Fed Should Heed Lessons of 1920's: Grant

[Parsad]

James Grant has some comments on the Fed's actions.  Cheers!

 

http://finance.yahoo.com/news/fed-heed-lessons-1920s-grant-155600555.html;_ylt=ApnFQ6t2iMpeNEgKdhLU4.KiuYdG;_ylu=X3oDMTQ0OTJ1MmRkBG1pdANGaW5hbmNlIEZQIFRvcCBTdG9yeSBSaWdodARwa2cDZGI5OGFiMGQtNjhmNi0zY2NiLTgwYjItOTZmNmM4NGMwZThhBHBvcwMyBHNlYwN0b3Bfc3RvcnkEdmVyAzEwZTRhM2YwLTU3MmQtMTFlMS05NjdlLTY3YjI5NzZkZWE1MA--;_ylg=X3oDMTFvdnRqYzJoBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25zBHRlc3QD;_ylv=3

[SmallCap]

Grant said. "The historical comparison is useful to invite us all to consider the present day orthodoxy and if it is possible that it is wrong. I think that it might be wrong."

 

This is a really bold and courageous stand for him to take. :P

[dcollon]

I really like the idea of issuing longer dated bonds are current rates.  I don't like the idea of our country being funded like Lehman Bros (i.e. short-term).

 

I realize this would open up a bunch of different issues as it relates to interest exp, etc..., but if we could issue 50 or 100 yr debt at reasonable rates I would do it.

 

[ERICOPOLY]

In arguing for the same medicine, is he stating the economy has the same disease?  Not just an intersection of symptoms, but the same disease.

 

[PlanMaestro]

In arguing for the same medicine, is he stating the economy has the same disease?  Not just an intersection of symptoms, but the same disease.

 

And it is a different decease. Two types of recession: inflation fighting recession vs balance sheet recession.

 

http://krugman.blogs.nytimes.com/2011/04/01/1921-and-all-that/

http://krugman.blogs.nytimes.com/2012/01/23/more-than-you-want-to-know-about-warren-harding/

[KinAlberta]

Has anyone read this?

 

 

The Forgotten Depression: 1921: The Crash That Cured Itself Hardcover – Nov 11 2014

by James Grant (Author)

http://www.amazon.ca/The-Forgotten-Depression-Crash-Itself/dp/1451686455

 

 

On another note, and not Fed related, but govt related, I've long been interested in the impact of MTR changes in the 1920s on the investment climate of the day. Some trivia here... A long good read. Possibly highly biased.

 

 

1920-1929: an Era of exceptional Prosperity

The post war period was an era of great prosperity generally referred to as the roaring twenties. US President Coolige was an advocate of "small government" and his supply side economics proved a real success  story.  Under his presidency, the top marginal tax rates were gradually reduced from 73% in 1922 to 24% in 1929. These "Mellon tax cuts" restored the incentives to work, save and invest and generated an atmosphere of great dynamism. The reduction of top tax rates particularly motivated the entrepreneurs to engage in the risky business of innovation with an unprecedented series of great discoveries and inventions as the logical consequence. Electrification, radio, phonograph and telephone date from this era and brought a wide range of new machinery and consumer goods. New tools and processes (Ford's assembly line) drastically increased productivity. All these brand new technologies boosted productivity and prosperity all over the world. "

 

http://workforall.net/the-great-1929-Depression.html