Never heard of it?
Come on sure you have. You know of the Great Depression of the 1930s. So you must know of the Great Depression of 1920/21.
Why do you think that might be?
Let’s look at what happened.
After the First World War (the epitome of ugly politics combined with narcissism – yet you may not know much about that either…) with the men returning from Europe, the great manufacturing concerns decided that demand for their goods would soar. So they ramped up production in the expectation of fantastic business.
It didn’t happen.
There was massive oversupply. Prices plummeted. Businesses had great problems. Unemployment soared from 4% to 12%. By some accounts, the GDP fell 24%. This was a huge depression. Still ring no bells? Curious huh?
Woodrow Wilson – in his last Presidential year – suffered TWO debilitating strokes. So he stopped governing. His wife took over and made no big decisions. In other words, they did not intervene.
The great free marketer and true capitalist Warren G Harding took over and he had Herbert Hoover (who became Pres going into the 1930s…) in his ear (Economic Secretary) shouting we need to stimulate, we need to borrow, we need to ‘help’.
Harding replied with, in effect, ‘Yada yada’ and promptly took the following action
- He CUT Federal spending 40%
- He BALANCED the Budget
- He let businesses – including big powerful corporations – go bust
The Federal Reserve also did nothing. How could they with a capitalist in charge?
Prices of goods and services collapsed. The costs of living and of running businesses collapsed. They had that beautiful thing – deflation! (Oh, how I dream of my living costs and business running costs falling.)
Within 18 months the US was back to full employment and then they had the Roaring 20s…
Do you still wonder why you know nothing of this period?
Want to know more?
Copyright Jonathan Davis 2014