Friday, 03 October 2008

• The Great Depression Quotes

  "If the Federal Reserve had an inflationist attitude during the boom, it was just as ready to try to cure the depression by inflating further. It stepped in immediately to expand credit and bolster shaky financial positions. In an act unprecedented in its history, the Federal Reserve moved in during the week of the crash-the final week of October-and in that brief period added almost $300 million to the reserves of the nation's banks. During that week, the Federal Reserve doubled its holdings of government securities, adding over $150 million to reserves, and it discounted about $200 million more for member banks. Instead of going through a healthy and rapid liquidation of unsound positions, the economy was fated to be continually bolstered by governmental measures that could only prolong its diseased state."-- America's Great Depression, Murray Rothbard

  "Prices started dropping in September.  Investors continued speculating, though, because they assumed that the market would rally, as it had many times in the past.  Plus, the bargain prices for stocks were too enticing to resist.  But the slide steadily continued, and picked up speed in October.  Then on the morning of October 24, 1929, on the day that would become known as Black Thursday, panic ensued.  With prices at an all time low, everybody wanted to get out of the market.  The sudden deluge of short selling overwhelmed the markets.  The biggest bankers of the country pooled their resources and tried to stop the panic by buying large amounts of stocks.  Prices actually rose slightly but resumed falling again a few days later.  Then on what would be later known as Black Tuesday, October 29, 1929 the market took the largest drop in its history.  It was estimated that $30 billion was lost over the next few days."--The Great Depression, Dennis Nishi

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