[ExI] banks and crash

Damien Broderick thespike at satx.rr.com
Sun Oct 12 17:43:00 UTC 2008

Barbara Lamar replies:

Dear Dr. Papaioannou,

You wrote:

<<But what lead to the great depression rather than
an ordinary recession was the inaction of government and the central
bank after the crash, allowing banks to fail and the money supply to
contract, because using fiscal and monetary policy to correct it was
anti-free market.>>

Dr. Papaioannou, you need to brush up United States history. The U.S. 
Federal Reserve Bank was created in 1913. Years later, Wilson (who, 
as president, signed the Federal Reserve Act) said,

  "I am a most unhappy man. I have unwittingly ruined my country. A 
great industrial nation is controlled by its system of credit. Our 
system of credit is concentrated. The growth of the nation, 
therefore, and all our activities are in the hands of a few men. We 
have come to be one of the worst ruled, one of the most completely 
controlled and dominated Governments in the civilized world."


I do not have time right now to write at greater length, but please 
at least read the history of the Federal Reserve Bank before you make 
statements about the operation of "free" financial markets in the 
1920's. Your comment indicates a basic lack of understanding on your 
part of the effect of money and credit on an economy.


Barbara Lamar 

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