Okay, so show us. Give us the numbers that back up your unsubstantiated assertion. For example, what was the growth in lending from "the fed" during that time period.
Sorry Capablanca looks like you were scammed 150K by your college professors. From a neutral source "PBS" http://www.pbs.org/wgbh/pages/frontline/shows/dotcon/historical/bubbles.html · The Bull Market of the Roaring Twenties (1924-1929) The raging U.S. stock market of the late 1920s was hailed by many as evidence of a "new era" of economic fundamentals. Proponents of this theory pointed to evidence such as the establishment of the Federal Reserve in 1913; Coolidge administration policies including the extension of free trade, anti-inflation measures, and the relaxation of anti-trust laws; and corporate improvements such as increased worker productivity and expanded research and development. In reality, the driving factor behind both the inflation and the bursting of the speculative bubble was the expanding use of leverage (i.e., debt) by individuals as well as corporations. The decade was marked by an enormous expansion of consumer credit, which Americans used to finance purchases of new products such as automobiles and radios, which were created using new techniques of mass production that additionally helped to drive down prices. Consumers also used credit to purchase stocks, and as the stock market escalated, investors began to take advantage of margin loans provided by their brokers. Their primary targets were industries involving new technologies, such as the automobile, motion picture, and aircraft industries. Radio stocks boomed, rising by 400 percent in 1928 alone,7 and the stock market attracted an immense public following. On Sept. 3, 1929, the Dow Jones reached its high for the year before the bubble began to deflate. Oct. 24, which became known as "Black Thursday," marked the beginning of the stock market's downturn, remembered as the "Crash of 1929." Almost 13 million shares were traded on that day as an unexpected panic affected the markets. Although the following Friday was quieter, the Dow fell by a record 38 points on Monday, Oct. 28, and another 30 points on the infamous "Black Tuesday," Oct. 29, when a record 16.5 million shares changed hands. Following the chaos of October, the market briefly rallied through spring 1930 before plummeting again during the early 1930s.
I've tried to look for various viewpoints on the circumstances of the Great Depression. I do not find any credible alternate viewpoints on the general scenario I have outlined. If you think you know of any feel free to provide a link. I notice, however, that in your response you have chosen to address the example of the Great Depression by avoiding it entirely and putting the blame on the Fed's complacency during the boom and before the bust. That is all well and good and can be fodder for another argument but it says nothing about what to do when the problem is right there in front of you staring you in the face. What do you do now is the question at hand not what should have been done before. So what do you advocate now? That the Fed having printed money freely before stop doing so now and by doing so it will be more responsible? Is that what you are saying? Are you going to follow classical economics principles now exclusively or are you also going to be cognizant of and incorporate some of Keynes ideas? By the way, the Fed was probably created in response to earlier financial shocks. I recall sometime around 1907 there was another very serious financial situation being faced and it took J.P. Morgan going around rounding up the players to settle the precarious position. Classical free markets are inherently unstable and go through boom and bust cycles. The South Sea bubble and infamous Tulip Mania preceded institutions like the Fed.
After a huge party, what do you do for the hangover? Absolutely nothing, any quack doctor recipe will make you even sicker. All you have to do is learn from your mistakes and not partying so hard again. Bailouts, rate cuts, and BS regulations will only make things worse. All we can do now is to avoid further monetary largesse. But that's not what politicians and people want to hear. So we all get what we deserve i.e. crises and stock market crashes.
Are you suggesting Bush, the president, is a fed puppet and impotent. I think that's just what you said
Buzzy2 your hands off policy was tried before in the late 1920s and early 1930s and what it led to was a series of bank runs that impoverished untold numbers of people. You think that is a good thing? You think the FDIC, a government creation which smacks of big government and socialism, is a bad idea?
Wrong, there was no "hands off" free market monetary policy during the 20's and 30's. The problem with keynesians is that they don't even know what "free market" is.