Talk:Causes of the Great Depression

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Second paragraph of the lead[edit]

I don't want to get in an ideology of economics discussion, but I think the "first was the austrian school...then the keynesian school" wording is arbitrary ordering that may be conflated with some theories being more important or coming earlier chronologically than others. I would hold that, if anything is first in terms of importance and chronology, it's probably the Keynesian explanation--that's the kind of stuff published immediately during and following. But really, the same sentences could keep their order, and remove "first" and "second," as in, "Economic thinkers of the Austrian School think..." Why not try that approach? (talk) 19:34, 3 September 2009 (UTC)

professional blindness ?[edit]

Practically every entry here has been writen by economists and economic graduates, and reflect their biased way of looking at things. Not one for example, can see that (real) interest rates rose from 0,5% in 1929 to 12,5% in 1930 and 1931, a nearly 2400% increase, turning a recession into a banking crisis and a repression. I have had this analysis taken out some 15 times, probably by some economists that do not want this huge mistake to become public. So lets have some sections for Financial Analysits, Sociologists, Realists, state their convictions than have this Economist monopoly of this debate. Wikipedia should be a pluralist view of world events. —The preceding unsigned comment was added by (talk) 11:37, August 22, 2007 (UTC)

If you do not cite a reliable source for your unbelievable numbers, they will be deleted. In addition to a reliable source, you must also show how the numbers were calculated and give reasons why they are valid. If by "real" interest rates, you mean adjusted for falling prices and wages that made each dollar more valuable and hence each interest payment became a much greater burden than before, then explain this by showing how the calculation is done. Greensburger (talk) 21:03, 3 September 2009 (UTC) chickens rule this house eat at chick fil-a


There is an inexplicable reference to American Idol in the article. Unfortunately I don't know the subject well enough to know what should be in its place in the sentence, and I can't find the change in the History. i like chicken — Preceding unsigned comment added by (talk) 18:12, 11 November 2013 (UTC) i love icarly

[Unspecified Title][edit]

OK, I have made a cut at improving this post. I know it needs work. The contents table no longer matches and the formatting needs help.

However the content added is much more accurate and a better reflection of the mainstreams of thought. I think that alot of the stuff in the last half is spurious and should be deleted.

A list of changes made:

Inequality theory moved to alternate explanations section – could be grouped with Marxists, but it certainly doesn’t belong in orthodox section

Deleted lack of diversification theory. I don’t know anyone who takes this theory seriously. The economy is always changing, industries grow and die constantly. There is nothing about this theory that couldn’t apply to many other times in history when we didn’t have a Depression

The Gold standard theory was mostly wrong and was reworked into a different part of the article

The section on the credit structure was deleted. This is not a real explanation. First of all, farmers have been deeply in debt at many other times and it is not a causal factor. More importantly, the Depression was a world wide phenomenon and nothing in this explanation could account for that.

The Austrian section of the article was re written. It was a very poor rendition of what Austrian economists have to say about the matter.

Most of the political section was deleted, because – it is US centric; it is covered elsewhere; or it was not accurate

American recession of 1937 and recovery section was deleted. This doesn’t belong in a “Causes of the Depression” section

Reworked explanations section – Keynes, monetarism, gold standard

The cycle theories section should be cut – they are not serious explanations.

I think the New Deal section should go too, but I didn’t cut it.

sojournerpaul 8/26/2006

Previous notes: 8/24/2006 There are lots of problems with this page. Theories are grouped badly and some are inadequately explained. The priority also has a major point of view problem. You could organize the page 2 ways as I see it. Historically - where you start with the prevailing theories at the time, move into Keynesianism, which dominated till the 70's, then into monetarism, which prevailed as conventional wisdom till the last decade or two where you have to give precedence to the theories of Eichengreen and Bernanke.

The other way would be to start with the current conventional wisdom and then go into alternate explanations ranked by general acceptance or historical influence. Current conventional wisdom would be best captured by Bernanke's Depression book.

If you are going for a neutral point of view, you have to give precedence to the most widely acclaimed depression theorist who is now Fed Chairman. To organize this article as it is now set up is highly partial to views that are beyond the pale and make mockery of the NPOV.

I will try to help if I have time. sojournerpaul 8/24/2006

This page needs

1. Organization, many theories are presented without context - the monetarist, credit and structural models are not as far apart as all that - all center on different IS-LM models, and argue different effects were the important disequilibria.

2.Coverage of a wider range of theories, the lack of a unified orthodox theory has given rise to many other theories, including some that have an impact on mainstream economics, such as Schumpter.

3. Coverage of contemporary theories - after all, we need to understand what they though they were doing.

Stirling Newberry 12:04, 15 Apr 2005 (UTC)

From Edward G. Nilges uid spinoza1111 email 4-20-2005

This page most needed someone to take a crack at the Marxist (both paleo and neo) analysis of depressions, so I did.

From Edward G. Nilges uid spinoza1111 email 4-21-2005

I hope you mean Joseph Schumpeter, the "creative destruction" man.


I added a fairly detailed summary of the Austrian Theory of Business Cycle, but I just noticed that there was already a small section dedicated to "Liberal Capitalist Critiques of Democracy". But I don't think "Ideological Theories" is a good category. Instead, the theories should probably be divided into different schools, such as the ones listed in the Macroeconomics article: Austrian economics, Keynesian economics, Monetarism, New classical economics, New Keynesian economics, Supply side economics and Welfare economics. I'll take a crack at reorganizing the information.--Blah99 21:56, 6 September 2005 (UTC)


I find something quite surprising. The description of the "excess surpluses" & the deflation fx on agriculture is strikingly like what Jack London (Y, Call of the Wild) describes as causitives in his 1912 SF novel The Iron Heel.... Trekphiler 01:13, 9 December 2005 (UTC)


Minor question... what's the point in dividing external sources into "World" and "USA"? I seriously propose removing this division. 03:02, 26 February 2006 (UTC)

Because the event is very distinctive in 2 seperate categories, world and US. Both are interlinked like you propose, however the effects are vastly different in terms of how it shaped each's economies afterwards and so on. To clump the links would be bad for those wishing to do research on the individual categories. In fact, one could be so inclined as to make 2 entirely different wikis based on each entity. --ReZips 04:41, 27 March 2006 (UTC)

The Way The World Works[edit]

All theories described in the article are nice but rather difficult to follow. I recommend reading The Way The World Works by Jude Wanniski, mainly chapter 7, which nicely describes and explains the market crash in 1929 and the preceeding years.

Wanniski writes well but has not done much research. Economists and historians do not take him seriously. He has a contradiictory argument to the effect that businessmen wanted a higher tariff and when they thought they might get it panicked and sent the stock market crashing. Rjensen 22:12, 17 May 2006 (UTC)

Austrian Economic Theory Section[edit]

I've read Murray Rothbard's book "America's Great Depression" and I would like to add a section on Austrian Economic Theory's explanation of The Great Depression. It will take a bit of time to put the information in a cogent and succinct form and welcome any feedback.

Please incorporate it into the section that already exists on Austrian Economic Theory/Caused by too much government Rjensen 15:57, 4 August 2006 (UTC)

Wiki does not make choices[edit]

The job of Wiki is not to tell what caused the depression, it is to tell what economists and policy makers thought. Some ideas may be out of fashion in 2006 (like underconsumption and credit) but they have to be covered because they significantly influenced policy makers. Likewise the discussion of the Causes is 50% political and the political models (left and right) have to be presented if people are to understand proposed solutions like the New Deal. Rjensen 18:11, 26 August 2006 (UTC)

This page is complete garbage[edit]

This page has enough factual inaccuracies to flunk an entire history class at once. The "New Dealers" section is absolutely incorrect, there is significant over-coverage of Austrianism, lies of omission (my favorite one being the new dealers wanting to raise taxes - Hoover and the Republicans wanted to "tax everybody for everything" to rebalance the budget...) And it wasn't just the left that blamed capitalism, future Republican nominee for President Alf Landon blamed "the profit motive" and hoped for sweeping dictatorial powers to be used to solve the economic crisis.

The misstatement of FDR's views is particularly vile. Roosevelt and the New Dealers did not blame business, they blamed, in varying orders: 1. The break down of trade and confidence ("We have nothing to fear but fear itself" people, there is a reason why the quote is famous) 2. The failure of old methods of dealing with problems. 3. The maldistribution of buying power, which led to insufficient demand for manufactured goods. 4. The lack of a social safety net. 5. "Cut throat Competition" leading to downward spiralling of wages - not business in general, but a few bad apples in business. 6. Lack of regulation to protect shareholders (See the book written by two New Dealers The Modern Corporation and Private Property - what we would now call the "actor problem" 7. Over production of agricultural goods.

Lies, half truths, uncited (because uncitable) oversimplifications... there is simply not a single section of this page which is not far, far, far, far below the quality required of wikipedia. The editors here should be ashamed of themselves for producing a biased, inaccurate and poorly worked out article which from one side to the other reads like a 5th grader's understanding of the subject in question.

It needs to be rolled back to some much previous version and reworked from there, this version is just about hopeless. Stirling Newberry 19:00, 26 August 2006 (UTC)

I don't know where you're getting your history from, but FDR started attacking businessmen on day one beginning with his inauguration address: "Primarily this is because rulers of the exchange of mankind's goods have failed through their own stubbornness and their own incompetence, have admitted their failure, and have abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men. True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish. The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit." Roosevelt was a virulent anti-capitalist who tried to convert the US into a planned economy. He blamed the Depression on businessmen and their quest for profits. He fostered an anti-business climate that created further fear of investment. He even attacked the very self-interest foundation on which capitalism is based. He was truly an idiot. C-Liberal 19:58, 26 August 2006 (UTC)
Ignore Stirling, he has this desire to push a completely revisionist view on history. He forgets that his idols do indeed make mistakes. Obviously, the concept of NPOV constantly escapes him - just look at his talk page archives. T Turner 16:12, 27 August 2006 (UTC)
While this is an old post I could not help noticing that C-Liberal missed the fact that FDR was using a biblical reference to moneychangers or bankers as they are called today, not all business men. LOL Oneeyedguide (talk) 04:18, 4 February 2009 (UTC)

Problems remain[edit]

This page still does have lots of problems. I stand by my efforts on the mainstream theories - I did my Masters thesis on theories of the depression and it was reviewed by teachers in the field. The underconsumption section and the politcal section got added back in. Neither, I think are appropriate. the underconsumption theory is not a mainstream theory. Just because two guys wrote about it doesn't mean it was ever generally accepted. Therefore, it should be moved to the alternate theories section, which I have done.

I wont delete the political section, but some of the complaints are right -it is riddled with inaccuracies and has a US focus.It also does not really address CAUSES of the Depression. I wont delete it till there is some more discussion. Sojourner paul 8/27/2006

all inaccuracies should be identified and can be fixed. The underconsuption theory was indeed a mainstream interpretation at the time. It decisively affected policy. That makes it important to know about. It continues to figure in history books. And please don't use words like "garbage"--your professors would be upset at the crude language. Rjensen 03:35, 28 August 2006 (UTC)

Nonsense. Mainstream at the time were Fisher, Robbins, Pigou. After the Depression Keynes till the 70's, then monetarism. Like you purport to say, it is not about what you think, but about what the most repected economists att he time thought. "Underconsumption theory," as you had it written, was not mainstream. I am not sure how you would think it was... THe attempt to elevate it violates the NPOV framework of this site. Sojourner paul 8/29/2006

This article, as pointed out above, does need more coverage from an international perspective, including I would think both industrialized countries and the large "third world" countries of the time - namely India and China. At this point, Japan is fairly successful so it would be part of the "industrialized" perspective. Additionally, the theory that advances in technology caused a significant displacement of labor needs to be included as well. It has been a widely taught theory over the years. Stevenmitchell 02:42, 1 September 2006 (UTC)

who was "mainstream" at the time--I suggest Catchings and Foster, Means, and many others. Dorfman covers this very thoroughly. It's essential to avoid the "whiggish" interpretation that looks at precursors of contemporary theory, and ignores the forgotten economists whose ideas, Keynees famously pointed out, were actually determinative of policy decisions. Rjensen 04:49, 1 September 2006 (UTC)

Just because i don't think that these others were mainstream, doesn't mean I think they were wrong. My favorite explanations are also not mainstream. But when i look for mainstream, I look for those who constituted the the most influential opinions of the time. When you look to see who Keynes debated with, and who influenced the central banks, it was not those from the overconsumption perspective. For proof, I suggest reading books that contain Keynes' debates with economists at the time. Also, Delong's paper De Long, Bradford Liquidation” Cycles and the Great Depression (1991);Meltzer, Allan H. A History of the Federal Reserve, Volume 1: 1913-1951 (2004). These books, and others, tell me that the underconsumtion theory was not a widely held belief at the time. Worth noting, yes, but not "mainstream." Afterwards, these may have, as you say, influenced Keynes, who became mainstream after the Depression. Sojourner paul 9/1/2006

Also, too many explanations may explain why the Depression happened in one country, but have no conceivable explanation for why it spanned most of the Western World. Sojourner paul 9/1/2006

This article should be summarized more concisely and easier to understand[edit]

I think you need to make the words easier for kids to read && Clarify things so that people actually KNOW what you are talking about.

I think u need to make the words a little more understandable for kids. I use wikipedia for assignments and projects all the time but PLEASE MAKE IT EASIER!!! {{unsigned|67.49.60

Hmmm? My one great question that has always remained with me is just this why is it that the generation that grew up from the 1890s on to after world war 2 and esspecially the so called children of the great depression wil not talk about it at all it is like some kind of social plauge or something is prohibting them ever talking about what happened to them having to grow up during that time period as the generations after them have and had no prtoblems talking about growing up in the 1950's and 1960's when the econmy grew in great leaps and bounds and there was to much easy money but why will the peoples of my own parents generation not tlak about this time period it is really stupid that they are so hung up about this i have studied that time period and although ti was indeed a very bad time i am yet convined it was not so horrific as it is made out to today looking back at it from now anyway more later on this but any of you wondering abou this like i am!


I agree with the first post. It's way too hard to understand, especially for those of us who are doing reports and need references. This website is a comfort to us all, and come on, is it not here to help those of us who need it? While I am not suggesting you put every other word in slang, some of the larger sentences could be reduced and some of the larger words substituted for smaller, more coherent that my fellow youths and I can understand. Please do something! I would, myself, but I honestly just don't have the time, what with homework and projects that I use this website for. I speak for myself and others my age when I say thank you to all who make an effort towards this request. ~LadyFroggie

It is too long and too complicated. I understand that this is relative and depends upon the education level of the reader. However, the article could be better written as to accommodate a less educated audience without sacrificing the depth and detail that it now has. For example, it could have better summaries of each section. I understand that there is a lot of controversy about the causes of the great depression, but this article needs to be better categorized so that it not necessary to trudge through the intricacies of each argument in order to get a general understanding of the topic. Part of this would be reducing the use of economics jargon; I understand that using such jargon, it is possible to include a large amount of information in a short space, but the article becomes very difficult to read for the general public when such ideas are not restated using a less specialized lexicon. --macscam (talk) 21:53, 4 March 2013 (UTC)

relationship to the threatening 2009 depression[edit]

It seems that this item, and the item on the Long Depression 1873-1896, will attract increasing interest if we slip into something like a Depression in 2009. We see that the current problems are being identified as caused by systemic problems in the way money moves around. I, and quite a few others, believe that the current crisis was caused by Peak Oil and the resultant price spike. Indeed we can be sure that total world economic production will fall as oil production falls, since the lockstep relationship between the two is easy to see over the last 40 years. And the economic system is not well set up to handle a gradual decline. So something like the current crash is what one would expect. Since I'm arguing that the current crash is caused by real world changes, I wanted to know if one might see a similar link in previous Depressions. It seems to me that the Long Depression occurred at a time sometimes identified as the 2nd Industrial Revolution for the great changes taking place, and the Great Depression also took place at a time when there was a big change in the way things were done: with much of the economy switching from coal and horses to oil and motorized vehicles. When such changes happen there is a lot of capital, real physical stuff, that is rendered valueless. It is hard to do a smooth transition. Not surprising that you get a crash then recovery instead of a smooth transition. So my question to the experts is: Have any studies of the Great Depression suggested real underlying causes rather than just systemic problems with money? Is there anybody out there who thinks it might be true. I'm very worried that the unanimity about the Great Depression is going to make it hard to convince people that this time there are real underlying problems that need to be urgently addressed. Feel free to e-mail me. Sma045 (talk) 03:51, 16 November 2008 (UTC)

interesting argument, by Robert Samuelson[edit]

This appeared recently (August, perhaps?) in Newsweek, by Robert Samuelson: "Historians increasingly attribute the Depression to broad geopolitical upheavals. World War I shattered the existing global economic order. Dominated by Great Britain, it fostered vibrant trade and rested on the gold standard. (Under the gold standard, paper currencies could be converted into gold coins or bullion). The war also spawned huge international debts, reflecting German war reparations and large U.S. loans to Britain and France. It was impossible to reconstruct the prewar order. Britain was too weak, the gold standard was too constricting, and the debts were too heavy. But countries tried, because the prewar order had delivered prosperity . This futile effort brought on Depression. Only when economic hardship became unbearable were unrealistic goals (keeping the gold standard, repaying debts) abandoned. "

Discuss.--Forich (talk) 21:21, 23 October 2010 (UTC)

It's been said Britain's desire to maintain the value of the pound after WW1, while holding to the gold standard, plus the connivance of senior Fed officers, played a role. TREKphiler any time you're ready, Uhura 02:16, 24 October 2010 (UTC)

Excessive human supply caused Great Depression[edit]

I believe that increased automation of production and replacement of human workers with machines lead to excessive human supply. Unemployed workers could destroy system therefore government was forced to create useless jobs and go to war to destroy wealth of capitalists. My solution to Great Depression would be allowing corporations and wealthy people to own private armies and return of debtors' prisons(or other possible solution: being poor and unemployed would be a crime) —Preceding unsigned comment added by (talk) 10:40, 2 January 2011 (UTC)

Missing causes[edit]

1. The Fed's inflationary policies. 2. The Smoot-Harley Act, high tariffs on imports. 3. Gov actions.

Additionally, although this mickey-mouse ignorant article is suppose to deal with causes, the big gov (New Deal agenda, started by Hoover) made the economy worse which created the Great Depression for a decade. It wasn't until post-WWII that prosperity grew. The war period does not count as recovery; far from it. Sure, GDP was higher, but 30%-50% (forget amount) for the war & more soldiers than the amount whom were previously unemployed does not cut it. See history & look at living standards.

Fairly soon after the stock crash, the economy started to recover, but gov spending & other intrusion [under Hoover] nixed that. — Preceding unsigned comment added by (talk) 04:42, 23 November 2011 (UTC) people are crazy chickens

Absurdly biased[edit]

"When Hoover was elected to president in 1928, he was a long-standing critic of free markets and small government. He had presided over "reconstruction" in Europe after WWI, the equivalent of "stimulus spending" in Keynesian terms. Rather than being "do-nothing", his administration immediately began expanding government spending, taxes, and regulation[37]. In fact, during his term Federal spending was effectively doubled[38]. Consistent with his pro-stimulus philosophy, Hoover effectively doubled Federal spending, possibly contributing to the economy's woes[2][3] Steven Horwitz, economist of the free banking branch of Austrian economics, blamed Hoover's spending, itself, for putting the "Great" in the depression: Herbert Hoover deserves a good deal of blame for turning what would have most likely been a steep but short recession into a much deeper and eventually much longer Great Depression...he expanded the role of government significantly in order to fight the Depression...The result, unfortunately (but not surprisingly), was to fan the flames rather than successfully fighting the fire[39] David Weinberger contrasted this approach with the cutting of spending, taxes, and deficits (also seen in the chart at right) under Coolidge, which had dramatically stimulated the economy out of the depression that Wilson's massive Federal government had caused[40]. It's noteworthy that Hoover, as commerce secretary under Coolidge, had urged for increases in spending and regulation under Coolidge, much of the kind he later implemented, himself, in 1929[41].

This massive growth under Hoover is apparent even if adjusting for the declining revenue of Hoover's economic downturn, as noted by Randall G. Holcombe, who found that Federal spending as a percentage of GDP still increased, in fact did so more than under FDR[42]."

I don't care if you're for or against Austrian economics; the above quoted section attaches unverifiable and clearly biased labels to descriptions of Hoover, Coolidge, and the Federal Reserve in attempting to self-justify its slanted arguments, and as a whole makes virtually no attempt to present itself from a neutral point of view. Whoever wrote this clearly had a confirmation bias, and similarly failed to back up their claims with either detailed explanations or reliable sources. I don't see how something this slanted and unsubstantiated could satisfy Wikipedia's standards. It without a doubt needs to be either significantly re-written or removed altogether. — Preceding unsigned comment added by (talk) 19:34, 7 December 2011 (UTC)

Austrian School[edit]

When respectable economists suggest that the do-nothing policy prescription which resulted from the Austrian business cycle theory contributed to deepening the Great Depression, then it is actually a serious theorie. --Pass3456 (talk) 21:41, 13 July 2012 (UTC)

I'm inclined to agree with Pass 3456 that this section belongs in the article. It certainly is relevant to the topic "Causes of the Great Depression. If this cannot be classified as a Specific Theory of Cause, then we can create a third heading in the article. However, there are two terms which need to be carefully defined.
1)"Austrian Business Cycle Theory (ABCT)--as Byel2007 has pointed out, the business cycle theory of Hayek and Robbins did not yet have the name "Austrian" in the 1920's and 1930's.
Update: In the Wikipedia article on ABCT, it states that Hayek's work Prices and Production published in 1931, contains a presentation of ABCT. It appears to me that the business cycle theory of Hayek can be safely identified with ABCT.
2)Liquidationism--Lawrence White, who is repeatedly cited in the article, made a very clear distinction between the business cycle theory of Hayek and Robbins on the one hand, and "liquidationism" on the other. If White's article has been generally well received by others scholars in the field, then this is a very significant point of view which needs to be taken into account.
In light of this, my proposal is to:
1)Divide this section into two sections, one on the role of the liquidationists who were responsible for the deflationary policy of the Central Bank, and one on the role of the business cycle theory of Robbins and Hayek and their failure to give advice to end the deflationary policy.
2)Avoid the use of the term "Austrian business cycle theory". Remove only the first sentence from the opening quote by Milton Friedman. The remainder of the quote would still stand on its own.
Update: I don't think this will be necessary in light of what I stated above.
3)Revise the sentence which begins "This liquidationist theory. . . ." so that we do not assume, contrary to the article by White, that Hayek was a liquidationist.
4)Move the material on Hayek and Robbins from the earlier section "Austrian School" to this section. In "Austrian School" we can then replace that paragraph with a shorter paragraph, the purpose of which will be to make clear to the reader that Rothbard, in disagreeing with Friedman, was not necessarily speaking for all Austrian economist.jJDefauw (talk) 15:43, 14 July 2012 (UTC)JDefauw
ABCT cannot be a cause "specific cause" of GD--it is a theory about markets *in general*.
"It appears to me that the business cycle theory of Hayek can be safely identified with ABCT." Yes, but ABCT did not exist until 1970/1971 (if I'm remembering correctly-it was around the time Hayek got the Nobel Prize). There were *precursors* to ABCT in the past, but they were not yet ABCT.
Also, whether or not ABCT implies a "do-nothing policy" (assuming we're talking about *government* "economic interventionist" policies) is controversial. ABCT basically implies that the govt shouldn't mess with credit markets, but whether or not ABCT also implies that the govt shouldn't implement Keynesianish policies in response to a recession in other ways is very controversial. Someone could agree with ABCT, but also advocate an "economic interventionist" response to a recession in *some* respects. Furthermore, many Austrian economists (who necessarily believe in ABCT) oppose free banking (most of these commonly advocate a 100% reserve requirement + a gold standard), which can be interpreted as supporting "economic interventionism" in a response to a recession.
Yes, liquidationism and Austrian recommendations are different. In particular, most Austrians would agree with Hayek that deflation is just as bad (or possibly worse) than inflation, and that the deflation policy of the late 20s/early 30s was very stupid.
You recommendations all sound great. Thanks. Byelf2007 (talk) July 15 2012
I like the idea of creating a third heading. The three headings would be "Theoretical Explanations", "Specific theories of Cause", and "The Role of Economic policy" or "The Debate over the Role of Economic Policy". Under this third heading we can also move the material under the sub-heading "Expanding Government", which also needs a lot of work. I think it will not be necessary to use the term "Austrian Business Cycle Theory".
Lawrence White also wrote a book in addition to the journal article. He specifically states his disagreement with the quotation from Milton Friedman. Both Friedman's view and White's view can be stated, while maintaining an NPOV.
I hope to be back on Wikipedia on Monday.
Sounds good. Byelf2007 (talk) July 15 2012
"I like the idea of creating a third heading. The three headings would be "Theoretical Explanations", "Specific theories of Cause", and "The Role of Economic policy" or "The Debate over the Role of Economic Policy". Under this third heading we can also move the material under the sub-heading "Expanding Government", which also needs a lot of work." I agree too. --Pass3456 (talk) 18:48, 15 July 2012 (UTC)--Pass3456 (talk) 18:48, 15 July 2012 (UTC)
Austrian Business cycle theory: developed by Ludwig von Mises with The Theory of Money and Credit (1912), refined by Friedrich Hayek with Monetary Theory and the Trade Cycle (1929), Prices and Production (1931) and Profits, Interest and Investment: And other essays on the theory of industrial fluctuations (1939). (The Elgar Compagnion to Austrian Economics, p. 216). --Pass3456 (talk) 17:49, 15 July 2012 (UTC)
Lawrence H. White: is not neutral, he is a proponent of Austrian School. I cited his article because it has its quality but it certainly should not be the only statement presented. --Pass3456 (talk) 18:02, 15 July 2012 (UTC)
The following lists are meant as an overview. Please feel free to add sources:
  • Generally for liquidationism:
liquidationism guided Federal Reserve policymakers
Ben Bernanke (Did Hayek and Robbins Deepen the Great Depression?, p. 2)
Barry Eichengreen (Did Hayek and Robbins Deepen the Great Depression?, p. 2)
Anna J. Schwartz (Did Hayek and Robbins Deepen the Great Depression?, p. 3; Reflections on the Great Depression, pp. 111-12)
Randall E. Parker (Reflections on the Great Depression, Elgar publishing, 2003, ISBN 978-1843763352, p. 9)
J. Bradford DeLong ("Liquidation" Cycles: Old Fashioned Real Business Cycle Theory and the Great Depression, National Bureau of Economic Research, Working Paper No. 3546, p. 1)
Selwyn Parker Chapter 3
liquidationism guided Hoover administration (until 1932 when treasury secretary Andrew Mellon got an impeachment and retired)
Barry Eichengreen (Did Hayek and Robbins Deepen the Great Depression?, p. 2)
Randall E. Parker (Reflections on the Great Depression, Elgar publishing, 2003, ISBN 978-1843763352, p. 9)
J. Bradford DeLong ("Liquidation" Cycles: Old Fashioned Real Business Cycle Theory and the Great Depression, National Bureau of Economic Research, Working Paper No. 3546, p. 1)
Selwyn Parker Chapter 3
  • Especially for Austrian School:
Austrian business cycle theory contributed to deepening the Great Depression (and seen as one of two versions of liquidationist theory):
Milton Friedman (Did Hayek and Robbins Deepen the Great Depression?, p. 2, 4, 5)
Randall E. Parker (Reflections on the Great Depression, Elgar publishing, 2003, ISBN 978-1843763352, p. 9)
J. Bradford DeLong ("Liquidation" Cycles: Old Fashioned Real Business Cycle Theory and the Great Depression, National Bureau of Economic Research, Working Paper No. 3546, p. 1; Did Hayek and Robbins Deepen the Great Depression?, p. 3, 4, 5)
Ricardo J. Caballero p. 192
Selwyn Parker Chapter 3
William Bonner p. 261-61
Hayek's business cycle theory was not consistent with a liquidationist policy:
Lawrence H. White (Did Hayek and Robbins Deepen the Great Depression?)
Technically, there's a strong case for the notion ABCT keeps getting more sophisticated as there are more and more nuances to the theory getting approved by the vast majority of prominent Austrian economists (thereby becoming ABCT, since most "Austrians" approve of the various additions, unless we say ABCT is Hayek's theory and not Austrian theory), so pinning down when pre-ABCT became ABCT (and then went on to become ABCT with some more elaboration) is very difficult. However, I would like to note that you've said that ABCT was still getting developed by Hayek in 1939 ("Profits, Interest and Investment: And other essays..."). So, while we could say that thinking that was pretty consistent with ABCT may have contributed to the crisis, we ought to make it clear to the reader that "ABCT contributed to GD" is not accurate, despite what a few famous economists have said (if we just say "They said thus and so", then the reader may reach the conclusion that ABCT existed in the mid-1930s and possibly earlier. Also, I'm not sure how much government policy was influenced by the pre-ABCT Austrian theory in the late 20s and 30s, but it appears from what I've read on this subject that the "liquidationists" had much more influence on government policy than the Austrians at the time. Byelf2007 (talk) July 15 2012
Thank you, Pass and Byel, for your input. It is greatly appreciated. I am grateful that you were willing to discuss this on the talk page. The chart is especially valuable. There is only one change I would make to the chart. Lawrence White agrees that Robbins and Hayek contributed significantly to deepening the Great Depression. Hayek even admitted in a talk in 1975 that he made a big mistake at the time. The only thing White denies is that Hayek's business cycle theory was consistent with a liquidationist policy.
After I wrote the above paragraph, I noticed that Pass has already created the new heading and the new section. It looks like he did a great job. The only problem we still have to resolve is whether the term "Austrian Business Cycle Theory" should be used to describe "ABCT" in its primitive stages. I have a personal preference for not using terms in an imprecise way. However, I don't think it is necessary to remove the opening sentence of the quote by Milton Friedman. Rather, we could clarify this in the paragraph on Lawrence White's point of view by saying "Hayek's business cycle theory (which later developed into what we know today as Austrian Business Cycle Theory)". It would be better if we were able to locate a secondary reliable source which makes that point.
Other than that, I think the material under the new heading has shaped up very well.JDefauw (talk) 02:03, 17 July 2012 (UTC)JDefauw
Thank you. --Pass3456 (talk) 21:40, 17 July 2012 (UTC)
Sounds good. Byelf2007 (talk) July 18 2012

Population dynamics[edit]


The article features a couple of explanations that are rather counterfactual. The long term trend population dynmics as a reason for just four years of a sharp recession? Is there really academic reception for the thesis that population dynamics were a significant cause for the Great Depression? I never read something like that in books about the Great Depression. --Pass3456 (talk) 10:21, 29 July 2012 (UTC)

Alvin Hansen wrote about this. I have a reference which I will add when I get a chance.Phmoreno (talk) 11:21, 29 July 2012 (UTC)
If we can establish that Alvin Hansen believed this theory was credible, then that would strengthen the position of those who believe we should include this theory in the article.
I have reviewed the article by Clarence Barber. The article is a purely economic analysis of the causes of the great depression, and I did not see any information in there on secularism, or the number of deaths in World War I. I will rewrite the paragraph when I get a chance.
I also believe that we should remove the last paragraph of this section (the one on the documentary "Demographic Winter") because it is unclear, based on the statement in the documentary which is quoted, that Phillip Longman himself applies this statement to the population decline which preceded the Great Depression. Our purpose should be to summarize the positions others have taken on the causes of the Great Depression, not to create our own arguments for their positions.JDefauw (talk) 01:17, 31 July 2012 (UTC)JDefauw
I have serious concerns about the credibility of the claim increasing population alone contributed to economic growth. Technology was changing very rapidly in the period being described, & ignoring the influence of this change is problematic if not downright stupid. TREKphiler any time you're ready, Uhura 08:39, 31 July 2012 (UTC)

The Gold Standard[edit]

A recent addition to the section on the Gold Standard provides us with some good information. However, it has been placed in the wrong section. It belongs in the section on the Austrian explanation of the causes of the Depression. The Austrian economists believe that an inflationary policy after WWI caused the Depression. According to the gold standard theory, on the other hand, post-war deflationary pressures, especially in Europe, caused the depression. We are allowed to disagree with either theory. However, the information we provide in each section needs to be consistent with the theory that is being presented. The paragraph that began "This had numerous consequences. However what is of particular relevance is that. . . ." states the main point of this section and will need to be restored to the article. The information that indicates that post-war policy was inflationary is out place in this section.

I understand that this section was confusing. The main point was stated in the opening sentence, and after that it took so long for the writer to get to the main point that one could easily conclude that the Depression was being blamed on the inflationary policy during World War I. However, if you read one of the early versions of this article (April 2005), the author's original intent is clearer (the title of the section was "Post-war deflationary pressures").

I rearranged the material so that the main point is summarized in the first paragraph. The 1st half of this section is also in need of reliable references. I placed two citation needed tags. Others could move them or add more of them.JDefauw (talk) 16:20, 23 August 2012 (UTC)JDefauw

Well done. --Pass3456 (talk) 21:22, 30 August 2012 (UTC)

President Hoover and Liquidationism[edit]

It is clear that the Federal Reserve policy during the presidency of Herbert Hoover was a liquidationist policy. There is presently disagreement among contributors over whether the other policies of the government during this time were liquidationist policies.

Keynesian economists believe that governments should run deficits during a depression or recession. To do that, a government needs to do one of three things. It can 1) Increase spending and cut taxes, 2) increase spending and keep taxes the same, or 3) cut taxes and keep spending the same. As has been been pointed under the last sub-heading in the article (Austrian school thought on expanding government), President Hoover increased spending and increased taxes. (Both Keynesian and Austrian economists agree that he should not have increased taxes.)

We can conclude from this that while there may be valid arguments to support the opinion that Hoover was an anti-liquidationist, the claim that he was anti-liquidationist cannot be supported simply by saying that he increased spending. If he increased spending and then balanced the budget by raising taxes, he was not really doing anything at all to combat the depression.

I think it would be best to state specific ways in which Hoover followed liquidationist policies (if, for example, he balanced the budget instead of intentionally creating a deficit), and specific ways in which he followed the advice of those in his cabinet who were economically responsible (Lamont and Hyde). In the meantime, the statement about the increased spending needs to be removed unless it can be shown that the increased spending caused a sizable deficit.

One way we could state both points of views without interrupting the flow of the article is to quote Lawrence White when he says that Hoover's policy was not truly a "do-nothing" policy, and place his quote at the very end of the section.JDefauw (talk) 03:21, 5 September 2012 (UTC)JDefauw

♠If you think I disagree with that proposition, you're wrong. What I disagree with is how it's been presented on the page.
♠To begin with, the quote from the memoir (as I presume it is) preceding mention of the source of it disconnects the two in a way that makes grasping the connection harder.
♠In the second place, it's far from clear, even allowing an unambiguous connection, exactly what policy Hoover advocated, based on how it's phrased, since the quote, & the following text, seem critical of Mellon's expressed position. Moreover, the mention of "cushioning" seems diametrically opposed to the seeming laissez-faire approach of Mellon.
♠In the third place, Hoover's own policy actions would seem to contradict the proposition he agreed with Mellon. (That's an argument rather above my grasp of the details, however.)
♠And so, I repeat, phrase it better. Make it clear. Let the narrative flow naturally. Don't go introducing confusion for no purpose. TREKphiler any time you're ready, Uhura 04:17, 5 September 2012 (UTC)
I addressed one of your concerns. There is more work that needs to be done.JDefauw (talk) 18:45, 5 September 2012 (UTC)JDefauw
That's a bit better, thx. For the contradiction, which remains, I'll leave you to it. I don't pretend to know it well enough. TREKphiler any time you're ready, Uhura 19:34, 5 September 2012 (UTC)

Barry Eichengreen and J. Bradford DeLong wrote that the Hoover administration’s fiscal policy was guided by liquidationism and that Hoover/Mellon tried to keep the federal budget balanced until 1932 when Hoover lost his confidence in Mellon and replaced him:

"Eichengreen believes that liquidationism guided the Hoover administration’s fiscal policy, and that the “same ideology of inactionpervaded the corridors of central banks."
-> (Lawrence H. White, Did Hayek and Robbins Deepen the Great Depression?, p. 2) [1]
"The inaction of the United States government during the 1929—33 slide into the Great Depression is, from any of today's various economic perpectives, extraordinarily puzzling"
-> J. Bradford De Long, "Liquidation" Cycles: Old Fashioned Real Business Cycle Theory and the Great Depression, National Bureau of Economic Research, Working Paper No. 3546, p. 1
"The Hoover administration's and the Federal Reserve's unwillingness to use fiscal of monetary policy to prop up aggregate demand during the slide into the Great Depression was approved by the most eminent economists of the day."
-> J. Bradford De Long, "Liquidation" Cycles: Old Fashioned Real Business Cycle Theory and the Great Depression, National Bureau of Economic Research, -> Working Paper No. 3546, p. 5
"In a later paper, DeLong (1998) makes similar argument regarding U.S. fiscal policy: Hoover and Mellon tried to keep the federal budget balanced in 1930-31 because they adhered to the Hayekian theory of the business cycle. "
-> Lawrence H. White, Did Hayek and Robbins Deepen the Great Depression?, p. 4) [2]
Similar: Randall E. Parker (Reflections on the Great Depression, Elgar publishing, 2003, ISBN 978-1843763352, p. 9). --Pass3456 (talk) 20:24, 5 September 2012 (UTC)

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Essay from a Marine Le Pen fan[edit]

This does not fit.

No reply on his user talk page either: [4]. --Pass3456 (talk) 17:16, 19 June 2017 (UTC)


Were not the Republicans in charge of the Federal Government from the end of the Civil War until FDR? How much responsibility do they have for the Crash?Tighelander (talk) 06:39, 29 January 2018 (UTC)

Big parts of the problem, such as unemployment caused by electricity and internal combustion and slowing population growth, had nothing to do with politics. The depression would not have been as great or lasted as long if the heavy burden of regulations had not been enacted. Recovery started as soon as part of recovery act was declared unconstitutional. Recovery was due to continued investment in new and existing technologies.Phmoreno (talk) 12:38, 29 January 2018 (UTC)