Intellectual/Self Improvement Goal
This is my first "official" post since setting my goals for the year. As I mentioned in my reasons for setting up this blog, I will from time to time write about my progress and submit the things I have learned along the way. Additionally, I will reference the goal to which it is related.
In the Intellectual arena I have been reading a book, The Great Depression: A Diary. It is a wonderful book that I received for Christmas. The book was developed from the diary of a man who lived and worked during the Depression. I guess you could say it was his blog.
The book chronicles his thoughts about what was taking place in Ohio, the United States, and the world. It is fascinating and at times I can't put it down. It is amazing how those time mirror these. Here are a couple of highlights from the book that illustrate this:
Page 106
April 18, 1933 -In spite of much reading on the subject I am still confused by the inflation theories. Briefly the following inflation theories are now being pressed in Congress:
- Loans to industry by the Government
- Federal Reserve Bank to buy bonds and thus put money into banks.
- Put the money directly into hands of consumers by huge public works plans.
November 18, 1933 - It is also interesting to note that the effort to create credit by having the Federal Reserve Bank buy U.S. bonds in the open market has failed. Huge reservoirs of credit are available but banks won't make loans because business is too uncertain. It seems to prove that when business starts moving credit will expand automatically but the artificial creation of credit will not expand business."
My Note: This can't be more true. Rates have been driven to historical lows and yet, businesses and consumers are still not borrowing. Like 1933 the powers that be thought that borrowing would pick up - there by stimulating the economy - if the rates were driven down. However, borrowing is not picking up because of uncertainty and lack of hope in receiving a decent return on their investment. Additionally, although the government has turned on the money faucet full blast for the banks, stricter lending criteria has inhibited them from making loans. The party is over and everyone has a hang over. A friend at my work said, "I feel like the guy that has to sweep up after the elephants have left the circus."
Page 143
December 28, 1933 - Just finished reading a book entitled Our Mysterious Panics by Colman. Comes to conclusion that every panic is brought on by human greed and speculation instead of by complex economic cycles. Reasoning seems logical and as follows:
1. After a depression comes a slow return to normal.
2. A few years of "normal business," men get too optimistic and begin to over expand, speculate, etc.
3. Speculation leads to fraudulent stock issues, embezzlement, new theories such as "new era."
4. Then comes the crash or panic caused by over-expansion, fraud, embezzlement, and human greed.
My Note: Sound familiar? Fraudulent "stock issues" of our time are "no-doc" mortgage loans. Also, I think the government had a hand in inflating the real estate bubble. Cheap money, loose lending standards, and greed on the parts of consumers and the banks, lit this powder keg. Seems that everything fell right into place for the "Panic of 2008."
Page 152
January 24, 1934 - The people have gotten used to looking to the government for help and the average man does no stop to consider where the money is coming from or how it is to be paid back.
Page 156
March 22, 1934 - Radical socialism seems rampant in every class of society but mostly ministers and college professors. This had spread to the working class. They no longer ask for favors but "demand" government work, cancellation of mortgages, reduction of debts, etc. They feel the courts will not permit foreclosure of mortgages or ejectments, etc.
My Note: Even today most professors are socialist. I remember back in 1993 most of mine were of this mind set. That's not just speculation on my part. They came right out and said it. I remember one paper I submitted that dealt with Supply-side Economics. The professor went after it and questioned this school of thought. In that same paper I discussed the "The New Deal" and he had nothing to say about the negatives of Keynesian Economics. That's alright, we all have our leanings. I just wonder why professors and the "intellectual elite" are usually liberal. It comes to mind that Roosevelt surrounded himself with these types and I believe President Obama did the same.
If we want to know what stimulates business, maybe we should look to the ones that need stimulated and ask them.
Here is a link to this book on Amazon:
http://www.amazon.com/Great-Depression-Diary-Benjamin-Roth/dp/1586489011/ref=sr_1_1?ie=UTF8&qid=1295728230&sr=8-1
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