interest rates 1930s chartBlog

interest rates 1930s chart

Conceivably, such a step might make sense in a situation in which a prolonged period of deflation had greatly weakened the confidence of the public in the ability of the central bank to achieve price stability, so that drastic measures were required to shift expectations.

Companies in solid positions but constrained by liquidity can take out high interest loans while unsound firms go out of business, freeing capital and labor for more productive purposes.I want to make a 3rd point, in the face of an increase in the demand for money, like the one we see now, spurring lending through policies like penalty rates on excess reserves would have unintended consequences. So, how much is enough?Well, if we had a free market in money creating maybe we would know.

That’s why counterfeiting is illegal, it’s stealing through the money system. In this chart we can see how the 1930’s compare to other decades. and is filed under 61 Responses to “In 1930 the Fed raised rates from 6% to 2.5%”So are you calling the Fed guys stupid? Jumping right into the middle of his explanation SS says Now for a curve ball.

My parents were frugal and my brother and I split the estate in 2007 when my mother died. But why did the Depression happen in the first place? Just read Mises, Hayek and Rothbard for that matter – and then forget about the crackpots.And yes, there is a lot of weirdos out there talking gold, gold, gold without any real understanding of understanding of economics. I believe that’s too simple. Compare fixed and adjustable rates today and lock in your rate. NGDP was $56.4 billion in 1933.

The proxy for inflation (Mvt) continued to accelerate downward bottoming in June 1932 @ -21%.I know it is not fair, but I always imagine fellows in the Austrian School as wearing funny little mustaches with dueling scars, with shiny knee-high boots under the jodhpurs. They got their wish, and disaster followed. go to discussion groups like at Reddit, or the AARP message boards.

In October 1929 the discount rate was 6%, and by October 1930 the discount rate was 2.5%. )But why did the Depression happen in the first place? It’s like a doctor who used the “classical” treatment and the patient always got better in a few weeks trying some new treatment.

But for over 50% of the U.S. population who lived on farms  the Depression began ten years earlier with the dramatic fall of commodity prices when demand from Europe dried up at the end of WWI.

Highly unstable NGDP growth almost always leads to problems. It’s endogenous. I think this response to Brad Delon’s question in December 2009 (9 months prior) displays similar reasoning.“D. All that said, we are in interesting time in terms of pro-market economists. It might be too bad that they didn’t have you to advise them back then, but the fact remains that monetary contractions had happened before, which little or no attempt had been made to fight, that didn’t create a Great Depression.

But consider this analogy:“The best policy is to no have a machine gun in your house. IMHO.US trade deficits were usually importations of capital goods for private companies who would upgrade their industrial capacity allowing them to pay off the loans. The US ran big deficits in the 1800s.Thanks Mark, BTW, a better term than “credit demand” would be investment demand. And it also probably fits the personal self-interest of all of them.OTOH, if 24 of the 38 were self-employed in businesses that had taken big hits in 2008 and weren’t recovering any faster than the 9+ unemplopyment rate, I’d wager that a lot more of than two of them would be a sympathetic to “more monetary stimulus is needed” policy presciption. I enjoy our converstaions and it’s interesting to hear from such an alien viewpoint to what I’ve read, so thanks again. Chart Comparing the 1930’s to other Decades. NGDP was $91.2 billion in 1930. So, how much is enough?”While a cogent point, I have learned the hard way to not underestimate how many people believe wages and prices are infinitely flexible.

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