The relationship between the Great Depression and the stock market crash of 1929 will forever be etched in history. The truth is that the crash was really just part and parcel to what actually occurred during the time period, and more importantly, what occurred in the prior generation. Some events preceding the Great Depression created a scenario for a Murphy's Law application. The question is whether the stock market crash happened naturally, or if it was calculated.
The Federal Reserve Act of 1913 established a policy for a centralized bank that would be called the Federal Reserve Bank. Used here, the term "federal" was and still is misleading. The Fed is a private bank with a presumptive name. The 1913 legislation gave this bank the authority to serve as the money conduit for the United States, effectively controlling the nation's money supply. As fate would have it, the law also was enacted in a successive timeline to World War I.
After the War the United States economy began growing. This time period is historically known as the "Roaring Twenties" and it was all being orchestrated on Wall Street. With no barriers in place, the lavish lifestyles of the celebrated wealthy of the time were often built on loan margins.
The market did rebound after the crash, but the major bankers pulled their money from the system after initially agreeing to serve as temporary support. Approximately 9,000 banks failed in the 1930s. After the 1932 election of President Franklin Delano Roosevelt, Congress passed the Gold Confiscation Act of 1933 and civil unrest swept America. The Great Depression had officially arrived.
Radio and newspapers were the only communication mediums of the day. National figures came to life on the radio, the Rev. Charles E. Coughlin being a prime example. Coughlin became an ardent critic of the Roosevelt Administration. He was also an adversary of big business, appealing to the sense of desperation many Americans felt at that time because of their low standard of living. The Great Depression does not refer to only a depressed economy. It included a depressed people who were victims of reduced living standards, which also included living through the Ohio River Flood of 1937 and the Dust Bowl. Cash flow is the lifeblood of any economy; America's circulation was bad.
In the midst of these socioeconomic conditions came a desire among many to re-evaluate the necessity of a capitalistic system. This presented a problem for the powers-that-be of the banking institution. The necessity for money to flow again became the primary agenda, but was brought about through the last resort, World War II. Kant's Theory of Just War mandates that war be the last resort and for the United States the last resort worked.
Unemployment was rampant at the time the United States entered WWII. The government put half of the available men into uniform and the other half of the population to work, essentially producing the uniform and its necessary frills like airplanes and guns. The transformation to a military production economy was the main means by which the Unites States was kept from enduring a longer return to financial stability.
There is no doubt that failed central banking monetary policy was behind the Great Depression. The Federal Reserve in particular printed too much money, and this money created first a tremendous boom and then a bust. Instead of doing away with central banking, the United States and other countries in the Western world actually increased government involvement in the private marketplace. The result was that a disastrous system further enfranchised a destructive system – one that continues to create chaos and ruin throughout the world today.
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