors. Plus other
people in his generation.
Now it's true that the Fed was created in 1913, so I guess they could
have eased the money supply in 1929/1930 and made the depression much
less horrible. But they didn't, and Hoover refused to, so we had a
deflationary spiral. Since then the Fed has eased the money supply
whenever there was a severe recession, and we never had another
depression, even during the worst of Covid.
People just love to diss the TARP during the last of Bush and beginning
of Obama, and the various giveaways during the last of Trump and the
beginning of Biden, but if either of these had not happened, we would
have had a horrible depression, probably with 25% unemployment and the
accompanying deflationary spiral that would have lasted for years.
Nobody likes inflation, but depression is much worse than any inflation
the US has ever encountered. We had 18.1% in 1946, 8.8% in 1947, 8.7%
in 1973, 12.3% in 1974, 9.0% in 1978, 13.3% in 1979, 12.5% in 1980, and
8.9% in 1981
(
https://www.thebalancemoney.com/u-s-inflation-rate-history-by-year-and-forecast-3306093
)
We got by just fine in those years, although it was hard on those with
fixed incomes. Compared to the Great Depression of the 1930's or the
Great Recession 2009-2012, the inflation we've seen is a walk in the
park. Inflation is a salary cut in terms of purchasing power, but a bad
recession is a salary cut as masses of unemployed knocking on your
employer's door, wanting your job, and willing to work for 30% less
than you. And of course if you're one of the unemployed during a bad
recession, you probably stay unemployed until the recession is over,
especially if you're an older worker.
Yeah, the Fed overplayed their hand in 1982, causing a recession, and
they're overplaying their hand now, which will cause a recession soon,
but we never had another Great Depression, and I thank the Fed for
that, as well as politicians who learned from history that when a bad
recession hits, you pump money into the system instead of doing what
Hoover did.
SteveT
Steve Litt
Autumn 2022 featured book: Thriving in Tough Times
http://www.troubleshooters.com/bookstore/thrive.htm
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