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Great Recession

2012-09-29T18:53:26Z

RayBirks: /* Prelude to the crisis */ wikify term 'Amortization' (though no page yet)

{{RightTOC}}

{{See also|European sovereign debt crisis (2010–present)}}

The [[financial crisis]], that began in 2007, has been named the '''Great Recession''' due to its impact on the American and worldwide economy.<ref name="Zuckerman_recession">Zuckerman, Mortimer. [http://online.wsj.com/article/SB10001424052748703837004575013592466508822.html "Mortimer Zuckerman: The Great Recession Continues - WSJ.com"], ''The Wall Street Journal'', referenced 2010-07-23.</ref><ref name="Evans-Pritchard_recession">Evans-Pritchard, Ambrose. [http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7871421/With-the-US-trapped-in-depression-this-really-is-starting-to-feel-like-1932.html "With the US trapped in depression, this really is starting to feel like 1932"]. ''The Daily Telegraph'' (London). Referenced 2010-07-27.</ref><ref name="Samuelson_recession">Robert J. Samuelson. [http://www.washingtonpost.com/wp-dyn/content/article/2010/07/11/AR2010071103038.html "The Great Recession's stranglehold"], ''The Washington Post'', July 12, 2010. Referenced 2010-07-27.</ref><ref name="Isidore_recession">Chris Isidore. [http://money.cnn.com/2009/03/25/news/economy/depression_comparisons/ "The Great Recession"], ''CNNMoney.com'', First Published: March 25, 2009. Referenced 2010-07-27.</ref>

==Prelude to the crisis==
Banks increasingly had the incentive to make long-term [[Amortization|amortizing]] loans secured by long-term assets because the threat of bank runs has been taken away by increases in [[Federal Deposit Insurance Corporation|FDIC]] deposit insurance. Deposit insurance started at $2,500 in the [[Great Depression]] and has increased in fits and starts to $250,000 in 2009. With the increase in deposit insurance there was no need to maintain liquidity. So instead of making short-term, self-liquidating business lines of credit, bankers opted for making real-estate loans.

This shift over the decade (2000s) was reflected in numbers from the FDIC: at the end of the third quarter of 1999, the assets of the nation's banks totaled $5.5 trillion. As of September 30 2009, bank assets had grown to $13.2 trillion. Commercial and industrial loans outstanding only grew from $947 billion a decade ago to $1.27 trillion by September 30, 2009. Meanwhile, loans secured by real estate increased from $1.43 trillion in the fall of 1999 to $4.5 trillion in 2009. And investment in securities doubled, rising from $1.03 trillion to $2.4 trillion.<ref name="French_loans">Doug French. [http://mises.org/daily/3925 "Productive Debt versus Unproductive Debt"], Mises Daily, December 08, 2009. Referenced 2010-07-28.</ref>

The [[subprime]] mortgage market was deregulated and the [[Securities and Exchange Commission]] decided in 2004 to allow banks to triple their [[leverage ratio]]s (that is, the ratio measuring the amount of risk to capital), which appeared benign at the time. Capital inflows pushed up borrowing and asset prices while reducing [[spread]]s on all sorts of risky assets, leading the [[International Monetary Fund]] to conclude in April 2007, in its twice-annual ''World Economic Outlook'', that risks to the global economy had become extremely low and that, for the moment, there were no great worries. When the international agency charged with being the global watchdog declares that there are no risks, there is no surer sign that this time ''is'' different.<ref name="Reinhart_leverage">Carmen M. Reinhart and Kenneth S. Rogoff. [http://press.princeton.edu/titles/8973.html "This Time is Different"], ''Princeton University Press'', ISBN 978-0-691-14216-6, p. 213-214. Referenced 2011-07-18.</ref>

Finance was once just a small portion of the US economy, but by 2007 it had mushroomed into being over a quarter of the S&P 500, after being only 5 percent of the index back in 1980 — and this doesn't count the financial affiliates of companies like GE. Finance is the largest sector of the US economy, so college graduates believe the road to riches lies with pushing paper, creating complex financial securities, and jockeying risk-management models.

These products served to grow Wall Street exponentially. All stocks in the S&P in 1957 had a market value of $220 billion. By the end of 2008, that index had a value of $9 trillion, but the real action was in [[derivative]]s, which totaled $518 trillion that year, "or about ten times the Gross Global Product." [[Credit Default Swaps]] (CDS) owners jumped on this opportunity to profit and the CDS market grew to $62 trillion at its peak, while the entire market for home mortgages was only $12 trillion. Sold as an insurance to hedge against credit risk, the CDS market morphed into speculation.<ref name="French_finance_industry">Doug French. [http://mises.org/daily/4592 "Turning Bread into Stones"], Mises Daily, July 26, 2010. Referenced 2010-07-28.</ref>

The Washington Post has called the 2000s "[[Lost Decade (Japan)|The lost decade]]". "The U.S. economy has expanded at a healthy clip for most of the last 70 years, but by a wide range of measures, it stagnated in the first decade of the new millennium. Job growth was essentially zero, as modest job creation from 2003 to 2007 wasn't enough to make up for two recessions in the decade. Rises in the nation's economic output, as measured by gross domestic product, was weak. And household net worth, when adjusted for inflation, fell as stock prices stagnated, home prices declined in the second half of the decade and consumer debt skyrocketed."<ref name="WashPost_decade">The Washington Post. [http://www.washingtonpost.com/wp-dyn/content/graphic/2010/01/01/GR2010010101478.html "The lost decade for the economy"], a graphic by Neil Irwin, Cristina Rivero and Todd Lindeman. Referenced 2010-07-30.</ref>

===Predicting the crisis===
<blockquote>''"While I am not going to say that there is no possibility of house pricing declining... the notion of a bubble bursting and the whole price level coming down seems to me as far as a nationwide type of phenomenon really quite unlikely."'' <br />
<small>Federal Reserve Chairman [[Alan Greenspan]], 2003.</small><ref name="Greenspan_bubble">Alan Greenspan. [http://www.access.gpo.gov/congress/senate/pdf/108hrg/86497.pdf "Global Aging: Opportunity or Threat for the U.S. Economy?"] (pdf), Hearing before the [http://aging.senate.gov/ Special Committee on Aging], United States Senate, One Hundred Eighth Congress, First Session, Washington, DC, February 27, 2003, p.10. Referenced 2010-07-24.</ref></blockquote>

A common view from the very beginning of the credit crisis, shared from the upper echelons of the global financial and policy hierarchy and in academia to the general public, was that, ‘no one saw this coming’. However, several economical analysts - especially from the [[Austrian School of Economics]] - warned specifically about a housing-led recession, going against the general mood and official assessment, and well before most observers turned critical from late 2007.<ref name="Bezemer_coming">Bezemer, Dirk J. [http://som.eldoc.ub.rug.nl/FILES/reports/2009/09002/09002_Bezemer.pdf "No One Saw This Coming": Understanding Financial Crisis Through Accounting Models] (pdf), ''Groningen University'', 16. June 2009. Referenced 2010-07-30.</ref><ref name="Mises_Bailout">Mises.org. [http://mises.org/daily/3128 "The Bailout Reader"], ''Mises Daily''', September 2008, section "Who Predicted This?". Referenced 2010-11-11.</ref><ref name="Murphy_Recession">Robert P. Murphy. [http://mises.org/daily/2728 "The Worst Recession in 25 years?"], ''Mises Daily'', October 01, 2007. Referenced 2010-11-11.</ref>

{{Main|Austrian predictions/Housing bubble}}

In '''2002''', [[Robert Blumen]] summed up the effect of the activities of Fannie and Freddie on the housing market as shows the systemic risk and foresaw a coming bailout.<ref name="Blumen_Fannie">Blumen, Robert. [http://mises.org/daily/986 "Fannie Mae Distorts Markets"], ''Mises Daily'', June 17, 2002. Referenced 2011-01-10.</ref> [[Sean Corrigan]] pointed to the blooming real estate business among all the bankruptcies, and noted that real estate bubbles tend to pop several years after stock market bubbles, and that mortgages may fare much worse compared to stocks... along with their owners.<ref name="Corrigan_Trouble">Corrigan, Sean. [http://mises.org/daily/994 "The Trouble with Debt"], ''Mises Daily'', July 01, 2002. Referenced 2011-01-10.</ref> Congressman [[Ron Paul]] criticized government involvement in housing, and said that like all artificially created bubbles, the boom in housing prices cannot last forever.<ref name="Paul_Testimony">Paul, Ron. [http://paul.house.gov/index.php?option=com_content&task=view&id=323&Itemid=60 "Testimony to U.S. House of Representatives"], July 16, 2002. Referenced 2011-01-10.</ref>

In '''2004''', [[Mark Thornton]] wrote that higher interest rates (indicated by the Fed) "should trigger a reversal in the housing market and expose the fallacies of the new paradigm, including how the housing boom has helped cover up increases in price inflation. Unfortunately, this exposure will hurt homeowners and the larger problem could hit the American taxpayer, who could be forced to bailout the banks and government-sponsored mortgage guarantors who have encouraged irresponsible lending practices."<ref name="Thornton_Housing">Thornton, Mark. "[http://mises.org/daily/1533 Housing: too good to be true.]" June 4, 2004. Referenced 2011-01-10.</ref> Later on, he spelled out the consequences for the construction industry, unemployment, foreclosures, bankruptcies, bailouts of banks and GSEs, and a long recession.<ref name="Thornton">Thornton, Mark. [http://mises.org/journals/scholar/Thornton13.pdf "The Economics of Housing Bubbles"], June 2006, p. 27, 29, 31. Referenced 2011-01-10.</ref>

[[Stefan Karlsson]] wrote that the next crisis will be more serious than the mild recession of 2001 one; as it is, in fact, that very same crisis, only postponed.<ref name="Karlsson_Unsustainable">Karlsson, Stefan. [http://mises.org/daily/1670 "America's Unsustainable Boom"], ''Mises Daily'', November 8, 2004. Referenced 2011-01-10.</ref>

In '''2005''', [[Doug French]] after observing the mania in Vegas, quipped "condos are the last segment of the housing market to catch fire in a boom and the first to crater in a bust.", and concluded that the bust must be close.<ref name="French_Condo-mania">French, Doug. [http://mises.org/daily/4403 "Condo-mania."], ''Mises Daily'', July 11, 2005. Referenced 2011-01-10.</ref> [[Gary North]] warned against the danger of ARMs (adjustable rate mortgages).<ref name="North_Surreal">North, Gary. [http://www.lewrockwell.com/north/north416.html "Surreal Estate on the San Andreas Fault."], November 25, 2005. Referenced 2011-01-10.</ref>

Investor [[Peter Schiff]] acquired fame in a series of TV appearances (most in 2006 and 2007), where he opposed a multitude of financial experts and claimed that a bust was to come.<ref name="Schiff_Right">Schiff, Peter. "[http://www.youtube.com/watch?v=2I0QN-FYkpw&feature=related Peter Schiff Was Right]" (video). Referenced 2011-01-10.</ref> He was warning about the speculation, ARMs, houses that couldn't be sold, people walking away from them and coming bailouts for several years before in print.<ref name="Schiff_Commentary_2003">Schiff, Peter. [http://www.europac.net/commentaries/fed_official_admits_emperor_has_no_clothes "Fed official admits the emperor has no clothes!"], Commentary, March 10, 2003. Referenced 2011-01-10.</ref><ref name="Schiff_Commentary_2004">Schiff, Peter. [http://www.europac.net/commentaries/arms_way_tender_trap_adjustable_rate_mortgages "In Arm's Way: The Tender Trap of Adjustable Rate Mortgages."], Commentary, May 7, 2004. Referenced 2011-01-10.</ref><ref name="Schiff_Commentary_2005">Schiff, Peter. [http://www.europac.net/commentaries/housing_speculation_more_rampant_you_think "Housing Speculation is More Rampant Than You Think."], Commentary, July 5, 2005. Referenced 2011-01-10.</ref>

The [[Federal Reserve]], led by then-Chairman [[Alan Greenspan]], identified a housing bubble in 2005 and failed to slow down the expansion of mortgage credit, as transcripts from Open Market Committee meetings that year show.<ref name="Torres_Fed">Craig Torres. [http://www.bloomberg.com/news/2011-01-14/fed-saw-housing-bubble-in-2005-failed-to-alter-policy-of-rate-increases.html "Fed Officials Saw Housing Bubble in 2005, Didn't Alter Policy"], ''Bloomberg'', January 14, 2010. Referenced 2010-11-11.</ref>

==Bubble economy==

===Housing bubble===
Psychology clearly plays a role in stimulating a bubble, but only monetary [[inflation]] enables it. It is difficult not to succumb to the temptation of astronomic profits in a short period of time. Resistance is even more difficult if the means to engage in the bubble are easily available at the nearest bank.

Former Fed chairman [[Alan Greenspan]] would suggest that "irrational exuberance" has the power to escalate asset prices. He could certainly claim exuberance, but there is nothing irrational in investing in higher-yield projects instead of watching your idle savings lose their purchasing power because of inflation.

With extremely low nominal interest rates and negative real interest rates (inflation is estimated at over 10% for 2007 and 2008), the rational behavior was to borrow and invest wherever it is possible. A booming real-estate market seemed to be the obvious choice most of the time. Under these conditions, everyone becomes a brilliant businessman. Entrepreneurial errors seem seldom while credit is abundant.

In the case of the housing sector, people failed to understand that demand for real estate is only sustainable if the ultimate reason for purchasing a property is to actually reside in it. Only [[saving]]s can allow for sustainable economic growth. Through inflation, credit flows excessively and distorts the production structure, allocating resources to projects that should have never existed in the first place and paving the way for the ensuing recession, that is, the adjustment of all the [[malinvestment]]s. Entrepreneurs can and will make mistakes even in the absence of inflation. But it is only through undue monetary expansion that the distortion occurs on a massive scale throughout the economy.

Production and saving cannot keep up with the pace of credit expansion, because production takes time and labor. The creation of additional money out of thin air does not add to the available amount of goods and services in the economy. If more credit is extended to construction companies, it does not mean there will be enough steel, cement, etc. — certainly not at prices that make the developments profitable. As soon as each company starts bidding for the same resource, it will tend to increase in [[price]], rendering some projects unviable. Resources are scarce. Printing more money can never alter this fact.<ref name="Ulrich_housing_bubble">Fernando Ulrich. [http://mises.org/daily/3956 "Rise and Fall in Dubai: An Austrian Perspective"], Mises Daily, December 16, 2009. Referenced 2010-07-28.</ref>

To place the housing bubble in historical perspective it is useful to view the [[Case-Shiller housing price index]] deflated by the [[GNP deflator]]. Since 1891, when the price series began, no housing price boom has been comparable, in terms of sheer magnitude and duration, to that recorded in the years culminating in the 2007 [[subprime]] mortgage fiasco. Between 1996 and 2006 (the year when prices peaked), the cumulative real price increase was about 92 percent - more than three times the 27 percent cumulative increase from 1890 to 1996. <ref name="Reinhart_housing">Carmen M. Reinhart and Kenneth S. Rogoff. [http://press.princeton.edu/titles/8973.html "This Time is Different"], ''Princeton University Press'', ISBN 978-0-691-14216-6, p.207. Referenced 2011-07-18.</ref>

===Government intervention in the housing market===
Government policies intended to promote home ownership, even by people otherwise not able to afford it, date back to the 1930s if not before. Today, many government agencies and government-sponsored companies guarantee or subsidize mortgage loans, either directly or by providing a secondary market. Examples include the [[Federal Home Loan Banks]], the [[Federal Housing Administration]] (FHA), the [[Government National Mortgage Association]] (GNMA, "Ginnie Mae"), and the Department of Agriculture's [[Rural Housing Service]] and [[USDA Rural Development|Rural Development Guaranteed Loan Program]]. Some programs aim to make housing more affordable for particular groups, including military veterans, police officers, teachers, and Native Americans.

Some programs have forged strong links with politicians. The [[Fannie Mae|Federal National Mortgage Association]] (Fannie Mae) and [[Federal Home Loan Mortgage Corporation]] (Freddie Mac), both government sponsored, have been particularly notorious, enjoying cozy relations with members of Congress and an implicit (later explicit) government guarantee of their bonds.

Several much-discussed laws and regulations, including the [[Community Reinvestment Act]] of 1977 and its sequels, pressured financial institutions to make mortgage loans to normally unqualified borrowers, and even to make them in parts of cities where a prudent person would hesitate to walk. Lenders have also been pressured to grant relief to troubled mortgage debtors.

It is not obvious that homeownership is unequivocally desirable. Owning a house puts friction in the way of the owner's moving to a place where he could have a better job. The owner carries the burdens of maintenance, landscaping, and finding plumbers and other repairmen when emergencies arise. These burdens might be left in the first place to managers of rental properties, who would take advantage of professionalism, risk-spreading, and economies of scale. Yet government has gone to remarkable lengths in obeisance to "the American dream" of homeownership.

Tax laws have long privileged owner occupancy over renting. Homeowners may deduct mortgage-interest payments and real-estate taxes in figuring their federal income taxes, and they enjoy favorable tax treatment of gains on the sale of their houses. Federal tax law permits state and local government agencies to offer below-market-rate financing to homebuyers. Owners enjoy tax-free nonmonetary income (implicit rental income) from occupancy of their homes, whereas landlords pay tax on their rental income and pass it and the property tax along to their tenants.

Such policies have effects. Cheap credit during the years of the boom compounded the long-term effects of government action. As one would predict, cheap credit encouraged borrowing, building construction, and bullish speculation in houses. Even financially unqualified homebuyers took advantage of dubiously attractive subprime mortgages, mortgages whose initial teaser rates could later be raised, loans requiring no payment of principal during the early years, and even negative-amortization loans.

Some borrowers and mortgage brokers connived to conceal applicants' inability to meet even the loosened financial standards. Borrowers and lenders were seduced by expectations that the collateral — houses — would keep rising in price indefinitely. Low interest rates spurred savers and institutions to look for better yields even on new or exotic and riskier kinds of investment. Financiers reached for these yields, resorting to complicated and poorly understood financial derivatives and making defective assessments and unclear explanations of risks.<ref name="Yeager_bubble_background">Leland B. Yeager. [http://mises.org/daily/4531 "Pandemic: The Contagious Crisis"], Mises Daily, July 08, 2010. Referenced 2010-07-28.</ref>

In 1997 homeowners were given a $250,000 exemption ($500,000 for couples) for capital gains that resulted from the sale of their house, adding greatly to the tax benefits of home ownership. This tax break could be said to have lit the fuse of the housing bubble. Then, government-sponsored credit corporations such as [[Fannie Mae]] and [[Freddie Mac]], who can acquire capital at a subsidized rate because of the implicit assumption that the Federal government will bail them out, began to collateralize home mortgage debt on a grand scale so that lenders could quickly and easily resell the loans they make. These government-sponsored agencies have helped stimulate the flow of credit to riskier borrowers who might not otherwise have access to credit, and have therefore helped to lower the credit standards of lending institutions.<ref name="Thornton_Told">Mark Thornton. [http://www.lewrockwell.com/thornton/thornton33.html "We Told You So"], ''LewRockwell.com'', March 24, 2007. Referenced 2011-01-12.</ref>

===Financial markets===
An advanced economy is a tissue of intricate interdependencies whose unraveling damages finance, production, employment, and consumption. Contagion particularly bedevils financial intermediation, which is the business of banks and other financial firms and the stock market. Lending institutions borrow, normally at shorter-term and lower rates of interest, to relend at higher rates. Banks, for example, owe short-term debt to their depositors and use the funds for medium- and long-term loans and securities.

Financial intermediation tailors types, maturities, and risk/reward characteristics of financial instruments to meet the desires both of ultimate savers and of borrowers and stock-issuing firms. In an advanced economy, this intermediation is essential to channel savings efficiently into factories, farms, machinery, and other capital goods, so promoting economic growth.

By its very nature, intermediation requires firms performing it to operate heavily with borrowed funds. Their excess of assets over liabilities — their capital in this accounting sense (net worth) — amounts to only a very small percentage of either. Even ordinary businesses use borrowed funds to some extent; but financial firms practice this [[Leverage (finance)|leverage]], so called, to a more extreme degree. Their capital, a small percentage of their balance sheets, is vulnerable to being wiped out.

'''[[Securitization]]''' means bundling loans into packages that provide the backing for bonds issued by the bundlers. Ideally, these "[[Collateralized debt obligation|collateralized debt obligations]]" enable their buyers to enjoy the convenience of not making individual mortgage loans and also, normally, the relative safety of diversification. The bundlers receive their shares of these benefits from an interest-rate spread between what they earn on the loans and what they pay on their own obligations.

The process can be carried to further stages as the first-level bonds are cut into "tranches" according to the estimated riskiness of their backing. The different tranches can then serve as backing for a further level of bonds, and even further levels. The results are called CDO2s (collateralized debt obligations squared). Many of them received the highest ratings by the three government-privileged bond-rating companies, S&P, Moody's, and Fitch, thus becoming approved holdings even for conservative investors such as pension funds, and building confidence among other investors also.

Yet these ratings, especially of unfamiliar debt instruments, proved overoptimistic. At the beginning of the chain, some of the underlying mortgage borrowers may not have been creditworthy — and in recent years, many of them certainly were not. While the process may achieve the apparent safety of diversification, it also makes risk assessment more difficult and obscures how participants along the chain share the risk of [[default]] on the underlying mortgages. Unforeseen defaults can spread and magnify damage along the whole ingenious chain.<ref name="Yeager_bubble_background" />

'''[[Credit-default swaps]]''' can be described as an insurance that investors buy to compensate for a loss if a particular debtor defaults on its obligation (a loan, mortgage, government debt, etc). The investor pays the CDS spread (the "insurance premium") and if the debtor defaults on its debt, the investor receives the insured sum. The CDS spreads indicate the confidence in the underlying bond.

Investors can buy CDSs even if they do not own any debt from the company that they refer to. These are the infamous naked credit-default swaps (already banned in Germany, there are plans to extend this ban to the rest of the EU). From a free-market point of view, betting on defaults of financial institutions is as legitimate as betting against a certain soccer team in the World Cup.<ref name="Bagus_CDS">Philipp Bagus. [http://mises.org/daily/4502 "The Social Function of Credit-Default Swaps"], Mises Daily, June 29, 2010. Referenced 2010-07-28.</ref>

Generally, the option of insurance means more certainty and that people will be more eager to lend money. However, if many are buying a specific "insurance", it will increase the spreads,and indicate distrust of the market. The institution in question may find it hard to borrow more money (this in fact happened to the [[2008–2010 Icelandic financial crisis|banks from Iceland]], and led to higher interest rate payments for the [[2010 European sovereign debt crisis#Greek government funding crisis|Greek government]]). Speculators can in this way warn the public that a company - or a government - won't be able to pay its debts. They may also bring about the collapse of unstable companies sooner.<ref name="Mera_CDS">Xavier Méra. [http://blog.mises.org/13177/second-thoughts-on-sovereign-credit-default-swaps/ "Second Thoughts on Sovereign Credit-Default Swaps"], Mises Economics Blog, July 6, 2010. Referenced 2010-07-28.</ref><ref name="Bagus_CDS" /> The default-swap issuer can also go broke - and with greater likelihood than a regular "insurer", because of the relative complexity and novelty of the transactions. For an example see the insurer [[American International Group|AIG]], which had to be rescued by the government.<ref name="Yeager_bubble_background" /> (As Treasury Secretary [[Timothy Geithner]] said: "Despite regulators in 20 different states being responsible for the primary regulation and supervision of AIG’s U.S. insurance subsidiaries, despite AIG’s foreign insurance activities being regulated by more than 130 foreign governments, and despite AIG’s holding company being subject to supervision by the Office of Thrift Supervision (OTS), no one was adequately aware of what was really going on at AIG."<ref name="Geithner_AIG">Secretary Timothy F. Geithner. [http://oversight.house.gov/images/stories/Hearings/Committee_on_Oversight/TESTIMONY-Geithner.pdf "Written Testimony"] (pdf) for the House Committee on Oversight and Government Reform, January 27, 2010. Referenced 2010-07-28.</ref>)

The whole tissue of economic interrelations rests on '''trust'''. Confidence can be justified, excessive, or abnormally weak. Confidence can rise or fall in waves of herding: understandably, people without enough information to make judgments on their own regard others' behavior as guided by information that they possess. A boom reinforces confidence. People are inclined to fall for dishonest schemes. A bust saps confidence. People and institutions, including banks, become more cautious in doing business with one another.

The stock market, swinging widely, both registers and magnifies the state of confidence or fear. Loss of stock and house values makes consumers hesitant to spend money, depriving businesses of sales in a further fall of dominos.

'''[[Moral hazard]]''' is a danger: past rescues breed expectations of more in the future. So soothed, firms run greater risks than would otherwise be prudent (just as fire insurance soothes homeowners to be less obsessively cautious than they would be without it). Against a long background of bank and hedge-fund rescues, the rescue of [[Bear Stearns]] in March 2008 further bolstered expectations. These were disappointed when [[Lehman Brothers]] was allowed to fail in mid-September. The crisis deepened, arousing hopes that the authorities had learned a lesson and would not allow a similar major collapse. The economy faces a [[Catch-22 (logic)|catch-22]]: damned by immediate damage if a rescue goes unattempted, and damned by the longer-run moral hazard if a rescue ''is'' undertaken.

Moral hazard presents a major short-run versus long-run contrast. Rescue of a troubled bank may seem the best thing to do immediately, but it reinforces expectations of further rescues, inviting repeated trouble later.<ref name="Yeager_bubble_background" />

===Regime uncertainty===
{{Main|Regime uncertainty}}

The December 2009 regular survey on Small Business Economic Trends by the [[National Federation of Independent Businesses|NFIB]] showed that capital expenditures and near-term plans for new capital investments remained stuck at 35-year lows. The same survey revealed that only 7% of small businesses saw the next few months as a good time to expand. Only 8% of small businesses reported job openings, as compared to 14%-24% in 2008, depending on month, and 19%-26% in 2007. The weak economy was the most prevalent reason given for why the next few months are "not a good time" to expand, but "political climate" was the next most frequently cited reason, well ahead of borrowing costs and financing availability. The authors stated: "the other major concern is the level of uncertainty being created by government, the usually source of uncertainty for the economy. The 'turbulence' created when Congress is in session is often debilitating, this year being one of the worst. . . . There is not much to look forward to here."<ref name="NFIB_Small_business">William C. Dunkelberg, Holly Wade. [http://www.nfib.com/Portals/0/PDF/sbet/SBET200912.pdf "NFIB Small Business Economic Trends"] (pdf), December 2009. Referenced 2010-08-15.</ref>

Business investment in the third quarter of 2009 was down 20% from the low levels a year earlier. Job openings were at the lowest level since the government began measuring the concept in 2000. The pace of new job creation by expanding businesses was slower than at any time in the past two decades and, though older data are not as reliable, likely slower than at any time in the past half-century. While layoffs and new claims for unemployment benefits have declined in recent months, job prospects for unemployed workers have continued to deteriorate. The exit rate from unemployment was lower now than any time on record, dating back to 1967.

According to the Michigan Survey of Consumers, 37% of households planned to postpone purchases because of uncertainty about jobs and income, a figure that has not budged since the second quarter of 2009, and one that remained higher than any previous year back to 1960.<ref name="Becker_Uncertainty">Gary S. Becker, Steven J. Davis and Kevin M. Murphy. [http://online.wsj.com/article/SB10001424052748703278604574624711732528426.html "Uncertainty and the Slow Recovery"], ''The Wall Street Journal'', January 4, 2010. Referenced 2010-08-15.</ref> In 2009, companies were holding more cash — and a greater percentage of assets in cash — than at any time in the past 40 years.<ref name="McGinty_cash">Tom McGinty and Cari Tuna. [http://online.wsj.com/article/SB125712303877521763.html "Jittery Companies Stash Cash"], ''The Wall Street Journal'', November 3, 2009. Referenced 2010-08-15.</ref><ref name="Higgs_cash">Robert Higgs. [http://www.independent.org/blog/index.php?p=3890 "More Evidence of Current Regime Uncertainty?"], ''The Beacon'', blog of the The Independent Institute, Nov 7, 2009. Referenced 2010-08-15.</ref>

The chairman of China’s [[sovereign wealth fund]] said in late 2008 that China had no plans for further investments in Western financial institutions. "Right now we do not have the courage to invest in financial institutions because we do not know what problems they may have." Mr. Lou said that the sheer pace of new initiatives and new rules issued by Western regulatory agencies was disconcerting and made it even harder for him to choose worthwhile investments. "If it is changing every week, how can you expect me to have confidence?" he asked.<ref name="Bradsher_China">Keith Bradsher. [http://www.nytimes.com/2008/12/04/business/worldbusiness/04yuan.html?_r=2&adxnnl=1&adxnnlx=1228594043-/gsxRDJZWxAxLLCcUhx8oQ "China Shuns Investments in West’s Finance Sector"], ''The New York Times'', published: December 3, 2008. Referenced 2010-08-15.</ref><ref name="Higgs_China">Robert Higgs. [http://www.independent.org/blog/index.php?p=635 "Regime Uncertainty in 1937 and 2008"], ''The Beacon'', blog of the The Independent Institute, Dec 6, 2008. Referenced 2010-08-15.</ref>

The chairman of the [[Business Roundtable]], an association of top corporate executives that has been [[Barack Obama|President Obama's]] closest ally in the business community, accused the president and Democratic lawmakers in June, 2010, of creating an "increasingly hostile environment for investment and job creation." ... "By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses."<ref name="Montgomery_stifle_growth">Lori Montgomery. [http://www.washingtonpost.com/wp-dyn/content/article/2010/06/22/AR2010062205279.html "Business leaders say Obama's economic policies stifle growth"], ''Washington Post'', June 23, 2010. Referenced 2010-08-15.</ref>

==Burst of the bubble==
Some consider the September 15 [[Bankruptcy of Lehman Brothers|bankruptcy of Lehman Brothers]] to cause the financial panic of late 2008.<ref name="Jones_Lehman">Sam Jones. [http://ftalphaville.ft.com/blog/2009/03/12/53515/why-letting-lehman-go-did-crush-the-financial-markets/ "Why letting Lehman go did crush the financial markets"], ''Financial Times'' on Mar 12 2009. Referenced 2010-07-30.</ref> According to others, the main risk indicators only took off after Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke's [[Troubled Asset Relief Program|TARP]] speeches to Congress on Sept. 23 and 24.<ref name="Cochrane_TARP">John H. Cochrane and Luigi Zingales. [http://online.wsj.com/article/SB10001424052970203440104574403144004792338.html "Lehman and the Financial Crisis"], ''The Wall Street Journal'', September 15, 2009. Referenced 2010-07-30.</ref><ref name="Taylor_responses">John B. Taylor. [http://www.stanford.edu/~johntayl/FCPR.pdf "The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong"] (pdf), November 2008, referenced 2010-07-30.</ref>

Still others point out, that the previous bailouts (esp. Bear Stearns in March 2008) produced in the markets an expectation, that the government will bail out large financial institutions and its decision to let Lehman Brothers to fall has surprised and shocked them.<ref name="Suster_Lehman">Matěj Šuster. [http://www.libinst.cz/komentare.php?id=574 "Pád Lehman Brothers a finanční panika"] ("Fall of Lehman Brothers and financial panic", in ''[[Czech language|Czech]]''), ''[http://libinst.cz/stranka_en.php?id=2 Liberalni Institut]'', 2009-09-20. Referenced 2010-07-30.</ref> (It has been noted, however, that there is a significant relationship between lobbying and bailout money, as well as a greater chance of getting bailouts depending on a bank’s ties with either the Federal Reserve or key members of Congress.<ref name="Mitchell_corruption">Daniel J. Mitchell. [http://www.cato-at-liberty.org/2009/12/22/university-of-michigan-study-confirms-link-between-financial-bailout-and-corruption/ "University of Michigan Study Confirms Link between Financial Bailout and Corruption"], ''Cato Institute'', December 22, 2009. Referenced 2010-07-31.</ref>)

===Unemployment===
Total employment peaked in 2007 at 137.6 million persons on nonfarm payrolls, fell slightly in 2008, and then dropped precipitously in 2009 to 132.0 persons, for a two-year loss of 5.6 million jobs. In 2009, total employment was approximately equal to its magnitude in 2001, even though the labor force had grown substantially in the interim.

The loss of employment has occurred entirely in the private sector: employment fell from 115.4 million persons in 2007 to 109.5 million persons in 2009, a decline that took private employment back to its level at the end of the 1990s. As private employment has collapsed since 2007, however, the government payroll has actually grown slightly from 22.2 million persons in 2007 to 22.5 million persons in 2009, which puts this class of employment roughly 1.7 million persons above its magnitude in 2000.<ref name="Higgs_unemployment">Robert Higgs. [http://www.independent.org/blog/index.php?p=4728 "Pity the Poor Private-Sector Workers"], ''The Independent Institute'', Jan 9, 2010. Referenced 2010-07-31.</ref>

The government employees also enjoyed increased compensation. The growth in six-figure salaries has pushed the average federal worker’s pay to $71,206, compared with $40,331 in the private sector.<ref name="Higgs_federal">Robert Higgs. [http://www.independent.org/blog/index.php?p=4383 "The Federal Bureaucracy-Plutocracy"], ''The Independent Institute'', Dec 12, 2009. Referenced 2010-07-31.</ref><ref name="Cauchon_Feds">Dennis Cauchon. [http://www.usatoday.com/news/washington/2009-12-10-federal-pay-salaries_N.htm "For feds, more get 6-figure salaries"], ''USA TODAY'', 2009-12-10. Referenced 2010-07-31.</ref>

This situation bears a resemblance to the employment situation during the [[Great Depression]], when private nonfarm hours worked fell steeply from 1929 to 1932 and did not get back to the 1929 level until 1941, notwithstanding (or perhaps because of) the millions of persons added to government payrolls during the New Deal period. In both cases, the possibility that government employment crowds out private employment, rather than stimulating it, cannot be dismissed out of hand.

The 2000s may prove to have been America’s second "lost decade" (the 1930s having been the first), an interval of little or no net economic gain, owing to destructive government policies that produced only unsustainable booms followed by inevitable busts, along with such huge, frequent, and unsettling changes in government policies that private planning, especially for long-term investment, has become too risky for private investors to bear — a situation called [[Uncertainty#Regime uncertainty|regime uncertainty]].<ref name="Higgs_unemployment" />

==After the fall==
Since the summer of 2008, the U.S. Treasury and the Fed initiated a new wave of spending, lending, and subsidizing programs ostensibly aimed at stemming the recession that began early in that year and deepened quickly in its last quarter and in the first quarter of 2009. Among the most notable of these programs have been attempts to prop up the real estate market and the residential construction industry, where the Fed’s easy-money policies in the first half of the present decade induced lenders to make millions of mortgage loans to home buyers who would not have qualified for such loans if traditional underwriting standards had been applied.

Rather than terminating the government policies that had encouraged the foolish behavior of real estate buyers, sellers, and lenders, the government has undertaken to continue and even to compound the selfsame policies that in large part caused our present economic troubles. For example, Fannie and Freddie, now effectively government owned and operated firms, continue to extend loans as if promising borrowers were superabundant.

Moreover, the [[Federal Housing Administration]], a government agency created in 1934 to insure conventional mortgage loans, has greatly expanded the volume of its business, and according to a [http://www.nytimes.com/2009/11/20/business/20limits.html?_r=1 report] in the New York Times, the FHA "is underwriting loans at quadruple the rate of three years ago even as its reserves to cover defaults are dwindling." The Mortgage Bankers Association affirmed on November 19, 2009 that "more than one in six F.H.A. borrowers was behind on payments." The FHA has backed 37 percent of all residential mortage loans made in 2009. Reporter Patrice Hill observes that "these loans are exposing taxpayers to the same kinds of soaring default rates and losses that brought down Fannie Mae and Freddie Mac as well as destroyed many banks and the private market for mortgage loans."<ref name="Higgs_housing">Robert Higgs. [http://www.independent.org/blog/?p=4069 "Government Responds to Economic Woes by Making More Bad Mortgage Loans"], ''The Independent Institute'', Nov 22, 2009. Referenced 2010-07-30.</ref>

Households across a majority of large U.S. cities received more foreclosure warnings in the first six months of 2010 than in the first half of 2009. In all, 154 out of 206 metropolitan areas with at least 200,000 residents posted an annual increase in foreclosure activity between January and June. The threat of foreclosures is spreading well beyond the top tier of metropolitan areas located in California, Florida, Nevada and Arizona, which have borne the brunt of the fallout from the housing crisis. "The face of foreclosure is driven much more now by unemployment than in the past," said the speaker of a foreclosure listing firm. The number of households facing foreclosure in the first half of the year climbed 8 percent versus the same period last year, but dropped 5 percent from the last six months of 2009.<ref name="Veiga_foreclosures">AP Real Estate Writer Alex Veiga. [http://news.yahoo.com/s/ap/20100729/ap_on_bi_ge/us_foreclosure_rates "Foreclosure activity up across most US metro areas"], ''Yahoo News'' / ''Associated Press'', Jul 29, 2010. Referenced 2010-07-31.</ref>

===Impact on Investment===
In 2006, gross private domestic [[investment]] reached its most recent peak, at $2.33 trillion (in constant 2005 dollars), or 17.4 percent of GDP. After remaining almost at this level in 2007, this measure of investment fell substantially during each of the next two years, reaching $1.59 trillion, or 11.3 percent of GDP, in 2009.

The greater part of gross investment consists of what the statisticians call the capital consumption allowance, an estimate of the amount of money that must be spent simply to offset wear and tear and obsolescence of the existing capital stock. In a country such as the United States, with an enormous fixed capital stock built up over the centuries, a great amount of funds must be allocated simply to maintain that stock. In recent years, the private capital consumption allowance has ranged from $1.29 trillion in 2005 to $1.46 trillion (in constant 2005 dollars) in 2009. Thus, even in the boom year 2006, about 60 percent of gross private domestic investment was required merely to maintain the economy’s productive capacity, leaving just 40 percent, or $889 billion in net private domestic investment, to augment that capacity.

From that level, net private domestic investment plunged during each of the following three years, taking the greatest dive between 2008 and 2009, when it fell to only $54 billion (in constant 2005 dollars), having declined altogether by 94 percent from its 2006 peak! Only 3.5 percent of all private investment spending in 2009 went toward building up the capital stock. Thus, net private investment did not simply fall during the recession; it virtually disappeared. Without substantial net private investment, brisk economic growth is unthinkable beyond the very short run.<ref name="Higgs_Divergence">Robert Higgs. [http://www.independent.org/blog/index.php?p=7882 "The Great Divergence: Private Investment and Government Power in the Present Crisis"], ''The Independent Institute'', on Sep 18, 2010. Data taken or derived from the National Economic Accounts prepared by the Commerce Department’s ''Bureau of Economic Analysis'' (Tables 1.1.5, 1.1.6, and 5.2.6 - see a [http://www.bea.gov/national/nipaweb/SelectTable.asp?Selected=N list of tables] for information. Referenced 2010-09-20.</ref>

==End of the crisis?==
In September, 2010, the [[National Bureau of Economic Research]] concluded, that the recession has ended in June 2009. It defines a recession as following:
<blockquote>"A recession is a period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real [[GDP]], real income, employment, industrial production, and wholesale-retail sales. The trough marks the end of the declining phase and the start of the rising phase of the business cycle."</blockquote>

According to the Bureau, the recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months.

The committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month.<ref name="NBER_recovery">National Bureau of Economic Research. [http://www.nber.org/cycles/sept2010.html "Business Cycle Dating Committee, National Bureau of Economic Research"], referenced 2010-12-06.</ref>

[[Frank Shostak]] holds, that the NBER's definition does not provide an explanation of what a recession is all about. The main reason why the NBER's definition is confined to describing manifestations rather than the underlying causes of a recession is because mainstream thinkers do not hold that such causes can be known. They are of the view that the sources of recessions are various random shocks emanating from various factors such as a sudden change in people's psychology or various unexpected political and other events. In short, these causes are of an unexpected nature.

In a [[Free market|free unhampered environment]] it is conceivable that the economy would be subject to various shocks, but it is difficult to envisage a phenomenon of recurrent [[Business cycle|boom-bust cycles]].

Shostak points out, that movements in GDP mirror past money pumping. And since a loose monetary policy will start an exchange of 'nothing for something', a rebound in the GDP rate of growth is actually likely to reflect a weakening in the wealth-formation process, which is bad news for the economy. A fall in the growth momentum of [[money supply]] is likely to undermine the rate of growth of GDP in the months ahead. This will be seen by most experts as bad economic news. On the contrary, Shostak suggests that the expected downturn is actually going to be good news for the wealth generating process.<ref name="Shostak_NBER">Frank Shostak. [http://mises.org/daily/4741 "How Useful Is the NBER's Dating of Business Cycles?"], ''Mises Daily'', September 26, 2010. Referenced 2010-12-06.</ref>

===Housing===
Foreclosures were at a record high in 2010, and more than 1 million people lost their homes, even as notices started leveling off during the end year. In total, there were nearly 2.9 million foreclosure notices filed during the year, according to report released Thursday by RealtyTrac. That was a record high, but just 1.7% above 2009. It probably would have been higher had notices not plunged in November and December as banks halted tens of thousands of foreclosures in the face of the "robo-signing" scandal,<ref name="Christie_repossessed">Les Christie. [http://finance.yahoo.com/news/1-million-homes-repossessed-cnnm-3351544913.html?x=0&sec=topStories&pos=3&asset=&ccode= "1 million homes repossessed in 2010"], ''YAHOO! Finance'', January 13, 2011. Referenced 2011-01-13.</ref> where loan servicers had employees sign thousands of documents a month without verifying the information.<ref name="Luhby_robo-signer">Tami Luhby. [http://money.cnn.com/2010/10/28/real_estate/robosigner/index.htm "I was a robo-signer"], ''CNNMoney.com'', October 28, 2010. Referenced 2011-01-13.</ref>

In 2011, Amherst Securities analyst Laurie Goodman said that as many as 11 million mortgage borrowers were in potential danger of default. Rick Sharga at RealtyTrac, predicted 4 million to 5 million, less than half as many but still disastrous.<ref name="Christie_repossessed" /> According to Case-Shiller Home Price Index home prices are diving again,<ref name="S_P_Weaken">David R. Guarino, David Blitzer. [http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline%3B+filename%3Ddownload.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1245281640766&blobheadervalue3=abinary%3B+charset%3DUTF-8&blobnocache=true "U.S. Home Prices Weaken Further as Six Cities Make New Lows According to the S&P/Case-Shiller Home Price Indices"] (pdf), ''S&P Indices'', December 28, 2010. Referenced 2011-01-13.</ref> spelling trouble for more homeowners given high unemployment and diminished job prospects.<ref name="French_Vibes">Douglas French. [http://blog.mises.org/15318/a-million-foreclosed-homes-with-bad-vibes/ "A Million Foreclosed Homes With Bad Vibes"], January 13, 2011. Referenced 2011-01-13.</ref>

In 2010, nearly 11 percent of all housing units have been vacant all year round and renting apartments became ever more popular.<ref name="Olick_Empty">Diana Olick. [http://www.cnbc.com/id/41355854/ "Nearly 11 Percent of US Houses Empty"], ''CNBC'', 31 Jan 2011. Referenced 2011-02-02.</ref>

11.1 million, or 23.1 percent, of all residential properties with a mortgage were in negative [[equity]] at the end of the fourth quarter of 2010, up from 10.8 million, or 22.5 percent, in the third quarter. An additional 2.4 million borrowers had less than five percent equity, referred to as near-negative equity, in the fourth quarter. Together, negative equity and near-negative equity mortgages accounted for 27.9 percent of all residential properties with a mortgage nationwide. (Negative equity, often referred to as "underwater" or "upside down," means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.)<ref name="CoreLogic_Underwater">CoreLogic. [http://www.sacbee.com/2011/03/08/3458329/new-corelogic-data-shows-23-percent.html# "New CoreLogic® Data Shows 23 Percent of Borrowers Underwater with $750 Billion Dollars of Negative Equity"], ''The Sacramento Bee'', published: March 8, 2011. Referenced 2011-02-02.</ref>

As of March, 2011, U.S. home prices fell for the eighth straight month, confirming the housing market has entered a "[[double-dip recession]]" according to the Case-Shiller home-price index released by [[Standard & Poor’s]]. The 20-city index is now below its April 2009 trough, meaning that home prices have fully retreated from gains posted from May 2009 through June 2010, putting housing in a double-dip downturn. Prices fell in 18 of 20 cities in March on a monthly basis. Over the past year, only Washington, D.C., has seen prices advance.<ref name="Robb_double">Greg Robb. [http://www.marketwatch.com/story/sp-data-signals-double-dip-in-housing-2011-05-31?siteid=YAHOOB "Housing in double-dip decline as prices fall again"], ''MarketWatch'', May 31, 2011. Referenced 2011-02-02.</ref> As of July, 2011, [[Bank of America]] and other mortgage holders were donating foreclosed and abandoned houses they couldn’t sell for demolition.<ref name="Rupp_Demolishes">Lindsey Rupp. [http://finance.yahoo.com/news/BofA-Donates-Then-Demolishes-bloomberg-946456059.html?x=0&sec=topStories&pos=6&asset=&ccode= "BofA Donates Then Demolishes Houses to Cut Glut"], ''Bloomberg'', July 27, 2011, referenced 2011-07-28.</ref>

===Recovery of unemployment===
As of 2011, jobs recovery has been very slow and dominated by low-paying jobs. Growth has been concentrated in mid-wage and lower-wage industries. By contrast, higher-wage industries showed weak growth and even net losses. In the first seven months of 2010, 76% of jobs created were in low- to mid-wage industries -- those earning between $8.92 to $15 an hour, well below the national average hourly wage of $22.60.

But jobs losses continued in higher-wage industries severely hit by the bursting of the housing bubble -- construction and financial services. Recoveries in those sectors helped lead the economy out of earlier downturns, but they're still suffering more than a year and a half after the official end of the Great Recession. High-wage sectors -- made up of jobs that pay between $17.43 and $31 an hour -- accounted for nearly half the jobs lost during the recession, but have produced only 5% of the new jobs since hiring resumed, study showed.

Even in some of the higher-wage industries that are hiring, it's lower-wage occupations within the sector where the jobs are being added. Professional and business services sectors gained a healthy 366,000 jobs in 2010. Workers in that sector earned $27.23 an hour, on average, in 2010. But almost all of the new jobs -- 308,000 -- came in temporary help services, where the average hourly wage was only $15 an hour. Temporary jobs accounted for nearly one in four jobs created by all types of businesses last year.<ref name="Isidore_Jobs">Chris Isidore. [http://money.cnn.com/2011/01/31/news/economy/low_wage_job_growth/index.htm?hpt=C2 "Jobs are back! But the pay stinks"], ''CNNMoney.com'', January 31, 2011. Referenced 2011-02-02.</ref>

As of 2011, the ranks of those out of work 99 weeks or longer have nationally swollen to nearly 1.8 million from 935,000 a year ago and 271,000 in 2008, according to the [[U.S. Department of Labor]]. As a portion of the total unemployed population, those unemployed 99 weeks or longer have grown from about 3 percent before the economic downturn to 12.2 percent during February. (After this period, some or all [[unemployment]] benefits expire.) The previous annual high was 5.6 percent in 1984, indicating that the recent recession created an unprecedented group of chronically unemployed.<ref name="Griffin_Safety">Greg Griffin. [http://www.denverpost.com/business/ci_17614972 "Safety net for jobless in Colorado rolls up after 99 weeks"], ''The Denver Post'', Posted 03/15/2011. Referenced 2011-03-21.</ref>

===Rising commodity prices===
According to a report from the [[World Bank]], global food prices have hit "dangerous levels" that could contribute to political instability, push millions of people into poverty and raise the cost of groceries. The food prices have jumped 29 percent in 2010, and are just 3 percent below the all-time peak hit in 2008. Bank President Robert Zoellick said the rising prices have hit people hardest in the developing world because they spend as much as half their income on food.

Industrialized nations like the [[United States]] are insulated from the price increases because raw ingredients account for just a fraction of the total food costs. But in many developing counties, prices get transmitted more drastically. Between June and December, wheat prices climbed 54 percent in [[Kyrgyzstan]], 45 percent in [[Bangladesh]] and 16 percent in [[Pakistan]], for example.

Zoellick warned that higher prices could stoke political instability in countries like [[Egypt]] and [[Tunisia]]. Both countries are big wheat importers and higher grain costs could aggravate social unrest as the countries form new regimes, he said.<ref name="Leonard_prices">Christopher Leonard. [http://finance.yahoo.com/news/World-Bank-Food-prices-at-apf-1943856598.html World Bank: Food prices at "dangerous levels"], ''Associated Press'', February 15, 2011. Referenced 2011-02-19.</ref>

In the US, some economists see the creeping signs of higher inflation, and warn that the Federal Reserve will need to raise interest rates or at least stop pumping more money into the economy. Others argue that such moves would choke off economic growth sorely needed to get companies hiring again.<ref name="Clifford_Looming">Stephanie Clifford, Motoko Rich and William Neuman. [http://www.nytimes.com/2011/02/15/business/15prices.html?_r=1 "Companies Warn That Higher Prices Are Looming"], ''New York Times'', February 14, 2011. Referenced 2011-02-19.</ref>

Another factor in the rise of food prices has been the subsidizing of corn for use as a [[biofuel]]. As of 2011, the [[United States]] has been spending about $6 billion a year on federal support for ethanol production through tax credits, tariffs, and other programs. Thanks to this financial assistance, one-sixth of the world’s corn supply was burned in American cars. That would be enough corn to feed 350 million people for an entire year. As a result of official policy in the US and Europe, including aggressive production targets, biofuel consumed more than 6.5% of global grain output and 8% of the world’s vegetable oil in 2010, up from 2% of grain supplies and virtually no vegetable oil in 2004.<ref name="Lomborg_Race">Bjørn Lomborg. [http://www.project-syndicate.org/commentary/lomborg70/English "A Race to Hunger"], ''Project Syndicate'', 2011-03-10. Referenced 2011-04-23.</ref> In 2011, 40% of America's corn crop will go to ethanol production, when 10 years before it was only 7%.<ref name="Evans_Global">Alex Evans. [http://www.guardian.co.uk/global-development/poverty-matters/2011/may/31/global-food-crisis-real-cost-biofuels "Global food crisis: Counting the real cost of biofuels"], 'The Guardian'', 31 May 2011. Referenced 2011-06-06.</ref>

==See also==
* ''[[Walk Away|Walk Away: The Rise and Fall of the Home-Ownership Myth]]''

==References==
{{Reflist|2}}

==Links==
* The [[Wikipedia:Late-2000s recession|Late-2000s recession]] on Wikipedia
* [http://video.google.com/videoplay?docid=-2757699799528285056 Real Estate Roller Coaster] (video), history of home values, 1890-2006
* [http://mises.org/daily/3128 The Bailout Reader] by Mises.org, September 2008
* [http://mises.org/daily/4059 "Illusions of the Age of Keynes"] by [[Doug French]], January 2010
* [http://www.independent.org/blog/index.php?p=5142 "Anatomy of the Current Recession"] by [[Robert Higgs]], February 2010
* [http://mises.org/daily/4787 "Bank Failures in Slow Motion"] by Doug French, October 2010
* [http://www.anarcocapitalista.com/JHSLSE10.htm "Financial Crisis and Economic Recession"] by [[Jesús Huerta de Soto]], October 2010
* [http://mises.org/daily/4989 "Can Austrian Theory Explain Construction Employment?"] by [[Robert P. Murphy]], January 2011
* [http://mises.org/daily/4896/Hoover-Bush-and-Great-Depressions "Hoover, Bush, and Great Depressions"] by [[Mark Thornton]], January 2011
* [http://vimeo.com/45687897 Fraud. Why the great recession] (video, movie), July 2012

{{DEFAULTSORT:Great Recession, The}}
[[Category:History]]
[[Category:Issues]]
[[Category:Financial crises]]

Panic of 1819

2011-04-10T20:45:26Z

RayBirks: wikiy; clarity

{{Wikipedia text|Panic_of_1819|387631539}}

The '''Panic of 1819''' was the first major [[Currency crisis|financial crisis]] in the [[United States]]<ref name=Glasner>{{Cite book | title = Business cycles and depressions: an encyclopedia | editor = Glasner, David; Cooley, Thomas F., eds | year = 1997 | location = New York | publisher = Garland Publishing | chapter = Crisis of 1819 | author = Skaggs, Neil T. | pages = 124–25 | isbn = 0824009444}}</ref>, which occurred during the end of the [[Era of Good Feelings]]. The new nation faced a depression in the late 1780s (which led directly to the establishment of the dollar and, perhaps indirectly, to the calls for a Constitutional Convention), and another severe economic downturn in the late 1790s following the [[Panic of 1796–1797|Panic of 1797]]. In those earlier crises, however, the primary cause of economic turmoil originated in the broader Atlantic economy.<ref>Morris, Richard B. (1987) ''The forging of the Union, 1781-1789''.</ref> These crises and others that resulted from international conflicts such as the [[Embargo Act]] and [[War of 1812]], caused widespread [[foreclosure]]s, [[bank failure]]s, [[unemployment]], and a slump in [[agriculture]] and [[manufacturing]]. However, things would change for the US economy after the [[Second Bank of the United States]] was founded in 1816,<ref>Rothbard, Murray N. [http://www.mises.org/rothbard/panic1819.pdf The Panic of 1819]</ref> in response to the spread of bank notes across United States from private banks, due to inflation brought on by the debt following the war.<ref>[http://www.ushistory.org/tour/tour_2bank.htm Second Bank of the United States/Portrait Gallery]</ref> In contrast, the causes of the Panic of 1819 largely originated within the U.S. economy. The panic marked the end of the [[economy of the United States|economic]] expansion that had followed the [[War of 1812]] and ushered in new financial policies that would shape economic development.

''[[The Panic of 1819]]'' is also the title of a book of economic history by [[Murray Rothbard]].

==References==
{{Reflist|2}}

==Links==
* [http://mises.org/freemarket_detail.aspx?control=478 The Feds Before the Fed] by H.A. Scott Trask, March 2004
* [http://mises.org/daily/3395 1819: America's First Housing Bubble] by C.J. Maloney, April 2009

[[Category:History of the United States]]
[[Category:Financial crises]]

{{stub}}

Talk:Trail of interventions

2011-04-10T15:08:48Z

RayBirks: /* Starting the page */ answering P.G.

==Starting the page==

This highly experimental page is devoted to tracing the primary set(s) of interventions experienced in various geographic and/or geopolitical settings with the [[United States]] as a starting point. The page title is a nod of acknowledgment to the 1831 [[Trail of Tears]], a sad chapter in the United States.

The initial intent is to list primary or seminal interventions that have occurred in history. While any complete list of interventions would be extremely and even impossibly long, it is the most significant interventions that are presently intended to be included here. (Similarly, large-scale reversals of intervention could be included.)

The events listed are woefully incomplete and are believed to be accurate but editing is, of course, welcome.

The idea for the initial list grew out of consideration of the interventions setting the stage for the so-called [[net neutrality]] rules in the United States in late 2010. I decided the list couldn't wait, despite its incompleteness, after watching the 5-part documentary ''[http://en.wikipedia.org/wiki/We_Shall_Remain_%28documentary%29 We Shall Remain]''. The pattern remains the same, as Tevye says in ''Fiddler on the Roof'': "A piece of paper and get thee out." – [[User:RayBirks|RayBirks]] 05:15, 10 April 2011 (MSD)

:I'm really not sure how to go about this one. I mean, I'm totally for a list of this kind, but the name strikes me as odd from an encyclopedic point of view. A 'List of Interventions' or a 'List of Interventions in the US' would just do it; alternatively put a 'MisesWiki:' prefix to show its alternative character. With a 'Trail', I'd expect to see which interventions grew out of which ones, causality chains and the like, how groups of interventions branched out and combined, that sort of a thing. (No to say that it won't be there, just don't see it at the moment.)

:Please continue with it, though, this looks important. Maybe somebody else can figure out how to wrap this; or it will show what it is as it ripens. Great idea! Can't quite get my head around it, but I like it. [[User:Pestergaines|Pestergaines]] 14:16, 10 April 2011 (MSD)

::The more poetic "trail" caught my interest, since the [[Trail of Tears]] was recently on my mind and it at least gives a slight hint of the misery that accompanies interventions, especially in their accumulation. It would be nice if there were an easy trail or timeline of one event unquestionably leading to the next. I suppose there is series of smaller trails that could more clearly indicate that one event set up the next, etc., and I am sure those (the major items perhaps a subset of this eventual list) could be delineated somewhere, sometime, in an article on a specific topic. Maybe a list like this one makes it easier for others writing articles to point to the essential items directly germane to their topic at hand.

::I was first interested in the idea of, which antecedent interventions got us to net neutrality, but invasions of other sorts kept "getting in the way" as I thought about it. So, I thought I'd start a larger list of the main events. Since its scope was enlarged and may yet further be if it starts to ripen, perhaps this is closer to a "history" of interventions. The key to me is seeing them in a short, compact, fairly digestible fashion. One gets a better sense of just how fast weeds can grow.

::I do admit that I am feeling less tied down to shoehorning things into an encyclopedic format, since more and more things on the Mises wiki are being included and/or sought. But maybe that's just me being away too long. :) Don't know when or how I will continue this, given my other offline projects. Remembering your comments and seeing afresh the vast array of interventions that precede our era, I just wanted to get ''something'' out there, even if unfinished.

::I have heard it said that knowing the full list of American Presidents gives one a framework for remembering and understanding American history. Perhaps the list, trail, timeline, or history of interventions could be a more useful framework for classical liberals. -- [[User:RayBirks|RayBirks]] 19:08, 10 April 2011 (MSD)

Trail of interventions

2011-04-10T02:25:16Z

RayBirks: add cat

{{TOC right}}

The '''Trail of Interventions''' is a developing listing of major interventions by The State against human beings.

Since their formation, [[State|states]] and other instruments of aggression have subjugated human beings brutally, violently, incessantly. By listing the most egregious of those interventions and their occasional reversals, it is hoped the pattern becomes clear, ideally paving the way to the peaceful path of voluntary human cooperation.

(If you are unsure if an intervention should be included, consider posting it on the accompanying Talk/Discussion page first.)

==United States==

===Pre-1700===

* October 1492: [[Christopher Columbus]] sights [[The Bahamas]]

* January 1526: First enslaved people arrive near [[Jamestown]], [[South Carolina]]

* 1619: First ship transporting enslaved people arrives in [[Jamestown]], [[Virginia]]

===1700s===

* The [[Stamp Act of 1765]] is imposed on the British American colonies by the British Parliament

* On 18 April 1775 at Lexington and Concord, near Boston in the Massachusetts Bay Province, British soldiers exchange gunfire with colonists, starting the [[American Revolutionary War]].

* On 2 July 1776, the [[Declaration of Independence]] is signed, signifying the colonies’ attempt to secede from England. The document does not directly acknowledge the individual rights of Native Americans or enslaved individuals, since doing so would have prevented unanimous passage of the Declaration. Among the colonists of European ancestry, 20% were pro-England “Loyalists” (all figures are approximations), 40% pro-independence “patriots”, and the remainder were, according to historian Robert Calhoon in 2000, undeclared, neutral, pacifist, or non-political.{{fact}}

* In March of 1781, the [[Articles of Confederation]] are ratified by representatives of the 13 colonies. Many counsel against their adoption, justifiably concerned over any kind of overarching government.{{fact}} Unanimity among the states’ voting representatives was required for adoption and subsequent alteration. Individual residents do not sign the Articles but are expected to adhere to them.

* On 3 September 1783, the [[Treaty of Paris]] is signed, formally ending hostilities between British colonies and England, recognizing the United States as a sovereign country, eliminating all coercive interventions of the British crown upon the American colonies

* In 1787, after being authorized only to amend the Articles of Confederation, the states’ representatives meet in secret in Philadelphia and write the basis of a new [[Constitution of the United States]]. Contrary to the Articles, the new Constitution would be considered ratified when only 9 of the 13 states’ representatives voted to approve. Further, subsequent amendment would also require only 9 of the 13 states. At the time of signing, it is considered understood that states can subsequently withdraw their approval and therefore not be bound by the Constitution. [[Lysander Spooner]] later states in his 1867 [[No Treason]] that the U.S. Constitution is not a binding contract upon most individuals, since they themselves did not sign it.

* December 1791: The [[Bill of Rights]] is officially ratified and becomes part of the new Constitution.

* In 1793 the first [[Fugitive Slave Act]] was passed, as authorized by Article IV of the new Constitution. With this Act it became a federal crime to assist an escaped slave.

* 1798: The [[Alien and Sedition Acts]] are passed. Most expire in 1801.

===1800s===

* In 1831, unwilling [[Choctaw]] residents (and later other Native American nations) are evicted from their homelands and forced to march to lands west of the [[Mississippi River]]. The [[ethnic cleansing]] was described by a Choctaw chief as a "trail of tears and death" and is now known simply as the Trail of Tears.

* The Tariff of 1842 is implemented by the [[Whig Party (United States)|Whigs]] controlling the [[U.S. Congress]] in that year. Among the many tariffs from 1789 to 1861, it is one of the most extractive and tends to benefit the Northern states at the unwilling expense of the South.

* In 1850 the second [[Fugitive Slave Act]] is passed by the U.S. Congress.

* By 1861, slavery had expanded into 15 states as the country grew. In order to avoid the dissolution of the Union, any new slave state joining the Union had to be accompanied by a free state and vice versa, thereby leaving the continuing problem of involuntary servitude unaddressed.

* As states begin seceding from the Union in 1860, hostilities are exchanged at [[Fort Sumter]] in [[South Carolina]] on April 11, 1861 and the [[American Civil War]] begins with Northern president [[Abraham Lincoln]] leading the fight against secession and the seceding states.

* 1 January 1863: The [[Emancipation Proclamation]] is signed as an Executive Order by Abraham Lincoln. Only a limited number of slaves were freed by this Order, and later scholars suggest it may have been a mere political move that avoided the real reforms that radical [[Abolitionists]] sought.{{fact}}

* April 1865: The American Civil War ends, seemingly ending secession as an effective check on the expansion of the federal American state.

* December 1865: The 13th Amendment to the U.S. Constitution was adopted, abolishing slavery and involuntary servitude in the United States.

* In 1873, the Supreme Court allowed the [[Slaughter-House cases]] to stand in a 5-4 decision. It effectively gutted the Privileges and Immunities Clause of the 14th Amendment and further paved the way for intervention in economic matters.

* In 1887, the Interstate Commerce Act further authorized federal intervention in and regulation of private industry in the U.S. beginning with the railroads. It was later amended to regulate others kinds of transportation and other forms of commerce.

* In 1898, the Spanish-American War is initiated by the U.S. after the mysterious sinking of the American battleship Maine in the Havana harbor in Cuba. The war is often seen as the first major intervention in other countries by the United States government.

===1900s===

===2000s===

[[Category:Interventions]]

Main Page

2011-04-10T02:23:28Z

RayBirks: undo vandalism

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Trail of interventions

2011-04-10T02:03:20Z

RayBirks: /* 1800s */ add naming of Trail of Tears

Talk:Trail of interventions

2011-04-10T01:33:23Z

RayBirks: /* Starting the page */ cleanup

Talk:Trail of interventions

2011-04-10T01:31:03Z

RayBirks: /* Starting the page */ edit my comments

Trail of interventions

2011-04-10T01:20:45Z

RayBirks: clarity

{{TOC right}}

The '''Trail of Interventions''' is a developing listing of major interventions by The State against human beings.

Since their formation, [[State|states]] and other instruments of aggression have subjugated human beings brutally, violently, incessantly. By listing the most egregious of those interventions and their occasional reversals, it is hoped the pattern becomes clear, ideally paving the way to the peaceful path of voluntary human cooperation.

(If you are unsure if an intervention should be included, consider posting it on the accompanying Talk/Discussion page first.)

==United States==

===Pre-1700===

* October 1492: [[Christopher Columbus]] sights [[The Bahamas]]

* January 1526: First enslaved people arrive near [[Jamestown]], [[South Carolina]]

* 1619: First ship transporting enslaved people arrives in [[Jamestown]], [[Virginia]]

===1700s===

* The [[Stamp Act of 1765]] is imposed on the British American colonies by the British Parliament

* On 18 April 1775 at Lexington and Concord, near Boston in the Massachusetts Bay Province, British soldiers exchange gunfire with colonists, starting the [[American Revolutionary War]].

* On 2 July 1776, the [[Declaration of Independence]] is signed, signifying the colonies’ attempt to secede from England. The document does not directly acknowledge the individual rights of Native Americans or enslaved individuals, since doing so would have prevented unanimous passage of the Declaration. Among the colonists of European ancestry, 20% were pro-England “Loyalists” (all figures are approximations), 40% pro-independence “patriots”, and the remainder were, according to historian Robert Calhoon in 2000, undeclared, neutral, pacifist, or non-political.{{fact}}

* In March of 1781, the [[Articles of Confederation]] are ratified by representatives of the 13 colonies. Many counsel against their adoption, justifiably concerned over any kind of overarching government.{{fact}} Unanimity among the states’ voting representatives was required for adoption and subsequent alteration. Individual residents do not sign the Articles but are expected to adhere to them.

* On 3 September 1783, the [[Treaty of Paris]] is signed, formally ending hostilities between British colonies and England, recognizing the United States as a sovereign country, eliminating all coercive interventions of the British crown upon the American colonies

* In 1787, after being authorized only to amend the Articles of Confederation, the states’ representatives meet in secret in Philadelphia and write the basis of a new [[Constitution of the United States]]. Contrary to the Articles, the new Constitution would be considered ratified when only 9 of the 13 states’ representatives voted to approve. Further, subsequent amendment would also require only 9 of the 13 states. At the time of signing, it is considered understood that states can subsequently withdraw their approval and therefore not be bound by the Constitution. [[Lysander Spooner]] later states in his 1867 [[No Treason]] that the U.S. Constitution is not a binding contract upon most individuals, since they themselves did not sign it.

* December 1791: The [[Bill of Rights]] is officially ratified and becomes part of the new Constitution.

* In 1793 the first [[Fugitive Slave Act]] was passed, as authorized by Article IV of the new Constitution. With this Act it became a federal crime to assist an escaped slave.

* 1798: The [[Alien and Sedition Acts]] are passed. Most expire in 1801.

===1800s===

* In 1831, unwilling [[Choctaw]] residents (and later other Native American nations) are evicted from their homelands and forced to march to lands west of the [[Mississippi River]].

* The Tariff of 1842 is implemented by the [[Whig Party (United States)|Whigs]] controlling the [[U.S. Congress]] in that year. Among the many tariffs from 1789 to 1861, it is one of the most extractive and tends to benefit the Northern states at the unwilling expense of the South.

* In 1850 the second [[Fugitive Slave Act]] is passed by the U.S. Congress.

* By 1861, slavery had expanded into 15 states as the country grew. In order to avoid the dissolution of the Union, any new slave state joining the Union had to be accompanied by a free state and vice versa, thereby leaving the continuing problem of involuntary servitude unaddressed.

* As states begin seceding from the Union in 1860, hostilities are exchanged at [[Fort Sumter]] in [[South Carolina]] on April 11, 1861 and the [[American Civil War]] begins with Northern president [[Abraham Lincoln]] leading the fight against secession and the seceding states.

* 1 January 1863: The [[Emancipation Proclamation]] is signed as an Executive Order by Abraham Lincoln. Only a limited number of slaves were freed by this Order, and later scholars suggest it may have been a mere political move that avoided the real reforms that radical [[Abolitionists]] sought.{{fact}}

* April 1865: The American Civil War ends, seemingly ending secession as an effective check on the expansion of the federal American state.

* December 1865: The 13th Amendment to the U.S. Constitution was adopted, abolishing slavery and involuntary servitude in the United States.

* In 1873, the Supreme Court allowed the [[Slaughter-House cases]] to stand in a 5-4 decision. It effectively gutted the Privileges and Immunities Clause of the 14th Amendment and further paved the way for intervention in economic matters.

* In 1887, the Interstate Commerce Act further authorized federal intervention in and regulation of private industry in the U.S. beginning with the railroads. It was later amended to regulate others kinds of transportation and other forms of commerce.

* In 1898, the Spanish-American War is initiated by the U.S. after the mysterious sinking of the American battleship Maine in the Havana harbor in Cuba. The war is often seen as the first major intervention in other countries by the United States government.

===1900s===

===2000s===

User talk:Pestergaines

2011-04-10T01:19:12Z

RayBirks: /* Decided to go with it */ new section

'''Welcome!'''

Hello, Pestergaines, and welcome to the Mises Wiki! Thank you for [[Special:Contributions/Pestergaines|your contributions]]. I hope you like the place and decide to stay.

Please sign your messages on discussion pages using four tildes (<nowiki>~~~~</nowiki>); this will automatically insert your username and the date. If you need help, ask me!

[[User:DickClarkMises|DickClarkMises]] 01:17, 5 November 2010 (CDT)

== Linking ==

What do you think about using red links instead of links to Wikipedia? We don't want readers who find us to go off to Wikipedia--we want them to stay here. Even now, red links are allowed on WP (see WP:RED), but when Wikipedia was younger and less developed, red links were strongly encouraged, because they helped new contributors find an article to create. For these reasons I think it makes more sense to use red links as much as possible. Sure, Wikipedia's article on [[Tennessee]] will be more developed than ours ever will, but we can at least shoot for a simple stub that gives readers the basics, with an external link at the bottom to WP's article. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 07:32, 9 November 2010 (CST)

: Good question. My take is, that this page is in many respects more focused than Wikipedia - on specific topics, it will provide more information, and specifically biased information - on many others, it will provide less information (at least in volume) with a specific spin or focus. On a great many topics, there will be no page at all.
: For an example, I see no need for an article or Tennessee - unless there is a reason for it. So in that case I would link to Wikipedia. (Or even not link at all!) I have actually linked very liberally to WP's articles and consider it a strength, not a weakness - it points to more resources and (possible) alternative viewpoints, both of which make a resource richer IMO.
: I will raise this in the mailing group, since it is an interesting strategic question, and deserves to be addressed by others as well. Thanks! [[User:Pestergaines|Pestergaines]] 07:55, 9 November 2010 (CST)

== Book sources and other crazy WP stuff ==

I managed to figure out what the issue was with [[Special:BookSources]]. The pages to change are [[MisesWiki:Book sources]] and [[MediaWiki:Booksources-text]].

All the citation stuff is in place except for that dumb cite journal template... I just can't figure out why it refuses to accept a link-free work. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 14:36, 16 November 2010 (CST)
:See [http://meta.wikimedia.org/wiki/Help:ISBN_links]. Especially: "links regarding the book according to the contents of the page "Book sources" in the project namespace." So [[MisesWiki:BookSources]] isn't doing anything. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 14:41, 16 November 2010 (CST)
:: Thanks! [[User:Pestergaines|Pestergaines]] 14:42, 16 November 2010 (CST)

== Anniversaries ==

I've been using past tense for the anniversary pages, in order to distinguish their entries from those of the "current events" box. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 09:33, 9 December 2010 (CST)
:Right you are, thanks for fixing my first attempts! [[User:Pestergaines|Pestergaines]] 10:31, 9 December 2010 (CST)

== On the International Project ==

A bit of discussion [[MisesWiki talk:International|here]]. :) -- [[User:RayBirks|RayBirks]] 14:20, 8 January 2011 (CST)

== Check-in ==

Not much to report [[User talk:RayBirks#About the idea|here]]. --[[User:RayBirks|RayBirks]] 11:03, 24 February 2011 (CST)

== Vandals ==

I did some research and found that our spammers are using open proxies, i.e., fake IP addresses that change constantly. Wikipedia blocks such proxies as fast as they appear, so I don't think there's any issue with blocking the IP addresses that the accounts use. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 07:48, 11 March 2011 (CST)
:Thanks for the research - and good work keeping those bastards out! [[User:Pestergaines|Pestergaines]] 03:12, 12 March 2011 (CST)

== Decided to go with it ==

This was the idea: The [[Trail of interventions]].
-- [[User:RayBirks|RayBirks]] 05:19, 10 April 2011 (MSD)

Talk:Trail of interventions

2011-04-10T01:15:34Z

RayBirks: start Talk page

Trail of interventions

2011-04-10T01:12:49Z

RayBirks: start page

{{TOC right}}

The '''Trail of Interventions''' is a developing listing of major interventions by The State against human beings.

Since their formation, [[State|states]] and other instruments of aggression have subjugated human beings brutally, violently, incessantly. By listing the most egregious of those interventions and their occasional reversals, it is hoped the pattern becomes more clear, ideally paving the way to the peaceful path of voluntary human cooperation.

(If you are unsure if an intervention should be included, consider posting it on the accompanying Talk/Discussion page first.)

==United States==

===Pre-1700===

* October 1492: [[Christopher Columbus]] sights [[The Bahamas]]

* January 1526: First enslaved people arrive near [[Jamestown]], [[South Carolina]]

* 1619: First ship transporting enslaved people arrives in [[Jamestown]], [[Virginia]]

===1700s===

* The [[Stamp Act of 1765]] is imposed on the British American colonies by the British Parliament

* On 18 April 1775 at Lexington and Concord, near Boston in the Massachusetts Bay Province, British soldiers exchange gunfire with colonists, starting the [[American Revolutionary War]].

* On 2 July 1776, the [[Declaration of Independence]] is signed, signifying the colonies’ attempt to secede from England. The document does not directly acknowledge the individual rights of Native Americans or enslaved individuals, since doing so would have prevented unanimous passage of the Declaration. Among the colonists of European ancestry, 20% were pro-England “Loyalists” (all figures are approximations), 40% pro-independence “patriots”, and the remainder were, according to historian Robert Calhoon in 2000, undeclared, neutral, pacifist, or non-political.{{fact}}

* In March of 1781, the [[Articles of Confederation]] are ratified by representatives of the 13 colonies. Many counsel against their adoption, justifiably concerned over any kind of overarching government.{{fact}} Unanimity among the states’ voting representatives was required for adoption and subsequent alteration. Individual residents do not sign the Articles but are expected to adhere to them.

* On 3 September 1783, the [[Treaty of Paris]] is signed, formally ending hostilities between British colonies and England, recognizing the United States as a sovereign country, eliminating all coercive interventions of the British crown upon the American colonies

* In 1787, after being authorized only to amend the Articles of Confederation, the states’ representatives meet in secret in Philadelphia and write the basis of a new [[Constitution of the United States]]. Contrary to the Articles, the new Constitution would be considered ratified when only 9 of the 13 states’ representatives voted to approve. Further, subsequent amendment would also require only 9 of the 13 states. At the time of signing, it is considered understood that states can subsequently withdraw their approval and therefore not be bound by the Constitution. [[Lysander Spooner]] later states in his 1867 [[No Treason]] that the U.S. Constitution is not a binding contract upon most individuals, since they themselves did not sign it.

* December 1791: The [[Bill of Rights]] is officially ratified and becomes part of the new Constitution.

* In 1793 the first [[Fugitive Slave Act]] was passed, as authorized by Article IV of the new Constitution. With this Act it became a federal crime to assist an escaped slave.

* 1798: The [[Alien and Sedition Acts]] are passed. Most expire in 1801.

===1800s===

* In 1831, unwilling [[Choctaw]] residents (and later other Native American nations) are evicted from their homelands and forced to march to lands west of the [[Mississippi River]].

* The Tariff of 1842 is implemented by the [[Whig Party (United States)|Whigs]] controlling the [[U.S. Congress]] in that year. Among the many tariffs from 1789 to 1861, it is one of the most extractive and tends to benefit the Northern states at the unwilling expense of the South.

* In 1850 the second [[Fugitive Slave Act]] is passed by the U.S. Congress.

* By 1861, slavery had expanded into 15 states as the country grew. In order to avoid the dissolution of the Union, any new slave state joining the Union had to be accompanied by a free state and vice versa, thereby leaving the continuing problem of involuntary servitude unaddressed.

* As states begin seceding from the Union in 1860, hostilities are exchanged at [[Fort Sumter]] in [[South Carolina]] on April 11, 1861 and the [[American Civil War]] begins with Northern president [[Abraham Lincoln]] leading the fight against secession and the seceding states.

* 1 January 1863: The [[Emancipation Proclamation]] is signed as an Executive Order by Abraham Lincoln. Only a limited number of slaves were freed by this Order, and later scholars suggest it may have been a mere political move that avoided the real reforms that radical [[Abolitionists]] sought.{{fact}}

* April 1865: The American Civil War ends, seemingly ending secession as an effective check on the expansion of the federal American state.

* December 1865: The 13th Amendment to the U.S. Constitution was adopted, abolishing slavery and involuntary servitude in the United States.

* In 1873, the Supreme Court allowed the [[Slaughter-House cases]] to stand in a 5-4 decision. It effectively gutted the Privileges and Immunities Clause of the 14th Amendment and further paved the way for intervention in economic matters.

* In 1887, the Interstate Commerce Act further authorized federal intervention in and regulation of private industry in the U.S. beginning with the railroads. It was later amended to regulate others kinds of transportation and other forms of commerce.

* In 1898, the Spanish-American War is initiated by the U.S. after the mysterious sinking of the American battleship Maine in the Havana harbor in Cuba. The war is often seen as the first major intervention in other countries by the United States government.

===1900s===

===2000s===

Hans-Hermann Hoppe

2011-04-08T23:54:12Z

RayBirks: /* Links */ add link to interview with Daily Bell

'''Hans-Hermann Hoppe''' (b. 1949) is Professor Emeritus of Economics at the [[University of Nevada]], [[Las Vegas]] and Distinguished Fellow at the [[Mises Institute]].

==Bibliography==
{{see also|Bibliography of Hans-Hermann Hoppe}}

*''[[Democracy: The God That Failed]]'' (2001)

==Links==
{{Contact faculty|hoppe@mises.com}}
*[http://www.HansHoppe.com HansHoppe.com]
*[http://www.mises.org/Hoppe Homepage] on [[Mises Institute|Mises.org]]
*[http://mises.org/articles.aspx?AuthorId=164 Daily Article archive] on Mises.org
*[http://mises.org/literature.aspx?action=author&ID=164 Literature archive] on Mises.org
*[http://mises.org/media.aspx?action=author&ID=164 Media archive] on Mises.org
* [http://www.lewrockwell.com/orig11/wile13.1.html Interview: The Impracticality of One-World Government and the Failure of Western-style Democracy] with Anthony Wile of ''The Daily Bell'', March 27, 2011

{{DEFAULTSORT:Hoppe, Hans-Hermann}}
[[Category:Economists]]
[[Category:Philosophers]]

Gustave de Molinari

2011-03-10T16:31:05Z

RayBirks: wikify WWI

'''Gustave de Molinari''' (born in Liège on March 3, 1819 and died in Adinkerque on January 28, 1912) was the leading representative of the [[laissez-faire]] school of [[classical liberalism]] in [[France]] in the second half of the 19th century and was still campaigning against protectionism, statism, militarism, colonialism, and socialism into his 90s on the eve of the [[World War I|First World War]]. As he said shortly before his death, his classical liberal views had remained the same throughout his long life but the world around him had managed to turn full circle in the meantime.<ref name="Hart_Molinari">David M. Hart. [http://www.econlib.org/library/Molinari/MolinariBio.html "Life and Works of Gustave de Molinari"], ''Library of Economics and Liberty'', referenced 2011-03-10.</ref>

==References==
{{Reflist}}

==Selected works==
* [http://mises.org/daily/2089/The-Utopia-of-Liberty-A-Letter-to-Socialists-1848 The Utopia of Liberty: A Letter to Socialists], 1848
* [http://mises.org/resources/2716 The Production of Security], 1849
* [http://praxeology.net/GM-FPS.htm The Feeding of Paris During the Siege], 1871
* [http://www.econlib.org/library/Molinari/mlnSoc.html The Society of To-morrow: A Forecast of Its Political and Economic Organisation], 1899

==Links==
* [http://praxeology.net/MR-GM-PS.htm Murray Rothbard] on Molinari in the preface to the ''The Production of Security'', 2003
* [http://praxeology.net/anarcres.htm#molinari Works by and about Gustave de Molinari] at the Molinari Institute
* [http://praxeology.net/ Molinari Institute]
* [http://mises.org/daily/1758/Remembering-Gustave-de-Molinari Remembering Gustave de Molinari] by Gary Galles, March 2005
* [https://mises.org/journals/jls/5_3/5_3_3.pdf Gustave de Molinari and the Anti-statist Liberal Tradition part I] (pdf) by David M. Hart, 1981
* [http://mises.org/journals/jls/5_4/5_4_4.pdf Gustave de Molinari and the Anti-statist Liberal Tradition part II] (pdf) by David M. Hart, 1981
* [http://oll.libertyfund.org/index.php?option=com_content&task=view&id=24&Itemid=259 Gustave de Molinari (1819-1912): An Annotated Bibliography] by David Hart
* [http://praxeology.net/YG-GM.htm M. G. de Molinari (1912)] an obituary by Yves Guyot

[[Category:Economists]]
{{Stub}}

Roy A. Childs Jr.

2011-03-10T05:02:27Z

RayBirks: /* Links */ add link to Open Letter to Ayn Rand

'''Roy A. Childs Jr.''' (1949–1992) was a [[libertarian]] essayist and critic who counted among his early influences [[Ayn Rand]], [[Ludwig von Mises]], [[Rose Wilder Lane]], and [[Robert LeFevre]]. In the 1960s, Childs became friends with [[Murray Rothbard]], and Childs's controversial paper, "The Invisible Hand Strikes Back," was published in the inaugural issue of the ''[http://mises.org/periodical.aspx?Id=3 Journal of Libertarian Studies]''. In 1977 he became a research associate of the [[Center for Libertarian Studies]].

==Links==
* [http://mises.org/daily/4988 The Story of Roy A. Childs Jr.] by [[Jeff Riggenbach]], January 2011
* [http://www.isil.org/ayn-rand/childs-open-letter.html An Open Letter to Ayn Rand], 1969
* [http://mises.org/daily/author/395 Mises Daily archives of Roy Childs].

{{stub}}
[[Category:Anarcho-capitalists]]

User talk:Pestergaines

2011-02-24T17:03:32Z

RayBirks: /* Check-in */ new section

User talk:RayBirks

2011-02-24T17:00:01Z

RayBirks: /* About the idea */ sidelined

{{TOC right}}
== Welcome to my user talk page! ==
Thanks for visiting. :)
-- [[User:RayBirks|RayBirks]] 13:48, 20 November 2010 (CST)

==Good to see you...==
...around Mises Wiki! Cheers, [[User:DickClarkMises|DickClarkMises]] 19:39, 24 November 2010 (CST)

==Community Portal==
Ray, I think we may have just been unlucky and had an editing conflict because we were both working on the page at the same time. So far as I can tell, anyone should be able to edit the [[MisesWiki:Community_portal|Community portal]] page. Try again, and first check to see if it lets you make a minor change. [[User:DickClarkMises|DickClarkMises]] 00:40, 25 November 2010 (CST)

== Thanks for the Touch-Ups ==

Thanks for the touch-ups over on the [[Bureau of Engraving and Printing]] page. And thanks for the quadruple-tilde trick. Wiki code is all new to me. It's great to see your work all over the Mises Wiki already. [[User:Mike Reid|Mike Reid]] 08:09, 29 November 2010 (CST)

== Nice ==

[http://wiki.mises.org/mediawiki/index.php?title=Communist_Terrorism&curid=1408&diff=6231&oldid=6230] I did not know of that template, it certainly makes the article neater, thanks [[User:Mark|Mark]] 17:33, 9 January 2011 (CST)

== Welcoming newcomers ==

May I suggest: If you post a welcome to a newcomer as a first message on the user's Talk/Discussion page, please consider setting the initial word "Welcome!" as a first header (i.e., inside two "==" indicators, of course) That way, the section structure gets a good start on the newcomer's page and can also serve as a small (albeit slightly hidden) lesson for extreme newbies. Thanks, all! :) --[[User:RayBirks|RayBirks]] 21:08, 13 January 2011 (CST)
:And: Don't forget to sign your welcoming post! :) -- [[User:RayBirks|RayBirks]] 13:57, 30 January 2011 (CST)

== About the idea ==

Hallo Ray, what happened to the idea mentioned [[Talk:Argumentation:ABCT|here]]? Curious minds want to know. :) [[User:Pestergaines|Pestergaines]] 06:14, 24 February 2011 (CST)
:Hey, P.G. -- have been slammed offline with unrelated mega-projects + travel, so am sidelined for now. Will try to return as I can. Thanks for remembering! -- [[User:RayBirks|RayBirks]] 11:00, 24 February 2011 (CST)

Quarterly Journal of Austrian Economics

2011-02-19T16:04:33Z

RayBirks: wikify

'''The Quarterly Journal of Austrian Economics''' was nominally founded in 1998, but, in terms of its mission and guiding spirit, it is a continuation, in an expanded and improved form, of the first ten volumes of the semi-annual [[Review of Austrian Economics]], whose founding editor was the late [[Murray N. Rothbard]]. The QJAE features the same editorial staff that succeeded Rothbard in the editorship of the RAE beginning with volume 8, number 2.

The mission now, as it was when it was adopted from Rothbard, is "to promote the development and extension of [[Austrian School|Austrian economics]] and to promote the analysis of contemporary issues in the mainstream of economics from an Austrian perspective."

[http://mises.org/periodical.aspx?Id=4 Quarterly Journal of Austrian Economics]

[[Category:Mises Institute]]
[[Category:Periodicals]]

Talk:Human Action

2011-02-17T19:56:21Z

RayBirks: /* Right place of a link */ some generic discussion elsewhere, perhaps?

==Goal of the page==
What is the goal of the stub? --[[User:Reserved|Reserved]] 07:48, 29 December 2010 (CST)
:Do you mean <code><nowiki>{{stub}}</nowiki></code>? It is used to mark short articles or articles without much prose. All pages that have <code><nowiki>{{stub}}</nowiki></code> on them are added to a category, [[:Category:Article stubs]], so they can be found easily. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 07:55, 29 December 2010 (CST)
:: No, I want to ask for the goal of that site at all. I cannot identify the further aim of the stub. The mises.org page contains already the content. --[[User:Reserved|Reserved]] 08:16, 29 December 2010 (CST)
:::There are many opportunities. Yes, the full text is available elsewhere, but summaries of key arguments might make it more accessible to students (see [[William Smith's speech of February 25, 1830]], for example—it's much easier to read that article than the original 50-page speech). Doing this would also allow us to compare and contrast Mises's views with those of Menger, Rothbard, Hoppe, and other Austrians, specifically referencing those different views. Besides this, obviously, we could include publication history and other information about the work itself. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 08:25, 29 December 2010 (CST)
:::: Should mises.org content become rewritten in wiki format? What is about redundancy? --[[User:Reserved|Reserved]] 09:04, 29 December 2010 (CST)
:::::Its not redundant because ''its a wiki''--you can click through topics at will. You can not do that in the *.pdf of Human action or the online version (you can click through Mises footnotes but not through worlds like "capital" or "evenly rotating economy").

:::::I plan to work more on this page: should I go though by chapter (as I began to do) and cut it down later? Any suggestions? Its a lot of material and, frankly, I am new at this. [[User:Huckelberry|Huckelberry]] 14:22, 6 February 2011 (CST)

==New format==
Am liking the new format so far. :) Will keep watching. Also tried narrowing the table of contents, as the long titles make it a little unwieldy. Adjustments welcome. -- [[User:RayBirks|RayBirks]] 15:18, 13 February 2011 (CST)

:I think the code for narrowing the table of contents put it in the middle of the page instead of making it narrower. So I fixed that but I want to narrow it as well (if anyone knows the right code let us know!). The table of contents is a problem.. and it will only be getting longer I suspect. The page might need a different format in the long run. [[User:Huckelberry|Huckelberry]] 16:34, 13 February 2011 (CST)

== Acting Man - please test new lesson format ==

I have added a [http://www.apriorist.de/modx/hauyf/ lesson] which is new formated based on mises.org resources. You may discuss, if it could be useful or not. --[[Special:Contributions/84.60.253.91|84.60.253.91]] 13:36, 14 February 2011 (CST)

===Right place of a link===

"I have added a [http://www.apriorist.de/modx/hauyf/ lesson] which is new formated based on mises.org resources. You may discuss, if it could be useful or not. --84.60.253.91 13:36, 14 February 2011 (CST)"

:I moved it down to the links section. [[User:Huckelberry|Huckelberry]] 16:32, 14 February 2011 (CST)

:: Why? When I would have more lessons, do you would move them all to the links section? The link section is for further information. The task is to prove if the format would be an improvement or a useful choice of the study guide format. --[[Special:Contributions/84.60.253.91|84.60.253.91]] 16:58, 14 February 2011 (CST)

:::I am not sure where the best place for them would be honestly. They seem to fall under the category of "further information." Specifically since they are ''lessons'' associated with the text--the page being specifically for the text. Yet, the link would work on the page for [[Action]] in addition to this one. I personally think the best place for the links is further information--however I'm still new to this and the older members might have a better idea. -- [[User:Huckelberry|Huckelberry]] 18:10, 14 February 2011 (CST)

:::: The link contains just Human Action - Acting Man. It makes no sense to move it elsewhere because you are losing the direct connection. The link section is suited for resources about HA at all. In [[Action]], I would place it just at #Links because it would be further info about action at all. --[[Special:Contributions/84.60.253.91|84.60.253.91]] 18:48, 14 February 2011 (CST)

::::Links to outside sites are at the bottom. I understand why you want it after [[Action]], yet it doesn't seem right in a wiki. I'm sorry. --[[User:Huckelberry|Huckelberry]] 23:32, 16 February 2011 (CST)

::::: Are you enforcing the Wikipedia Guidelines? Links can have another meaning here. Mises Resources are quasi InterMisesLinks instead of InterWikiLinks. Please, read what is said about the MisesWiki and don't disturb other users when they are only doing their job:
::::: ''Mises Wiki is still in its developmental stages, and as such, it does not have firm rules. Its parent, the Mises Institute, remains its guiding force. Its Editorial Vice-President has said, "We don't want an encyclopedia only and we don't want just opinion pieces. We want [Mises Wiki] to be a guide to learning and studying; an archive of important and useful information; a documented assembly of important facts and figures and narratives; a valuable resource for discovery what is going on and what people think; most importantly, we don't want the scope limited." There is also hope that this wiki can eventually come to replace major sections of Mises.org itself.'' --[[Special:Contributions/84.60.220.190|84.60.220.190]] 12:50, 17 February 2011 (CST)
::Perhaps we can avoid any unhappiness by mentioning this topic generically in the Commons area to get many points of view. I see points on both sides and at the moment lean in the direction of diverging from the norm of the mainstream wiki and indicating the link to the specifically-related lesson close to the text summary. However, there may be other angles of which I am not aware. Now who can point out the issue most objectively without tipping his hand?? A lesson for the student. :) --[[User:RayBirks|RayBirks]] 13:56, 17 February 2011 (CST)

Great Recession

2011-02-16T00:45:14Z

RayBirks: adjust TofC width to improve appearance (subjective judgment, true)

{{RightTOC|width=45%}}

The [[financial crisis]], that began in 2007, has been named the '''Great Recession''' due to its impact on the American and worldwide economy.<ref name="Zuckerman_recession">Zuckerman, Mortimer. [http://online.wsj.com/article/SB10001424052748703837004575013592466508822.html "Mortimer Zuckerman: The Great Recession Continues - WSJ.com"], ''The Wall Street Journal'', referenced 2010-07-23.</ref><ref name="Evans-Pritchard_recession">Evans-Pritchard, Ambrose. [http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7871421/With-the-US-trapped-in-depression-this-really-is-starting-to-feel-like-1932.html "With the US trapped in depression, this really is starting to feel like 1932"]. ''The Daily Telegraph'' (London). Referenced 2010-07-27.</ref><ref name="Samuelson_recession">Robert J. Samuelson. [http://www.washingtonpost.com/wp-dyn/content/article/2010/07/11/AR2010071103038.html "The Great Recession's stranglehold"], ''The Washington Post'', July 12, 2010. Referenced 2010-07-27.</ref><ref name="Isidore_recession">Chris Isidore. [http://money.cnn.com/2009/03/25/news/economy/depression_comparisons/ "The Great Recession"], ''CNNMoney.com'', First Published: March 25, 2009. Referenced 2010-07-27.</ref>

==Prelude to the crisis==
Banks increasingly had the incentive to make long-term amortizing loans secured by long-term assets because the threat of bank runs has been taken away by increases in [[Federal Deposit Insurance Corporation|FDIC]] deposit insurance. Deposit insurance started at $2,500 in the [[Great Depression]] and has increased in fits and starts to $250,000 in 2009. With the increase in deposit insurance there is no need to maintain liquidity. So instead of making short-term, self-liquidating business lines of credit, bankers opted for making real-estate loans.

Numbers from the FDIC reflect this shift over the past decade. At the end of the third quarter of 1999, the assets of the nation's banks totaled $5.5 trillion. As of September 30 2009, bank assets had grown to $13.2 trillion. Commercial and industrial loans outstanding only grew from $947 billion a decade ago to $1.27 trillion by September 30, 2009. Meanwhile, loans secured by real estate increased from $1.43 trillion in the fall of 1999 to $4.5 trillion in 2009. And investment in securities doubled, rising from $1.03 trillion to $2.4 trillion.<ref name="French_loans">Doug French. [http://mises.org/daily/3925 "Productive Debt versus Unproductive Debt"], Mises Daily, December 08, 2009. Referenced 2010-07-28.</ref>

Finance was once just a small portion of the US economy, but by 2007 it had mushroomed into being over a quarter of the S&P 500, after being only 5 percent of the index back in 1980 — and this doesn't count the financial affiliates of companies like GE. Finance is the largest sector of the US economy, so college graduates believe the road to riches lies with pushing paper, creating complex financial securities, and jockeying risk-management models.

These products served to grow Wall Street exponentially. All stocks in the S&P in 1957 had a market value of $220 billion. By the end of 2008, that index had a value of $9 trillion, but the real action was in derivatives, which totaled $518 trillion that year, "or about ten times the Gross Global Product." Credit Default Swaps owners jumped on this opportunity to profit and the CDS market grew to $62 trillion at its peak, while the entire market for home mortgages was only $12 trillion. Sold as an insurance to hedge against credit risk, the CDS market morphed into speculation.<ref name="French_finance_industry">Doug French. [http://mises.org/daily/4592 "Turning Bread into Stones"], Mises Daily, July 26, 2010. Referenced 2010-07-28.</ref>

The Washington Post has called the 2000s "[[Lost Decade (Japan)|The lost decade]]". "The U.S. economy has expanded at a healthy clip for most of the last 70 years, but by a wide range of measures, it stagnated in the first decade of the new millennium. Job growth was essentially zero, as modest job creation from 2003 to 2007 wasn't enough to make up for two recessions in the decade. Rises in the nation's economic output, as measured by gross domestic product, was weak. And household net worth, when adjusted for inflation, fell as stock prices stagnated, home prices declined in the second half of the decade and consumer debt skyrocketed."<ref name="WashPost_decade">The Washington Post. [http://www.washingtonpost.com/wp-dyn/content/graphic/2010/01/01/GR2010010101478.html "The lost decade for the economy"], a graphic by Neil Irwin, Cristina Rivero and Todd Lindeman. Referenced 2010-07-30.</ref>

===Predicting the crisis===
<blockquote>''"While I am not going to say that there is no possibility of house pricing declining... the notion of a bubble bursting and the whole price level coming down seems to me as far as a nationwide type of phenomenon really quite unlikely."'' <br />
<small>Federal Reserve Chairman [[Alan Greenspan]], 2003.</small><ref name="Greenspan_bubble">Alan Greenspan. [http://www.access.gpo.gov/congress/senate/pdf/108hrg/86497.pdf "Global Aging: Opportunity or Threat for the U.S. Economy?"] (pdf), Hearing before the [http://aging.senate.gov/ Special Committee on Aging], United States Senate, One Hundred Eighth Congress, First Session, Washington, DC, February 27, 2003, p.10. Referenced 2010-07-24.</ref></blockquote>

A common view from the very beginning of the credit crisis, shared from the upper echelons of the global financial and policy hierarchy and in academia to the general public, was that, ‘no one saw this coming’. However, several economical analysts - especially from the [[Austrian School of Economics]] - warned specifically about a housing-led recession, going against the general mood and official assessment, and well before most observers turned critical from late 2007.<ref name="Bezemer_coming">Bezemer, Dirk J. [http://som.eldoc.ub.rug.nl/FILES/reports/2009/09002/09002_Bezemer.pdf "No One Saw This Coming": Understanding Financial Crisis Through Accounting Models] (pdf), ''Groningen University'', 16. June 2009. Referenced 2010-07-30.</ref><ref name="Mises_Bailout">Mises.org. [http://mises.org/daily/3128 "The Bailout Reader"], ''Mises Daily''', September 2008, section "Who Predicted This?". Referenced 2010-11-11.</ref><ref name="Murphy_Recession">Robert P. Murphy. [http://mises.org/daily/2728 "The Worst Recession in 25 years?"], ''Mises Daily'', October 01, 2007. Referenced 2010-11-11.</ref> For example, in 2004, [[Mark Thornton]]<ref name="Thornton_Housing">Mark Thornton. [http://mises.org/daily/1533 "Housing: Too Good to be True"], ''Mises Daily'', June 04, 2004. Referenced 2010-11-25.</ref> and others warned about a bubble in the housing market.<ref name="Karlsson_Boom">Stefan Karlsson. [http://mises.org/daily/1670 "America's Unsustainable Boom"], ''Mises Daily'', November 08, 2004. Referenced 2010-11-25.</ref>

[[Federal Reserve]], led by then-Chairman [[Alan Greenspan]], identified a housing bubble in 2005 and failed to slow down the expansion of mortgage credit, as transcripts from Open Market Committee meetings that year show.<ref name="Torres_Fed">Craig Torres. [http://www.bloomberg.com/news/2011-01-14/fed-saw-housing-bubble-in-2005-failed-to-alter-policy-of-rate-increases.html "Fed Officials Saw Housing Bubble in 2005, Didn't Alter Policy"], ''Bloomberg'', January 14, 2010. Referenced 2010-11-11.</ref>

==Bubble economy==

===Housing bubble===
Psychology clearly plays a role in stimulating a bubble, but only monetary [[inflation]] enables it. It is difficult not to succumb to the temptation of astronomic profits in a short period of time. Resistance is even more difficult if the means to engage in the bubble are easily available at the nearest bank.

Former Fed chairman [[Alan Greenspan]] would suggest that "irrational exuberance" has the power to escalate asset prices. He could certainly claim exuberance, but there is nothing irrational in investing in higher-yield projects instead of watching your idle savings lose their purchasing power because of inflation.

With extremely low nominal interest rates and negative real interest rates (inflation is estimated at over 10% for 2007 and 2008), the rational behavior was to borrow and invest wherever it is possible. A booming real-estate market seemed to be the obvious choice most of the time. Under these conditions, everyone becomes a brilliant businessman. Entrepreneurial errors seem seldom while credit is abundant.

In the case of the housing sector, people failed to understand that demand for real estate is only sustainable if the ultimate reason for purchasing a property is to actually reside in it. Only [[saving]]s can allow for sustainable economic growth. Through inflation, credit flows excessively and distorts the production structure, allocating resources to projects that should have never existed in the first place and paving the way for the ensuing recession, that is, the adjustment of all the [[malinvestment]]s. Entrepreneurs can and will make mistakes even in the absence of inflation. But it is only through undue monetary expansion that the distortion occurs on a massive scale throughout the economy.

Production and saving cannot keep up with the pace of credit expansion, because production takes time and labor. The creation of additional money out of thin air does not add to the available amount of goods and services in the economy. If more credit is extended to construction companies, it does not mean there will be enough steel, cement, etc. — certainly not at prices that make the developments profitable. As soon as each company starts bidding for the same resource, it will tend to increase in [[price]], rendering some projects unviable. Resources are scarce. Printing more money can never alter this fact.<ref name="Ulrich_housing_bubble">Fernando Ulrich. [http://mises.org/daily/3956 "Rise and Fall in Dubai: An Austrian Perspective"], Mises Daily, December 16, 2009. Referenced 2010-07-28.</ref>

===Government intervention in the housing market===
Government policies intended to promote home ownership, even by people otherwise not able to afford it, date back to the 1930s if not before. Today, many government agencies and government-sponsored companies guarantee or subsidize mortgage loans, either directly or by providing a secondary market. Examples include the [[Federal Home Loan Banks]], the [[Federal Housing Administration]] (FHA), the [[Government National Mortgage Association]] (GNMA, "Ginnie Mae"), and the Department of Agriculture's [[Rural Housing Service]] and [[USDA Rural Development|Rural Development Guaranteed Loan Program]]. Some programs aim to make housing more affordable for particular groups, including military veterans, police officers, teachers, and Native Americans.

Some programs have forged strong links with politicians. The [[Fannie Mae|Federal National Mortgage Association]] (Fannie Mae) and [[Federal Home Loan Mortgage Corporation]] (Freddie Mac), both government sponsored, have been particularly notorious, enjoying cozy relations with members of Congress and an implicit (later explicit) government guarantee of their bonds.

Several much-discussed laws and regulations, including the [[Community Reinvestment Act]] of 1977 and its sequels, pressured financial institutions to make mortgage loans to normally unqualified borrowers, and even to make them in parts of cities where a prudent person would hesitate to walk. Lenders have also been pressured to grant relief to troubled mortgage debtors.

It is not obvious that homeownership is unequivocally desirable. Owning a house puts friction in the way of the owner's moving to a place where he could have a better job. The owner carries the burdens of maintenance, landscaping, and finding plumbers and other repairmen when emergencies arise. These burdens might be left in the first place to managers of rental properties, who would take advantage of professionalism, risk-spreading, and economies of scale. Yet government has gone to remarkable lengths in obeisance to "the American dream."

Tax laws have long privileged owner occupancy over renting. Homeowners may deduct mortgage-interest payments and real-estate taxes in figuring their federal income taxes, and they enjoy favorable tax treatment of gains on the sale of their houses. Federal tax law permits state and local government agencies to offer below-market-rate financing to homebuyers. Owners enjoy tax-free nonmonetary income (implicit rental income) from occupancy of their homes, whereas landlords pay tax on their rental income and pass it and the property tax along to their tenants.

Such policies have effects. Cheap credit during the years of the boom compounded the long-term effects of government action. As one would predict, cheap credit encouraged borrowing, building construction, and bullish speculation in houses. Even financially unqualified homebuyers took advantage of dubiously attractive subprime mortgages, mortgages whose initial teaser rates could later be raised, loans requiring no payment of principal during the early years, and even negative-amortization loans.

Some borrowers and mortgage brokers connived to conceal applicants' inability to meet even the loosened financial standards. Borrowers and lenders were seduced by expectations that the collateral — houses — would keep rising in price indefinitely. Low interest rates spurred savers and institutions to look for better yields even on new or exotic and riskier kinds of investment. Financiers reached for these yields, resorting to complicated and poorly understood financial derivatives and making defective assessments and unclear explanations of risks.<ref name="Yeager_bubble_background">Leland B. Yeager. [http://mises.org/daily/4531 "Pandemic: The Contagious Crisis"], Mises Daily, July 08, 2010. Referenced 2010-07-28.</ref>

===Financial markets===
An advanced economy is a tissue of intricate interdependencies whose unraveling damages finance, production, employment, and consumption. Contagion particularly bedevils financial intermediation, which is the business of banks and other financial firms and the stock market. Lending institutions borrow, normally at shorter-term and lower rates of interest, to relend at higher rates. Banks, for example, owe short-term debt to their depositors and use the funds for medium- and long-term loans and securities.

Financial intermediation tailors types, maturities, and risk/reward characteristics of financial instruments to meet the desires both of ultimate savers and of borrowers and stock-issuing firms. In an advanced economy, this intermediation is essential to channel savings efficiently into factories, farms, machinery, and other capital goods, so promoting economic growth.

By its very nature, intermediation requires firms performing it to operate heavily with borrowed funds. Their excess of assets over liabilities — their capital in this accounting sense (net worth) — amounts to only a very small percentage of either. Even ordinary businesses use borrowed funds to some extent; but financial firms practice this [[Leverage (finance)|leverage]], so called, to a more extreme degree. Their capital, a small percentage of their balance sheets, is vulnerable to being wiped out.

'''[[Securitization]]''' means bundling loans into packages that provide the backing for bonds issued by the bundlers. Ideally, these "[[Collateralized debt obligation|collateralized debt obligations]]" enable their buyers to enjoy the convenience of not making individual mortgage loans and also, normally, the relative safety of diversification. The bundlers receive their shares of these benefits from an interest-rate spread between what they earn on the loans and what they pay on their own obligations.

The process can be carried to further stages as the first-level bonds are cut into "tranches" according to the estimated riskiness of their backing. The different tranches can then serve as backing for a further level of bonds, and even further levels. The results are called CDO2s (collateralized debt obligations squared). Many of them received the highest ratings by the three government-privileged bond-rating companies, S&P, Moody's, and Fitch, so becoming approved holdings even for conservative investors such as pension funds, and building confidence among other investors also.

Yet these ratings, especially of unfamiliar debt instruments, proved overoptimistic. At the beginning of the chain, some of the underlying mortgage borrowers may not have been creditworthy — and in recent years, many of them certainly were not. While the process may achieve the apparent safety of diversification, it also makes risk assessment more difficult and obscures how participants along the chain share the risk of default on the underlying mortgages. Unforeseen defaults can spread and magnify damage along the whole ingenious chain.<ref name="Yeager_bubble_background" />

'''[[Credit-default swaps]]''' can be described as an insurance that investors buy to compensate for a loss if a particular debtor defaults on its obligation (a loan, mortgage, government debt, etc). The investor pays the CDS spread (the "insurance premium") and if the debtor defaults on its debt, the investor receives the insured sum. The CDS spreads indicate the confidence in the underlying bond.

Investors can buy CDSs even if they do not own any debt from the company that they refer to. These are the infamous naked credit-default swaps (already banned in Germany, there are plans to extend this ban to the rest of the EU). From a free-market point of view, betting on defaults of financial institutions is as legitimate as betting against a certain soccer team in the World Cup.<ref name="Bagus_CDS">Philipp Bagus. [http://mises.org/daily/4502 "The Social Function of Credit-Default Swaps"], Mises Daily, June 29, 2010. Referenced 2010-07-28.</ref>

Generally, the option of insurance means more certainty and that people will be more eager to lend money. However, if many are buying a specific "insurance", it will increase the spreads,and indicate distrust of the market. The institution in question may find it hard to borrow more money (this in fact happened to the [[2008–2010 Icelandic financial crisis|banks from Iceland]], and led to higher interest rate payments for the [[2010 European sovereign debt crisis#Greek government funding crisis|Greek government]]). Speculators can in this way warn the public that a company - or a government - won't be able to pay its debts. They may also bring about the collapse of unstable companies sooner.<ref name="Mera_CDS">Xavier Méra. [http://blog.mises.org/13177/second-thoughts-on-sovereign-credit-default-swaps/ "Second Thoughts on Sovereign Credit-Default Swaps"], Mises Economics Blog, July 6, 2010. Referenced 2010-07-28.</ref><ref name="Bagus_CDS" /> The default-swap issuer can also go broke - and with greater likelihood than a regular "insurer", because of the relative complexity and novelty of the transactions. For an example see the insurer [[American International Group|AIG]], which had to be rescued by the government.<ref name="Yeager_bubble_background" /> (As Treasury Secretary [[Timothy Geithner]] said: "Despite regulators in 20 different states being responsible for the primary regulation and supervision of AIG’s U.S. insurance subsidiaries, despite AIG’s foreign insurance activities being regulated by more than 130 foreign governments, and despite AIG’s holding company being subject to supervision by the Office of Thrift Supervision (OTS), no one was adequately aware of what was really going on at AIG."<ref name="Geithner_AIG">Secretary Timothy F. Geithner. [http://oversight.house.gov/images/stories/Hearings/Committee_on_Oversight/TESTIMONY-Geithner.pdf "Written Testimony"] (pdf) for the House Committee on Oversight and Government Reform, January 27, 2010. Referenced 2010-07-28.</ref>)

The whole tissue of economic interrelations rests on '''trust'''. Confidence can be justified, excessive, or abnormally weak. Confidence can rise or fall in waves of herding: understandably, people without enough information to make judgments on their own regard others' behavior as guided by information that they possess. A boom reinforces confidence. People are inclined to fall for dishonest schemes. A bust saps confidence. People and institutions, including banks, become more cautious in doing business with one another.

The stock market, swinging widely, both registers and magnifies the state of confidence or fear. Loss of stock and house values makes consumers hesitant to spend money, depriving businesses of sales in a further fall of dominos.

'''[[Moral hazard]]''' is a danger: past rescues breed expectations of more in the future. So soothed, firms run greater risks than would otherwise be prudent (just as fire insurance soothes homeowners to be less obsessively cautious than they would be without it). Against a long background of bank and hedge-fund rescues, the rescue of [[Bear Stearns]] in March 2008 further bolstered expectations. These were disappointed when [[Lehman Brothers]] was allowed to fail in mid-September. The crisis deepened, arousing hopes that the authorities had learned a lesson and would not allow a similar major collapse. The economy faces a [[Catch-22 (logic)|catch-22]]: damned by immediate damage if a rescue goes unattempted, and damned by the longer-run moral hazard if a rescue ''is'' undertaken.

Moral hazard presents a major short-run versus long-run contrast. Rescue of a troubled bank may seem the best thing to do immediately, but it reinforces expectations of further rescues, inviting repeated trouble later.<ref name="Yeager_bubble_background" />

===Regime uncertainty===
The December 2009 regular survey on Small Business Economic Trends by the [[National Federation of Independent Businesses|NFIB]] showed that capital expenditures and near-term plans for new capital investments remained stuck at 35-year lows. The same survey revealed that only 7% of small businesses saw the next few months as a good time to expand. Only 8% of small businesses reported job openings, as compared to 14%-24% in 2008, depending on month, and 19%-26% in 2007. The weak economy was the most prevalent reason given for why the next few months are "not a good time" to expand, but "political climate" was the next most frequently cited reason, well ahead of borrowing costs and financing availability. The authors stated: "the other major concern is the level of uncertainty being created by government, the usually source of uncertainty for the economy. The 'turbulence' created when Congress is in session is often debilitating, this year being one of the worst. . . . There is not much to look forward to here."<ref name="NFIB_Small_business">William C. Dunkelberg, Holly Wade. [http://www.nfib.com/Portals/0/PDF/sbet/SBET200912.pdf "NFIB Small Business Economic Trends"] (pdf), December 2009. Referenced 2010-08-15.</ref>

Business investment in the third quarter of 2009 was down 20% from the low levels a year earlier. Job openings were at the lowest level since the government began measuring the concept in 2000. The pace of new job creation by expanding businesses was slower than at any time in the past two decades and, though older data are not as reliable, likely slower than at any time in the past half-century. While layoffs and new claims for unemployment benefits have declined in recent months, job prospects for unemployed workers have continued to deteriorate. The exit rate from unemployment was lower now than any time on record, dating back to 1967.

According to the Michigan Survey of Consumers, 37% of households planned to postpone purchases because of uncertainty about jobs and income, a figure that has not budged since the second quarter of 2009, and one that remained higher than any previous year back to 1960.<ref name="Becker_Uncertainty">Gary S. Becker, Steven J. Davis and Kevin M. Murphy. [http://online.wsj.com/article/SB10001424052748703278604574624711732528426.html "Uncertainty and the Slow Recovery"], ''The Wall Street Journal'', January 4, 2010. Referenced 2010-08-15.</ref> In 2009, companies were holding more cash — and a greater percentage of assets in cash — than at any time in the past 40 years.<ref name="McGinty_cash">Tom McGinty and Cari Tuna. [http://online.wsj.com/article/SB125712303877521763.html "Jittery Companies Stash Cash"], ''The Wall Street Journal'', November 3, 2009. Referenced 2010-08-15.</ref><ref name="Higgs_cash">Robert Higgs. [http://www.independent.org/blog/index.php?p=3890 "More Evidence of Current Regime Uncertainty?"], ''The Beacon'', blog of the The Independent Institute, Nov 7, 2009. Referenced 2010-08-15.</ref>

The chairman of China’s [[sovereign wealth fund]] said in late 2008 that China had no plans for further investments in Western financial institutions. "Right now we do not have the courage to invest in financial institutions because we do not know what problems they may have." Mr. Lou said that the sheer pace of new initiatives and new rules issued by Western regulatory agencies was disconcerting and made it even harder for him to choose worthwhile investments. "If it is changing every week, how can you expect me to have confidence?" he asked.<ref name="Bradsher_China">Keith Bradsher. [http://www.nytimes.com/2008/12/04/business/worldbusiness/04yuan.html?_r=2&adxnnl=1&adxnnlx=1228594043-/gsxRDJZWxAxLLCcUhx8oQ "China Shuns Investments in West’s Finance Sector"], ''The New York Times'', published: December 3, 2008. Referenced 2010-08-15.</ref><ref name="Higgs_China">Robert Higgs. [http://www.independent.org/blog/index.php?p=635 "Regime Uncertainty in 1937 and 2008"], ''The Beacon'', blog of the The Independent Institute, Dec 6, 2008. Referenced 2010-08-15.</ref>

The chairman of the [[Business Roundtable]], an association of top corporate executives that has been [[Barack Obama|President Obama's]] closest ally in the business community, accused the president and Democratic lawmakers in June, 2010, of creating an "increasingly hostile environment for investment and job creation." ... "By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses."<ref name="Montgomery_stifle_growth">Lori Montgomery. [http://www.washingtonpost.com/wp-dyn/content/article/2010/06/22/AR2010062205279.html "Business leaders say Obama's economic policies stifle growth"], ''Washington Post'', June 23, 2010. Referenced 2010-08-15.</ref>
{{Main|Regime uncertainty}}

==Burst of the bubble==
Some consider the [[Bankruptcy of Lehman Brothers|bankruptcy of Lehman Brothers]] to cause the financial panic of late 2008.<ref name="Jones_Lehman">Sam Jones. [http://ftalphaville.ft.com/blog/2009/03/12/53515/why-letting-lehman-go-did-crush-the-financial-markets/ "Why letting Lehman go did crush the financial markets"], ''Financial Times'' on Mar 12 2009. Referenced 2010-07-30.</ref> According to others, the main risk indicators only took off after Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke's [[Troubled Asset Relief Program|TARP]] speeches to Congress on Sept. 23 and 24.<ref name="Cochrane_TARP">John H. Cochrane and Luigi Zingales. [http://online.wsj.com/article/SB10001424052970203440104574403144004792338.html "Lehman and the Financial Crisis"], ''The Wall Street Journal'', September 15, 2009. Referenced 2010-07-30.</ref><ref name="Taylor_responses">John B. Taylor. [http://www.stanford.edu/~johntayl/FCPR.pdf "The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong"] (pdf), November 2008, referenced 2010-07-30.</ref>

Still others point out, that the previous bailouts (esp. Bear Stearns in March 2008) produced in the markets an expectation, that the government will bail out large financial institutions and its decision to let Lehman Brothers to fall has surprised and shocked them.<ref name="Suster_Lehman">Matěj Šuster. [http://www.libinst.cz/komentare.php?id=574 "Pád Lehman Brothers a finanční panika"] ("Fall of Lehman Brothers and financial panic", in ''[[Czech language|Czech]]''), ''[http://libinst.cz/stranka_en.php?id=2 Liberalni Institut]'', 2009-09-20. Referenced 2010-07-30.</ref> (It has been noted, however, that there is a significant relationship between lobbying and bailout money, as well as a greater chance of getting bailouts depending on a bank’s ties with either the Federal Reserve or key members of Congress.<ref name="Mitchell_corruption">Daniel J. Mitchell. [http://www.cato-at-liberty.org/2009/12/22/university-of-michigan-study-confirms-link-between-financial-bailout-and-corruption/ "University of Michigan Study Confirms Link between Financial Bailout and Corruption"], ''Cato Institute'', December 22, 2009. Referenced 2010-07-31.</ref>)

===Unemployment===
Total employment peaked in 2007 at 137.6 million persons on nonfarm payrolls, fell slightly in 2008, and then dropped precipitously in 2009 to 132.0 persons, for a two-year loss of 5.6 million jobs. In 2009, total employment was approximately equal to its magnitude in 2001, even though the labor force had grown substantially in the interim.

The loss of employment has occurred entirely in the private sector: employment fell from 115.4 million persons in 2007 to 109.5 million persons in 2009, a decline that took private employment back to its level at the end of the 1990s. As private employment has collapsed since 2007, however, the government payroll has actually grown slightly from 22.2 million persons in 2007 to 22.5 million persons in 2009, which puts this class of employment roughly 1.7 million persons above its magnitude in 2000.<ref name="Higgs_unemployment">Robert Higgs. [http://www.independent.org/blog/index.php?p=4728 "Pity the Poor Private-Sector Workers"], ''The Independent Institute'', Jan 9, 2010. Referenced 2010-07-31.</ref>

The government employees also enjoyed increased compensation. The growth in six-figure salaries has pushed the average federal worker’s pay to $71,206, compared with $40,331 in the private sector.<ref name="Higgs_federal">Robert Higgs. [http://www.independent.org/blog/index.php?p=4383 "The Federal Bureaucracy-Plutocracy"], ''The Independent Institute'', Dec 12, 2009. Referenced 2010-07-31.</ref><ref name="Cauchon_Feds">Dennis Cauchon. [http://www.usatoday.com/news/washington/2009-12-10-federal-pay-salaries_N.htm "For feds, more get 6-figure salaries"], ''USA TODAY'', 2009-12-10. Referenced 2010-07-31.</ref>

This situation bears a resemblance to the employment situation during the [[Great Depression]], when private nonfarm hours worked fell steeply from 1929 to 1932 and did not get back to the 1929 level until 1941, notwithstanding (or perhaps because of) the millions of persons added to government payrolls during the New Deal period. In both cases, the possibility that government employment crowds out private employment, rather than stimulating it, cannot be dismissed out of hand.

The 2000s may prove to have been America’s second "lost decade" (the 1930s having been the first), an interval of little or no net economic gain, owing to destructive government policies that produced only unsustainable booms followed by inevitable busts, along with such huge, frequent, and unsettling changes in government policies that private planning, especially for long-term investment, has become too risky for private investors to bear — a situation called [[Uncertainty#Regime uncertainty|regime uncertainty]].<ref name="Higgs_unemployment" />

==After the fall==
Since the summer of 2008, the U.S. Treasury and the Fed initiated a new wave of spending, lending, and subsidizing programs ostensibly aimed at stemming the recession that began early in that year and deepened quickly in its last quarter and in the first quarter of 2009. Among the most notable of these programs have been attempts to prop up the real estate market and the residential construction industry, where the Fed’s easy-money policies in the first half of the present decade induced lenders to make millions of mortgage loans to home buyers who would not have qualified for such loans if traditional underwriting standards had been applied.

Rather than terminating the government policies that had encouraged the foolish behavior of real estate buyers, sellers, and lenders, the government has undertaken to continue and even to compound the selfsame policies that in large part caused our present economic troubles. For example, Fannie and Freddie, now effectively government owned and operated firms, continue to extend loans as if promising borrowers were superabundant.

Moreover, the [[Federal Housing Administration]], a government agency created in 1934 to insure conventional mortgage loans, has greatly expanded the volume of its business, and according to a [http://www.nytimes.com/2009/11/20/business/20limits.html?_r=1 report] in the New York Times, the FHA "is underwriting loans at quadruple the rate of three years ago even as its reserves to cover defaults are dwindling." The Mortgage Bankers Association affirmed on November 19, 2009 that "more than one in six F.H.A. borrowers was behind on payments." The FHA has backed 37 percent of all residential mortage loans made in 2009. Reporter Patrice Hill observes that "these loans are exposing taxpayers to the same kinds of soaring default rates and losses that brought down Fannie Mae and Freddie Mac as well as destroyed many banks and the private market for mortgage loans."<ref name="Higgs_housing">Robert Higgs. [http://www.independent.org/blog/?p=4069 "Government Responds to Economic Woes by Making More Bad Mortgage Loans"], ''The Independent Institute'', Nov 22, 2009. Referenced 2010-07-30.</ref>

Households across a majority of large U.S. cities received more foreclosure warnings in the first six months of 2010 than in the first half of 2009. In all, 154 out of 206 metropolitan areas with at least 200,000 residents posted an annual increase in foreclosure activity between January and June. The threat of foreclosures is spreading well beyond the top tier of metropolitan areas located in California, Florida, Nevada and Arizona, which have borne the brunt of the fallout from the housing crisis. "The face of foreclosure is driven much more now by unemployment than in the past," said the speaker of a foreclosure listing firm. The number of households facing foreclosure in the first half of the year climbed 8 percent versus the same period last year, but dropped 5 percent from the last six months of 2009.<ref name="Veiga_foreclosures">AP Real Estate Writer Alex Veiga. [http://news.yahoo.com/s/ap/20100729/ap_on_bi_ge/us_foreclosure_rates "Foreclosure activity up across most US metro areas"], ''Yahoo News'' / ''Associated Press'', Jul 29, 2010. Referenced 2010-07-31.</ref>

===Impact on Investment===
In 2006, gross private domestic [[investment]] reached its most recent peak, at $2.33 trillion (in constant 2005 dollars), or 17.4 percent of GDP. After remaining almost at this level in 2007, this measure of investment fell substantially during each of the next two years, reaching $1.59 trillion, or 11.3 percent of GDP, in 2009.

The greater part of gross investment consists of what the statisticians call the capital consumption allowance, an estimate of the amount of money that must be spent simply to offset wear and tear and obsolescence of the existing capital stock. In a country such as the United States, with an enormous fixed capital stock built up over the centuries, a great amount of funds must be allocated simply to maintain that stock. In recent years, the private capital consumption allowance has ranged from $1.29 trillion in 2005 to $1.46 trillion (in constant 2005 dollars) in 2009. Thus, even in the boom year 2006, about 60 percent of gross private domestic investment was required merely to maintain the economy’s productive capacity, leaving just 40 percent, or $889 billion in net private domestic investment, to augment that capacity.

From that level, net private domestic investment plunged during each of the following three years, taking the greatest dive between 2008 and 2009, when it fell to only $54 billion (in constant 2005 dollars), having declined altogether by 94 percent from its 2006 peak! Only 3.5 percent of all private investment spending in 2009 went toward building up the capital stock. Thus, net private investment did not simply fall during the recession; it virtually disappeared. Without substantial net private investment, brisk economic growth is unthinkable beyond the very short run.<ref name="Higgs_Divergence">Robert Higgs. [http://www.independent.org/blog/index.php?p=7882 "The Great Divergence: Private Investment and Government Power in the Present Crisis"], ''The Independent Institute'', on Sep 18, 2010. Data taken or derived from the National Economic Accounts prepared by the Commerce Department’s ''Bureau of Economic Analysis'' (Tables 1.1.5, 1.1.6, and 5.2.6 - see a [http://www.bea.gov/national/nipaweb/SelectTable.asp?Selected=N list of tables] for information. Referenced 2010-09-20.</ref>

==End of the crisis?==
In September, 2010, the [[National Bureau of Economic Research]] concluded, that the recession has ended in June 2009. It defines a recession as following:
<blockquote>"A recession is a period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real [[GDP]], real income, employment, industrial production, and wholesale-retail sales. The trough marks the end of the declining phase and the start of the rising phase of the business cycle."</blockquote>

According to the Bureau, the recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months.

The committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month.<ref name="NBER_recovery">National Bureau of Economic Research. [http://www.nber.org/cycles/sept2010.html "Business Cycle Dating Committee, National Bureau of Economic Research"], referenced 2010-12-06.</ref>

[[Frank Shostak]] holds, that the NBER's definition does not provide an explanation of what a recession is all about. The main reason why the NBER's definition is confined to describing manifestations rather than the underlying causes of a recession is because mainstream thinkers do not hold that such causes can be known. They are of the view that the sources of recessions are various random shocks emanating from various factors such as a sudden change in people's psychology or various unexpected political and other events. In short, these causes are of an unexpected nature.

In a [[Free market|free unhampered environment]] it is conceivable that the economy would be subject to various shocks, but it is difficult to envisage a phenomenon of recurrent [[Business cycle|boom-bust cycles]].

Shostak points out, that movements in GDP mirror past money pumping. And since a loose monetary policy will start an exchange of 'nothing for something', a rebound in the GDP rate of growth is actually likely to reflect a weakening in the wealth-formation process, which is bad news for the economy. A fall in the growth momentum of [[money supply]] is likely to undermine the rate of growth of GDP in the months ahead. This will be seen by most experts as bad economic news. On the contrary, Shostak suggests that the expected downturn is actually going to be good news for the wealth generating process.<ref name="Shostak_NBER">Frank Shostak. [http://mises.org/daily/4741 "How Useful Is the NBER's Dating of Business Cycles?"], ''Mises Daily'', September 26, 2010. Referenced 2010-12-06.</ref>

===Housing===
Foreclosures were at a record high in 2010, and more than 1 million people lost their homes, even as notices started leveling off during the end year. In total, there were nearly 2.9 million foreclosure notices filed during the year, according to report released Thursday by RealtyTrac. That was a record high, but just 1.7% above 2009. It probably would have been higher had notices not plunged in November and December as banks halted tens of thousands of foreclosures in the face of the "robo-signing" scandal,<ref name="Christie_repossessed">Les Christie. [http://finance.yahoo.com/news/1-million-homes-repossessed-cnnm-3351544913.html?x=0&sec=topStories&pos=3&asset=&ccode= "1 million homes repossessed in 2010"], ''YAHOO! Finance'', January 13, 2011. Referenced 2011-01-13.</ref> where loan servicers had employees sign thousands of documents a month without verifying the information.<ref name="Luhby_robo-signer">Tami Luhby. [http://money.cnn.com/2010/10/28/real_estate/robosigner/index.htm "I was a robo-signer"], ''CNNMoney.com'', October 28, 2010. Referenced 2011-01-13.</ref>

Amherst Securities analyst Laurie Goodman says that as many as 11 million mortgage borrowers are in potential danger of default. Rick Sharga at RealtyTrac, predicted 4 million to 5 million, less than half as many but still disastrous.<ref name="Christie_repossessed" /> According to Case-Shiller Home Price Index home prices are diving again,<ref name="S_P_Weaken">David R. Guarino, David Blitzer. [http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline%3B+filename%3Ddownload.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1245281640766&blobheadervalue3=abinary%3B+charset%3DUTF-8&blobnocache=true "U.S. Home Prices Weaken Further as Six Cities Make New Lows According to the S&P/Case-Shiller Home Price Indices"] (pdf), ''S&P Indices'', December 28, 2010. Referenced 2011-01-13.</ref> spelling trouble for more homeowners given high unemployment and diminished job prospects.<ref name="French_Vibes">Douglas French. [http://blog.mises.org/15318/a-million-foreclosed-homes-with-bad-vibes/ "A Million Foreclosed Homes With Bad Vibes"], January 13, 2011. Referenced 2011-01-13.</ref>

In 2010, nearly 11 percent of all housing units have been vacant all year round and renting apartments became ever more popular.<ref name="Olick_Empty">Diana Olick. [http://www.cnbc.com/id/41355854/ "Nearly 11 Percent of US Houses Empty"], ''CNBC'', 31 Jan 2011. Referenced 2011-02-02.</ref>

===Recovery of unemployment===
As of 2011, jobs recovery has been very slow and dominated by low-paying jobs. Growth has been concentrated in mid-wage and lower-wage industries. By contrast, higher-wage industries showed weak growth and even net losses. In the first seven months of 2010, 76% of jobs created were in low- to mid-wage industries -- those earning between $8.92 to $15 an hour, well below the national average hourly wage of $22.60.

But jobs losses continue in higher-wage industries severely hit by the bursting of the housing bubble -- construction and financial services. Recoveries in those sectors helped lead the economy out of earlier downturns, but they're still suffering more than a year and a half after the official end of the Great Recession. High-wage sectors -- made up of jobs that pay between $17.43 and $31 an hour -- accounted for nearly half the jobs lost during the recession, but have produced only 5% of the new jobs since hiring resumed, study showed.

Even in some of the higher-wage industries that are hiring, it's lower-wage occupations within the sector where the jobs are being added. Professional and business services sectors gained a healthy 366,000 jobs in 2010. Workers in that sector earned $27.23 an hour, on average, in 2010. But almost all of the new jobs -- 308,000 -- came in temporary help services, where the average hourly wage was only $15 an hour. Temporary jobs accounted for nearly one in four jobs created by all types of businesses last year.<ref name="Isidore_Jobs">Chris Isidore. [http://money.cnn.com/2011/01/31/news/economy/low_wage_job_growth/index.htm?hpt=C2 "Jobs are back! But the pay stinks"], ''CNNMoney.com'', January 31, 2011. Referenced 2011-02-02.</ref>

==References==
{{Reflist}}

==Links==
* The [[Wikipedia:Late-2000s recession|Late-2000s recession]] on Wikipedia
* [http://video.google.com/videoplay?docid=-2757699799528285056 Real Estate Roller Coaster] (video), history of home values, 1890-2006
* [http://mises.org/daily/3128 The Bailout Reader] by Mises.org, September 2008
* [http://mises.org/daily/4059 Illusions of the Age of Keynes] by Doug French, January 2010
* [http://www.independent.org/blog/index.php?p=5142 Anatomy of the Current Recession] by Robert Higgs, February 2010
* [http://mises.org/daily/4787 Bank Failures in Slow Motion] by Doug French, October 2010
* [http://mises.org/books/walkaway_french.pdf Walk Away: The Rise and Fall of the Home-Ownership Myth] (pdf) by Douglas E. French, 2010
* [http://www.anarcocapitalista.com/JHSLSE10.htm Financial Crisis and Economic Recession] by Professor Huerta de Soto, October 2010
* [http://mises.org/daily/4989 Can Austrian Theory Explain Construction Employment?] by Robert P. Murphy, January 2011

{{DEFAULTSORT:Great Recession, The}}
[[Category:History]]
[[Category:Issues]]
[[Category:Financial crises]]

Threat

2011-02-15T19:09:54Z

RayBirks: sp

A '''threat''' is the communication to a person of the [[intent]] of [[aggression]] against that person.

{{stub}}
[[Category:Concepts]]

Talk:Human Action

2011-02-13T21:18:57Z

RayBirks: new section

Human Action

2011-02-13T21:16:29Z

RayBirks: reduce TofC width

{{Italic title}}{{rightTOC|width=60%}}

'''''Human Action''''' is the magnum opus of [[Ludwig von Mises]], first published in 1949. It defined a large part of present [[Austrian Economics]].

<blockquote>"It is true that economics is a theoretical science and as such abstains from any judgment of value...Science never tells a man how he should act; it merely shows how a man must act if he wants to attain definite ends."<ref name="humanaction_intro_3">[[Ludwig von Mises]]. [http://mises.org/humanaction/introsec3.asp Introduction], 3. Introduction, [[Human Action]], online version, referenced 2011-02-05.</ref></blockquote>

== Part One: Human Action ==

===I. Acting Man===

<blockquote>''Main Article: [[Action]].''</blockquote>

The science of human action is called [[praxeology]]. Human action always involves [[opportunity cost]] and it is always ''purposeful''. <ref name="humanaction_ch1sec1">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap1sec1.asp I. Acting Man], 1. Purposeful Action and Animal Reaction, [[Human Action]], online version, referenced 2011-02-06.</ref>

===II. The Epistemological Problems of the Sciences of Human Action===

[[Ludwig von Mises]] takes the [[logical deductive]] approach to economics, as opposed to the [[empirical]] (or the [[logical positivist]] approach). Economic problems cannot be solved [[empirically]] because renunciation and long-term planning can not be seen. Humans act to attain definite ends--and economic phenomena can be understood as such.

<blockquote>"[[Praxeology]] is a theoretical and systematic, not a historical, science...It aims at knowledge valid for all instances in which the conditions exactly correspond to those implied in its assumptions and inferences. Its statements and propositions are not derived from experience. They are, like those of logic and mathematics, ''[[a priori]]''."<ref name="humanaction_ch2sec1">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap2sec1.asp II. Epistemological Problems of Human Action], 1. Praxeology and History, [[Human Action]], online version, referenced 2011-02-06.</ref></blockquote>

Like geometry, [[praxeology]] is not subject to disproof. This method may be called ''methodological apriorism''.<ref name="humanaction_ch2sec2">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap2sec2.asp II. Epistemological Problems of Human Action], 2. The Formal and Aprioristic Character of Praxeology, [[Human Action]], online version, referenced 2011-02-06.</ref>

===III. Economics and the Revolt Against Reason===

[[Mises]] dismisses the [[Historical School]], [[Hegel]] and [[Marx]] with it. In discussing the "bourgeois logic" and "bourgeois mentality" of [[Marx]], [[Mises]] is able to attack [[polylogism]] in general. There does not exist multiple logics, only differing interests and their logical conclusions--whether they are spurious or well-founded. [[Mises]] states with regard to the [[Historical School]], "History, in due time, will arrange everything for the best. It does not need the advice of mortal men."<ref name="humanaction_ch3sec1">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap3sec1.asp III. Economics and the Revolt Against Reason], 1. The Revolt Against Reason, [[Human Action]], online version, referenced 2011-02-06.</ref>

<blockquote>''See [[German Idealism]].''</blockquote>

===IV. A First Analysis of the Category of Action===

<blockquote>''Main Article: [[Value]]''</blockquote>

All actions are directed toward goals, aims or ends. The end, speaking generally, is always to remove a ''felt uneasiness''. Means are the ways by which we approach an end. Things in the world, when applied to our ends, become means and are commonly referred to as [[goods]].<ref name="humanaction_ch4sec1">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap4sec1.asp IV. A First Analysis of The Category of Action], 1. Ends and Means, [[Human Action]], online version, referenced 2011-02-06.</ref> Means are [[scare]], like time and oil.

Actions are reflective of our ''scale of [[values|value]]''. All things equal, we satisfy wants of higher [[value]] to us, and leave unsatisfied wants of lower [[value]] to us. Things in the world have no intrinsic [[value]], our actions give things [[value]].<ref name="humanaction_ch4sec2">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap4sec2.asp IV. A First Analysis of The Category of Action], 2. The Scale of Value, [[Human Action]], online version, referenced 2011-02-06.</ref>

Given that every action is an attempt to establish a more satisfactory state of affairs, viz., to remove a ''felt uneasiness'', all actions are in a sense an [[exchange]]. We [[exchange]] one state for another, hopefully better, state. Lastly, value judgments arrange wants, but do not measure them. They are expressive of sequence and order rather than of measurement and weight.<ref name="humanaction_ch4sec4">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap4sec4.asp IV. A First Analysis of The Category of Action], 4. Action as Exchange, [[Human Action]], online version, referenced 2011-02-06.</ref>

===V. Time===

Time is a [[praxeological]] category: all action is in time and is subject to time.<ref name="humanaction_ch5sec2">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap4sec4.asp V. Time], 2. Past, Present and Future, [[Human Action]], online version, referenced 2011-02-07.</ref>As humans, our time is [[scare]] and we must economize it accordingly. Our scales of [[value]] and therefore our actions are always with reference to time. As we will see later, time is important in the determination of [[interest]] and consumption.<ref name="humanaction_ch5sec3">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap5sec3.asp V. Time], 3. The Economization of Time, [[Human Action]], online version, referenced 2011-02-07.</ref>

===VI. Uncertainty===

All action is speculative. We never know exactly what will occur. The natural sciences make it possible to foretell results from specific actions. They do not make the future predictable.<ref name="humanaction_ch6sec1">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap6sec1.asp VI. Uncertainty], 1. Uncertainty and Acting, [[Human Action]], online version, referenced 2011-02-08.</ref> But, [[Mises]] tells us, probability is a primary concern of [[praxeology]].

He distingushish between two types of propability: [[class probability]] and [[case probability]].

<blockquote>"''[[Class probability]] means'': We know or assume to know, with regard to the problem concerned, everything about the behavior of a whole class of events or phenomena; but about the actual singular events or phenomena we know nothing but that they are elements of this class."<ref name="humanaction_ch6sec3">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap6sec3.asp VI. Uncertainty], 3. Class Probability, [[Human Action]], online version, referenced 2011-02-08.</ref>(emphasis added)</blockquote>

For example, car insurance works on the premise that with a large pool of policies, they can use class probability to decide upon an approriate premium given the ''class probability'' of accidents. But, they know nothing about the probability of the individual policy holder getting into an accident.

<blockquote>"''[[Case probability]]'' means: We know, with regard to a particular event, some of the factors which determine its outcome; but there are other determining factors about which we know nothing."<ref name="humanaction_ch6sec4">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap6sec4.asp VI. Uncertainty], 3. Case Probability, [[Human Action]], online version, referenced 2011-02-08.</ref>(emphasis added)</blockquote>

For example, foreign policy experts may make predictions about the settlement of foreign disputes. They are well informed but it is impossible for them to predict the outcome perfectly because they can not grasp all the data and all the opinions of individuals shaping decisions. Therefore, the may know some of the factors that will shape the future, but never perfectly.

For [[Mises]], we make decisions with incomplete knowledge. To say it again, all action is speculative in character. To this difficulty in decisions, specifically in social cooperation where selection occurs, competition serves as a function to select the most able person for specific positions. It assigns every member of society to the position where they best serve society.<ref name="humanaction_ch6sec6">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap6sec6.asp VI. Uncertainty], 6. Betting, Gambling, and Playing Games, [[Human Action]], online version, referenced 2011-02-08.</ref>

===VII. Action Within the World===

Each person possesses one scale of valuations, which is visible through action.<ref name="humanaction_ch7sec1">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap7sec1.asp VII. Action Within The World], 1. The Law of Marginal Utility, [[Human Action]], online version, referenced 2011-02-13.</ref> Goods and modes of action are chosen based on their utility, or their causal relevance for the removal of felt ''uneasiness''.<ref name="humanaction_ch7sec1"></ref> Here [[Mises]] discusses the [[paradox of value]]: why is ''gold'' more valuable than ''iron''? Despite the many uses of iron, gold is valued more on the market because of its value in exchange. Iron may have more technological prospects or ''objective use-value'' but it lacks ''subjective use-value'', that is, gold is valuable in exchange due to scarcity, appearance and its tradition as a form of money. [[Mises]], however, dismisses the question as one which never occurs in reality.<ref name="humanaction_ch7sec1"></ref>

The [[Law of Marginal Utility]] is implied by the category of action: If a supply increases from quantity ''n'' to ''n + 1'' the extra unit provides less utility than unit ''n''. This is because ''n'' is satisfying a more urgent want than unit ''n + 1''. Conversely, unit ''n + 1'' is satisfying a want less urgent than ''n'' because we satisfy more urgent wants first by their definition. Unit ''n'' is satisfying the more urgent want, ''n + 1'' is satisfying a less urgent want. Therefore, the [[law of marginal utility]], "does not deal primarily with the [[value]] of things, but with the [[value]] of the services a man expects to get from them."<ref name="humanaction_ch7sec1"></ref>

"[[Labor]]," says [[Mises]], "is preferred to leisure only insofar as the yield of [[labor]] is more urgently desired than the enjoyment of leisure."<ref name="humanaction_ch7sec3">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap7sec3.asp VII. Action Within The World], 3. Labor as Means, [[Human Action]], online version, referenced 2011-02-13.</ref> Work involves disutility. To this note, [[labor]] is more scarce than other material factors of production:

<blockquote>"In our world there is no abundance, but a shortage of manpower, and there are unused material factors of production, i.e. land, mineral deposits, and even plants and equipment."<ref name="humanaction_ch7sec3"></ref></blockquote>

Labor saving devices reduce want, they do not bring about "technological unemployment." Man economizes both labor and material factors.<ref name="humanaction_ch7sec3"></ref>

Action is successful it it produces the intended result: it produces the product. The human mind directs [[action]] with a purpose and production is creative. It is not something physical, natural, and external; it is a spiritual and intellectual phenomenon. All material actions within the world are a product of the mind. "In this sense," [[Mises]] tells us, "[[praxeology]] can be called a moral science."<ref name="humanaction_ch7sec4">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap7sec4.asp VII. Action Within The World], 4. Production, [[Human Action]], online version, referenced 2011-02-13.</ref>

== Part Two: Actions Within the Framework of Society ==

<ol style="list-style-type:upper-roman;" start="8">
<li> Human Society</li>
<li> The Role of Ideas</li>
<li> Exchange Within Society</li>
</ol>

== Part Three: Economic Calculation ==

<ol style="list-style-type:upper-roman;" start="11">
<li> Valuation Without Calculation</li>
<li> The Sphere of Economic Calculation</li>
<li> Monetary Calculation as a Tool of Action</li>
</ol>

== Part Four: Catallactics or Economics of the Market Society ==

<ol style="list-style-type:upper-roman;" start="15">
<li> The Market</li>
<li> Prices</li>
<li> Indirect Exchange</li>
<li> '''Action in the Passing of Time'''</li>
For humans considering [[action]], time matters: there is a ''too late'' and a ''too early''. [[Time preferences]] affect all action (see [[Value]]).<ref name="mises_action_in_passage_of_time_2">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap18sec2.asp XVIII. Action in the Passing of Time], 2. Time Preference as an Essential Requisite of Action, [[Human Action]], online version, referenced 2011-02-04.</ref>

Postponements of consumption, or [[saving]], is always embodied in concrete goods. "The act of saving," [[Mises]] tells us, "always has its counterpart in a supply of goods produced and not consumed...Man's savings are always embodied in concrete capital goods."<ref name="mises_action_in_passage_of_time_3">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap18sec9.asp XVIII. Action in the Passing of Time], 9. Money and Capital; Saving and Investment, [[Human Action]], online version, referenced 2011-02-08.</ref>

The discussion of [[time preference]], and the postponment of consumption, is a lead in to [[interest]].

<li> '''Interest'''</li>

Time preference manifests itself in the phenomenon of [[originary interest]], i.e., the discount of future goods as against present goods.<ref name="mises__human_action_chap19sec1">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap19sec1.asp XIX. The Rate of Interest], The Phenomenon of Interest, [[Human Action]], online version, referenced 2011-02-13.</ref> Originary interest is a ratio, like profit and loss, and not a price.<ref name="mises__human_action_chap19sec2">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap19sec2.asp XIX. The Rate of Interest], Originary Interest, [[Human Action]], online version, referenced 2011-02-13.</ref> It is the ratio between the value assigned to presents goods against the value assigned to future goods. This discounting explains, for example, the reason why there is finite prices on usable land:

<blockquote>"If the future services which a piece of land can render were to be valued in the same way in which its present services are valued, no finite price would be high enough to impel its owner to sell it."<ref name="mises__human_action_chap19sec2"></ref></blockquote>

We [[discount]] future services and [[goods]] because of [[time preference]]. The fact that we can purchase land which is usable into the foreseeable future is proof of this. Furthermore, [[originary interest]] is not determined by supply and demand of [[loanable funds]]. Time preference, manifesting in the discount of future goods against present goods (i.e., originary interest) determines both the demand and supply of capital and capital goods.<ref name="mises__human_action_chap19sec2"></ref>

Interest rates in loans, in a changing economy, always have an element of entrepreneurial profit. The lender, taking a risk and and making a prediciton about the future state of the market, is engaging in an entrepreneurial venture. Therefore, interest rates on loans are never pure [[originary interest]] but also entrepreneurial profit.<ref name="mises__human_action_chap19sec4">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap19sec4.asp XIX. The Rate of Interest], Originary Interest in the Changing Economy, [[Human Action]], online version, referenced 2011-02-13.</ref>

<li> Interest, Credit Expansion, and the Trade Cycle</li>
<li> Work and Wages</li>
<li> The Nonhuman Original Factors of Production</li>
<li> The Data of the Market</li>
<li> Harmony and Conflict of Interests</li>
</ol>

== Part Five: Social Cooperation Without a Market ==

<ol style="list-style-type:upper-roman;" start="25">
<li> The Imaginary Construction of a Socialist Society</li>
<li> The Impossibility of Economic Calculation Under Socialism</li>
</ol>

== Part Six: The Hampered Market Economy ==

<ol style="list-style-type:upper-roman;" start="27">
<li> The Government and the Market</li>
<li> Interference by Taxation</li>
<li> Restriction of Production</li>
<li> Interference with the Structure of Prices</li>
<li> Currency and Credit Manipulation</li>
<li> Confiscation and Redistribution</li>
<li> Syndicalism and Corporativism</li>
<li> The Economics of War</li>
<li> The Welfare Principle Versus the Market Principle</li>
<li> The Crisis of Interventionism</li>
</ol>

== Part Seven: The Place of Economics in Society ==
<ol style="list-style-type:upper-roman;" start="38">
<li> The Nondescript Character of Economics</li>
<li> The Place of Economics in Learning</li>
<li> Economics and the Essential Problems of Human Existence</li>
</ol>

==References==
{{Reflist}}

==Links==
''{{Store|http://www.mises.org/store/Human-Action-The-Scholars-Edition-P119.aspx|Human Action (Scholar's Edition)}}''
* ''[http://www.mises.org/resources/3250 Human Action]'' complete text ([http://mises.org/humanaction/pdf/humanaction.pdf pdf])
* ''[http://mises.org/media.aspx?action=category&ID=139 Human Action]'' audiobook, read by Jeff Riggenbach
* ''[http://www.mises.org/books/humanactionstudy.pdf Human Action Study Guide]''(pdf), also [http://www.mises.org/store/Human-Action-Study-Guide-P547.aspx for sale]
* ''[[Wikipedia:Human Action|Human Action]]'' on Wikipedia

{{See also|Human Action Comics}}
[[Category:Writings of Ludwig von Mises]]
[[Category:Writings on economics]]

{{stub}}

Talk:Secession

2011-02-12T18:21:08Z

RayBirks: start Talk page

==Categories for Secession==
Added several at this early stage (Concepts; Governments; Ideologies; Issues). There is some overlap, as secession seems relevant in many areas. Certainly adjust categories as is most meaningful. Great start to a great topic! -- [[User:RayBirks|RayBirks]] 12:21, 12 February 2011 (CST)

Secession

2011-02-12T18:18:29Z

RayBirks: wikify; ital title; set off quote; add cats

'''Secession''' is the voluntary assertion of a people for separation from a higher government, historically resulting from a series of grievances. It is a central idea in the [[Classical liberalism|classical liberal]] understanding of political order, as elucidated by [[Ludwig von Mises]] in ''[http://mises.org/nsande.asp Nation, State, and Economy]'' (1919): <blockquote>No people and no part of a people shall be held against its will in a political association that it does not want.</blockquote>
{{stub}}
[[Category:Concepts]]
[[Category:Governments]]
[[Category:Ideologies]]
[[Category:Issues]]

Property

2011-02-10T03:03:26Z

RayBirks: /* Creation of property */ clarity & wikify

{{stub}}
A property is a [[Scarcity|scarce]] resource.

==Creation of property==
It is often assumed that property is created whenever [[labor]] yields a result, tangible or intangible. A possible reason why this assumption is made is because an important distinction is ignored: the distinction between the ''creation of'' property and the method of determining who owns what is ''already considered to be'' property. Most libertarians would argue that the first person to "mix their labor" with previously unowned or presently abandoned property is indeed its rightful owner, but this says nothing about how property is created, only how it is acquired.

"Why are tangible goods property? A little reflection will show that it is these goods’ [[scarcity]]—the fact that there can be conflict over these goods by multiple human [[Action|actors]]. The very possibility of conflict over a resource renders it scarce, giving rise to the need for ethical rules to govern its use. Thus, the fundamental social and ethical function of property rights is to prevent interpersonal conflict over scarce resources."<ref name="Stephan Kinsella">[[Stephan Kinsella]], ''[[Against Intellectual Property]]''.</ref>

==References==
{{reflist}}

[[Category:Economic concepts]]

Time preference

2011-02-09T17:17:55Z

RayBirks: move TofC to the upper right corner

{{TOC right}}
{{Stub}}

'''Time preference''' is the assumption that all people prefer a given end to be achieved sooner rather than later. In the Misesian school it is derived from the assumption about [[human action]]. If people did not prefer to attain their ends sooner rather than later they would never act. The further in the future the attainment of the end appears to be, the less preferable it is. The less waiting [[time]], the more preferable is the end.

It may be called the preference for present satisfaction over future satisfaction or present good over future good, provided the same satisfaction (or [[good]]) is compared over periods of time.<ref name="Rothbard_Time">Murray N. Rothbard. [http://mises.org/rothbard/mes/chap1b.asp "4. Further Implications: Time"], Chapter 1-Fundamentals of Human Action, ''[[Man, Economy and State]]'', online edition, referenced 2010-01-10</ref>

==Preference for future goods==
It is sometimes objected that goods in the future may be preferred to the same good in the present. For example, in winter, a man will care little for ice, but would prefer it in the summer. But a [[good]] is not an item with certain material properties; this is merely a convenient description for goods under most circumstances. However, a good is identified by its function and extent of the satisfaction it provides. As the good "ice-in-the-summer" provides different (and greater) satisfactions than "ice-in-the-winter", they are different goods. In this case, different goods are being compared, even though ice has the same physical composition whether in winter or summer. <ref name="Rothbard_Time" />

==Savings and Time preference==
To enjoy greater [[consumption]], man must extend his [[Production|productivity]] first. Since acquiring the increased productivity comes with a cost — namely, time spent away from using the old method of production and consumption — there must be some means of paying that cost. This is the role of [[saving]]s. Some people have refrained from consumption in the past so that others can be sustained and create the new structure.

Savings remain key to this process of capital construction, and it is the time preference, that manifests itself in savings. Time preference is the extent to which people value current consumption over future consumption. If people enjoy current consumption so much, that the promise of an increased future consumption cannot bring them to save (and sacrifice the current level of consumption), the production will not be improved.

The thrust of the [[Austrian Business Cycle Theory]] is that credit inflation distorts this process, by making it appear that more means exist for current production than are actually sustainable. Since this is in fact an illusion, the endeavors of entrepreneurs to create a structure of production not reflecting actual consumer time preferences (as manifested in available savings for the purchase of producer goods) must end in failure.<ref name="Mahoney_preference">Dan Mahoney. [http://mises.org/story/672 "Austrian Business Cycle Theory: A Brief Explanation"], Mises Daily, May 07 2001, referenced 2010-01-10.</ref>

==Time Preference and the Process of Civilization==
[[Hans-Hermann Hoppe]] states in his 2001 ''[[Democracy: The God That Failed]]'' that a time preference low enough to allow for production of capital goods initiates the “process of civilization” - a positive feedback loop where time preferences perpetually decrease due to the accumulation of capital, the increase of the relative value of future goods, the further [[Labor#Division of Labor|division of labor]], and lengthening of life expectancies.<ref name="Hoppe6">Hoppe, Hans-Hermann. ''Democracy: The God that Failed: The Economics and Politics of Monarchy, Democracy, and Natural Order'' (Transaction Publishers, 2001), 6-7.</ref> This process will continue indefinitely, as long as private property is respected.<ref name="Hoppe10">Hoppe, ''Democracy: The God that Failed'', 10.</ref> [[Intervention|State violations of property rights]] are continuous and perpetual, therefore the state acts as a de-civilizing force upon society.<ref name="Hoppe13">Hoppe, ''Democracy: The God that Failed'', 13.</ref>

==References==
{{Reflist}}

==External links==
* [[Wikipedia:Time preference|Time preference]] on Wikipedia
* [http://mises.org/daily/4011 Of Time and Marshmallows] by J. Grayson Lilburne
* [http://www.newyorker.com/reporting/2009/05/18/090518fa_fact_lehrer?currentPage=all Don’t! The secret of self-control.] by Jonah Lehrer. A study on time-preference.
* [http://mises.org/daily/4212 Some Applications of the Time-Preference Theory] by Ludwig von Mises
[[Category:Economic concepts]]

Time preference

2011-02-09T17:16:22Z

RayBirks: /* Time Preference and the Process of Civilization */ wikify

{{Stub}}

'''Time preference''' is the assumption that all people prefer a given end to be achieved sooner rather than later. In the Misesian school it is derived from the assumption about [[human action]]. If people did not prefer to attain their ends sooner rather than later they would never act. The further in the future the attainment of the end appears to be, the less preferable it is. The less waiting [[time]], the more preferable is the end.

It may be called the preference for present satisfaction over future satisfaction or present good over future good, provided the same satisfaction (or [[good]]) is compared over periods of time.<ref name="Rothbard_Time">Murray N. Rothbard. [http://mises.org/rothbard/mes/chap1b.asp "4. Further Implications: Time"], Chapter 1-Fundamentals of Human Action, ''[[Man, Economy and State]]'', online edition, referenced 2010-01-10</ref>

==Preference for future goods==
It is sometimes objected that goods in the future may be preferred to the same good in the present. For example, in winter, a man will care little for ice, but would prefer it in the summer. But a [[good]] is not an item with certain material properties; this is merely a convenient description for goods under most circumstances. However, a good is identified by its function and extent of the satisfaction it provides. As the good "ice-in-the-summer" provides different (and greater) satisfactions than "ice-in-the-winter", they are different goods. In this case, different goods are being compared, even though ice has the same physical composition whether in winter or summer. <ref name="Rothbard_Time" />

==Savings and Time preference==
To enjoy greater [[consumption]], man must extend his [[Production|productivity]] first. Since acquiring the increased productivity comes with a cost — namely, time spent away from using the old method of production and consumption — there must be some means of paying that cost. This is the role of [[saving]]s. Some people have refrained from consumption in the past so that others can be sustained and create the new structure.

Savings remain key to this process of capital construction, and it is the time preference, that manifests itself in savings. Time preference is the extent to which people value current consumption over future consumption. If people enjoy current consumption so much, that the promise of an increased future consumption cannot bring them to save (and sacrifice the current level of consumption), the production will not be improved.

The thrust of the [[Austrian Business Cycle Theory]] is that credit inflation distorts this process, by making it appear that more means exist for current production than are actually sustainable. Since this is in fact an illusion, the endeavors of entrepreneurs to create a structure of production not reflecting actual consumer time preferences (as manifested in available savings for the purchase of producer goods) must end in failure.<ref name="Mahoney_preference">Dan Mahoney. [http://mises.org/story/672 "Austrian Business Cycle Theory: A Brief Explanation"], Mises Daily, May 07 2001, referenced 2010-01-10.</ref>

==Time Preference and the Process of Civilization==
[[Hans-Hermann Hoppe]] states in his 2001 ''[[Democracy: The God That Failed]]'' that a time preference low enough to allow for production of capital goods initiates the “process of civilization” - a positive feedback loop where time preferences perpetually decrease due to the accumulation of capital, the increase of the relative value of future goods, the further [[Labor#Division of Labor|division of labor]], and lengthening of life expectancies.<ref name="Hoppe6">Hoppe, Hans-Hermann. ''Democracy: The God that Failed: The Economics and Politics of Monarchy, Democracy, and Natural Order'' (Transaction Publishers, 2001), 6-7.</ref> This process will continue indefinitely, as long as private property is respected.<ref name="Hoppe10">Hoppe, ''Democracy: The God that Failed'', 10.</ref> [[Intervention|State violations of property rights]] are continuous and perpetual, therefore the state acts as a de-civilizing force upon society.<ref name="Hoppe13">Hoppe, ''Democracy: The God that Failed'', 13.</ref>

==References==
{{Reflist}}

==External links==
* [[Wikipedia:Time preference|Time preference]] on Wikipedia
* [http://mises.org/daily/4011 Of Time and Marshmallows] by J. Grayson Lilburne
* [http://www.newyorker.com/reporting/2009/05/18/090518fa_fact_lehrer?currentPage=all Don’t! The secret of self-control.] by Jonah Lehrer. A study on time-preference.
* [http://mises.org/daily/4212 Some Applications of the Time-Preference Theory] by Ludwig von Mises
[[Category:Economic concepts]]

Utilitarianism

2011-02-07T11:48:27Z

RayBirks: add cat

{{stub}}

'''Utilitarianism''' is the moral doctrine which holds that, "actions are right in proportion as they tend to promote happiness; wrong as they tend to produce the reverse of happiness."<ref name="Mill_what_utilitarianism_is">[[John Stuart Mill]] [http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=241&chapter=21504&layout=html&Itemid=27 ''Utilitarianism''] II. What Utilitarianism Is, [[Utilitarianism]], online version, referenced 2-7-2011</ref> In ''Utilitarianism'', [[John Stuart Mill]] defends the principle that, "pleasure and freedom from pain are the only thing desirable as ends," because they make up the happy life.<ref name="Mill_what_utilitarianism_is"></ref>

<blockquote>"The Utilitarian doctrine is that happiness is desirable, and the only thing desirable, as an end; all other things being desirable as a means to that end."<ref name="Mill_2">[[John Stuart Mill]] [http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=241&chapter=21508&layout=html&Itemid=27 ''Utilitarianism''] IV. OF What Sort of Proof The Principle of Utility Is Susceptible, [[Utilitarianism]], online version, referenced 2-7-2011</ref> - [[John Stuart Mill]]</blockquote>

==References==
{{reflist}}

[[Category:Ideologies]]

Talk:History of economic thought

2011-02-07T04:32:51Z

RayBirks: start Talk page

==Economic thought as its own category==
I added the general category of "History" to this article, but perhaps we should consider a History sub-category entitled "History of economic thought". It seems rather broad and may overlap other categories. If anyone has opinions on this potential new category, please chime in. -- [[User:RayBirks|RayBirks]] 22:32, 6 February 2011 (CST)

History of economic thought

2011-02-07T04:29:11Z

RayBirks: /* References */ add category History (but see this Talk page)

{{Stub}}

The '''History of Economic Thought''' is the history of political economic theory.

To quote [[Ludwig von Mises]]:

<blockquote>Economics is the youngest of all sciences. In the last two hundred years, it is true, many new sciences have emerged from the disciplines familiar to the ancient Greeks. However, what happened here was merely that parts of knowledge which had already found their place in the complex of the old system of learning now became autonomous. The field of study was more nicely subdivided and treated with new methods; hitherto unnoticed provinces were discovered in it, and people began to see things from aspects different from those of their precursors. The field itself was not expanded. But economics opened to human science a domain previously inaccessible and never thought of. The discovery of a regularity in the sequence and interdependence of market phenomena went beyond the limits of the traditional system of learning. It conveyed knowledge which could be regarded neither as logic, mathematics, psychology, physics, nor biology.<ref name="Mises_economics_in_history">Ludwig von Mises [http://mises.org/humanaction/introsec1.asp "Introduction, 1. Economics and Praxeology"], ''[[Human Action]]'', online edition, referenced 2010-02-05.</ref></blockquote>

Systematic treatments of logic, psychology, and biology were given as early as the 4th century B.C.<ref name="Aristotle">In [[Aristotle]]'s ''Organon'', ''De Anima'', and biological works</ref> The sciences of mathematics and physics are even older.<ref name="math_physics">Systematic treatments of mathematics were given by the ancient Egyptians and Babylonians. Systematic treatments of physics were given by the pre-socratic philosophers.</ref> Since ancient times, writers have made fragmentary insights into praxeological and economic considerations. However, economics as a science did not emerge until Richard Cantillon's ''Essai Sur La Nature Du Commerce En Général'' (written in 1730, and published in 1755), which was the first unitary and systematic treatment of the market process.

==References==
<references />
[[Category:History]]

United States Constitution

2011-02-07T04:24:55Z

RayBirks: /* Amendments */ clarity

{{TOC right}}
The '''Constitution of the United States''' is the agreement that formed the current [[United States of America]]. It replaced the [[Articles of Confederation]]. It was drafted in 1787, and entered into force with the ratification of New Hampshire on June 21, 1788.

==Ratification==
{{Ratification of the Constitution}}

The Constitution stipulates that in order for it to enter into force, nine of the thirteen states had to approve it, as opposed to unanimous agreement required by the Articles of Confederation.

The ninth state to agree to the Constitution was New Hampshire, on June 21, 1788. Eventually, all thirteen states ratified, but three of them—Virginia, New York, and Rhode Island—did so by small majorities and included the stipulation that the state could at some time in the future revoke its ratification. Virginia's ratification document said:
{{quote|The powers granted under the Constitution, being derived from the people of the United States, may be resumed by them, whensoever the same shall be perverted to their injury or oppression, and that ever power not granted thereby remains with them, and at their will.<ref>{{cite book|last1=Elliot|first1=Jonathan|title=Debates in the Several State Conventions on the Adoption of the Federal Constitution|year=1836 |volume=1|page=327|url=http://en.wikisource.org/wiki/Ratifications_of_the_Constitution_of_the_United_States/Virginia}}</ref>}}

==Interpretations==
By the early 19th century, two schools of thought regarding interpretation of the Constitution had developed, commonly referred to as the "Nationalist" theory and the "Compact" theory.

===Nationalist theory===
The Nationalist theory argues that the Constitution formed a sovereign nation, under which the states are subordinate in power to the federal government. Thus, the powers of secession and nullification, according to the theory, are unconstitutional.

Prominent advocates of the Nationalist theory include [[Alexander Hamilton]], [[John Marshall]], [[Daniel Webster]], and [[Abraham Lincoln]].

===Compact theory===
The Compact theory argues that the Constitution was a compact, that is, the voluntary agreement of thirteen sovereign states to create a general government to take on specific roles. According to the theory, the compact was voluntary and the states retain their sovereignty, so any state has the right, under the Constitution, to secede from the Union. Some proponents of the Compact theory also argued that nullification, that is, a state's refusal to obey a law of the general government, was also constitutional.

Prominent advocates of the Compact theory include [[Thomas Jefferson]], [[Abel P. Upshur]], and [[Jefferson Davis]].

===Other interpretations===
[[Lysander Spooner]] argued in his 1867 work ''[[No Treason]]'' that the Constitution is not a valid contract. As a result, no individual could be bound by it except those few individuals who actually signed the original document.

==Amendments==
Since its original ratification, the Constitution has been officially amended 27 times. The first 10 of these 27 amendments are collectively known as the [[Bill of Rights]].

==References==
<references />

[[Category:History of the United States]]

User talk:Huckelberry

2011-02-07T04:18:03Z

RayBirks: /* Another welcome */ mea culpa

{{TOC right}}
==Welcome!==

Hello, Huckelberry, and welcome to the [[MisesWiki:About|Mises Wiki]]! Thanks for signing up – we're glad to have you! If you need help [[Help:Getting started|getting started]], take a look at our [[Help:Contents|help pages]].

Community discussion takes place at the [[MisesWiki:Commons|MisesWiki Commons]], so feel free to post any questions you might have there or on my talk page. Please sign your messages on talk and discussion pages using four tildes (<nowiki>~~~~</nowiki>); this will automatically insert your username and the date. Again, welcome! --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 17:54, 5 February 2011 (CST)

==Capital goods==
Hallo, Huckelberry, I noticed you have made several good economic pages, big thanks for that! The page on Capital goods was already covered by [[Capital]], so I've turned it into a redirect; hope you don't mind that. Please let me know if anything was left out on that page! [[User:Pestergaines|Pestergaines]] 13:53, 6 February 2011 (CST)

:Not at all! I noticed that after I had finished it--it was a good exercise nevertheless. [[User:Huckelberry|Huckelberry]] 14:03, 6 February 2011 (CST)

==Another welcome==
Huckelberry, you are off to a great start! Welcome to the group. (I did some slight cleanup to your talk page. Hope that's ok.) -- [[User:RayBirks|RayBirks]] 15:10, 6 February 2011 (CST)

:Thanks! Its good to be here. And of course, your cleaning/editing make for good learning. [[User:Huckelberry|Huckelberry]] 15:18, 6 February 2011 (CST)

::And, my apologies for misspelling the verb ''wikify'' earlier on my edit summary for [[Evenly Rotating Economy]], as I may have gotten you off on the wrong foot. When I used the '''Show preview''' button to check that edit, I forgot to proofread what I had typed in the edit '''Summary''' box. To ''wikify'' is, of course, to supply the set of double square brackets <nowiki>"[["</nowiki> and <nowiki>"]]"</nowiki> around a term so that it can link to another entry somewhere else on the wiki. I will try to pay even more attention to detail in the future. Meantime, keep up the great work! -- [[User:RayBirks|RayBirks]] 22:18, 6 February 2011 (CST)

Principles of Political Economy and Taxation

2011-02-06T23:27:56Z

RayBirks: /* Links */ add cat

{{Italic title}}{{stub}}

'''''Principles of Political Economy and Taxation''''' is a book by [[David Ricardo]] first published 1817. It is notable for the first explication of [[comparative advantage]].

== Links ==
* [http://books.google.com/books?id=iUUJAAAAQAAJ&printsec=frontcover&dq=david+ricardo&hl=en&ei=oR5PTay4OYa-sAOl9Y34Cg&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCcQ6AEwAA#v=onepage&q&f=false Principles of Political Economy and Taxation] by David Ricardo
{{stub}}
[[Category:Writings on economics]]

German Idealism

2011-02-06T23:25:55Z

RayBirks: add cat

{{stub}}

[[Ludwig von Mises]] was, to a large extent, likely discussing '''German Idealism''' when he wrote:

<blockquote>"Philosophers had long since been eager to ascertain the ends which God or Nature was trying to realize in the course of human history. They searched for the law of mankind's destiny and evolution. But even those thinkers whose inquiry was free from any theological tendency failed utterly in these endeavors because they were committed to a faulty method. They dealt with humanity as a whole or with other holistic concepts like nation, race, or church. They set up quite arbitrarily the ends to which the behavior of such wholes is bound to lead. But they could not satisfactorily answer the question regarding what factors compelled the various acting individuals to behave in such a way that the goal aimed at by the whole's inexorable evolution was attained. They had recourse to desperate shifts: miraculous interference of the Deity either by revelation or by the delegation of God-sent prophets and consecrated leaders, preestablished harmony, predestination, or the operation of a mystic and fabulous "world soul" or "national soul." Others spoke of a "cunning of nature" which implanted in man impulses driving him unwittingly along precisely the path Nature wanted him to take."<ref name="Mises_endsofnature">Ludwig von Mises [http://mises.org/humanaction/introsec1.asp "Introduction, 1. Economics and Praxeology"], ''[[Human Action]]'', online edition, referenced 2010-02-05.</ref></blockquote>

"Cunning of nature" is a Hegelian interpretation of Immanuel Kant's "plan of nature" doctrine. "World soul" refers to G.W.F. Hegel's ''weltgeist'' (world spirit) doctrine. According to Mises, Hegel purported to be a kind of prophet of the ''weltgeist''. "National soul" refers to the ''volksgeist'' doctrine, also propounded by Hegel.

Mises considered these doctrines unsound, because he considered it nonsensical to posit trans-individual ends. Only individuals act, and therefore only individuals have ends. This is the principle of [[methodological individualism]].

<references/>
[[Category:Ideologies]]

User talk:Huckelberry

2011-02-06T21:10:35Z

RayBirks: another welcome

Accounting

2011-02-06T19:33:10Z

RayBirks: offset equation, due to its importance and vast misunderstanding

'''Accounting''' is the method by which an organization measures the use of [[assets]] and [[liabilities]] against [[money]]. It is an indispensable tool and prerequisite to modern day capitalism.<ref name="weber">[[Max Weber]], ''General Economic History'', trans. Frank H. Knight (New York, NY: Collier Books, 1961) 208-209</ref> Double book entry accounting is a method by which every economic action must affect two accounts so that they balance in the equation:<blockquote>'''Assets - Liabilities = Equity'''</blockquote>.
== Recent Developments ==

Modern day capital accounting in the [[United States]] is under the standard Generally Accepted Accounting Principles (GAAP). The Securities and Exchange Commission ([[SEC]]) has proposed a movement to international financial reporting standards or [[IFRS]].

[[Economic calculation]] directs the actions of individual business persons. "Economic logic prevails over the technological," says Schumpeter.<ref name="schumpeter_economic_logic">[[Joseph Schumpeter]], ''The Theory of Economic Development'', trans. Redvers Opie (Cambridge, Massachusetts: Harvard University Press, 1961) 14</ref> The transition to a world standard of accounting may impart some benefits, for example: "...in more efficient functioning of [[capital markets]] and a lower [[cost of capital]] for the economy as a whole." <ref name="SFAC_8">Statement of Financial Accounting Concepts, No. 8 [http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175821997186&blobheader=application/pdf] QC37</ref> In sum, the method of economic calculation has importance in economic analysis.

==References==
{{Reflist}}

{{Stub}}
[[Category:Economic concepts]]

Consumer

2011-02-06T19:22:18Z

RayBirks: /* Sovereignty of the Consumer */ fix word

In economics, the '''consumer''' is the individual or household who purchases [[goods]] and [[services]].

==Sovereignty of the Consumer==

All business persons are subject to the sovereignty of the consumer. As soon as an [[entrepreneur]] or [[capitalist]] ceases to serve the consumer better than his peers, he loses his position and suffers losses. To quote [[Ludwig von Mises]]:

<blockquote>"[Consumers] buying and their abstention from buying decides who should own and run the plants and the farms. They make poor people rich and rich people poor. They determine precisely what should be produced, in what quality, and in what quantities...Only the sellers of [[goods and services of the first order]] are in direct contact with the consumers and directly depend on their orders. But they transmit the orders received from the public to all those producing [[goods and services of the higher orders]]...The consumer is in a position to give free rein to his caprices and fancies. The [[entrepreneurs]], [[capitalists]], and farmers have their hands tied; they are bound to comply in their operations with the orders of the buying public."<ref name="humanaction_consumer_sovereignty">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap15sec4.asp XV. Market], 4. The Sovereignty of the Consumers, [[Human Action]], online version, referenced 2011-02-05.</ref></blockquote>

==References==
{{Reflist}}

{{Stub}}
[[Category:Economic concepts]]

Thales

2011-02-05T19:29:28Z

RayBirks: cat & misc.

{{Stub}}

'''Thales''' (c. 624 - c. 545 BC) was an ancient [[Greece|Greek]] natural philosopher, astronomer, and mathematician. He has been credited as being the founder of natural philosophy (and philosophy in general) as well as [[Geometry|geometry]].

[[Category:Philosophers]]

Evenly Rotating Economy

2011-02-05T19:24:09Z

RayBirks: wikiy; cat; clarity

The '''Evenly Rotating Economy''' is a fictitious system in which there are no [[price]] changes whatever--i.e., there is perfect price stability. The concept is used to illustrate the function of [[Entrepreneur|entrepreneurship]] and to demonstrate meaning of [[profit]] and [[loss]] by hypothesizing a system where they are absent.<ref name="Mises_evenly_rotating_economy">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap14sec5.asp XV. The Scope and Method of Catallactics], 5. The State of Rest and the Evenly Rotating Economy, [[Human Action]], online version, referenced 2011-02-05.</ref>

On the ''evenly rotating economy'', [[Ludwig von Mises]] writes:

<blockquote>"The same market transactions are repeated again and again. The goods of the higher orders pass in the same quantities through the same stages of processing until ultimately the produced consumers' goods come into the hands of the consumers and are consumed. No changes in the market data occur. Today does not differ from yesterday and tomorrow will not differ from today...Therefore prices--commonly called static or [[equilibrium]] prices--remain constant too."<ref name="Mises_evenly_rotating_economy">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap14sec5.asp XV. The Scope and Method of Catallactics], 5. The State of Rest and the Evenly Rotating Economy, [[Human Action]], online version, referenced 2011-02-05.</ref></blockquote>

==References==
{{Reflist}}

{{Stub}}
[[Category:Economic concepts]]

Human Action

2011-02-03T20:58:51Z

RayBirks: /* Links */ italicize books titles

{{Italic title}}{{Stub}} __NOTOC__ 

'''''Human Action''''' is the magnum opus of [[Ludwig von Mises]], first published in 1949. It defined a large part of present [[Austrian Economics]].

==Contents==
=== Part One: Human Action ===

<ol style="list-style-type:upper-roman;">
<li> Acting Man</li>
<li> The Epistemological Problems of the Sciences of Human Action</li>
<li> Economics and the Revolt Against Reason</li>
<li> A First Analysis of the Category of Action</li>
<li> Time</li>
<li> Uncertainty</li>
<li> Action Within the World</li>
</ol>

=== Part Two: Actions Within the Framework of Society ===

<ol style="list-style-type:upper-roman;" start="8">
<li> Human Society</li>
<li> The Role of Ideas</li>
<li> Exchange Within Society</li>
</ol>

=== Part Three: Economic Calculation ===

<ol style="list-style-type:upper-roman;" start="11">
<li> Valuation Without Calculation</li>
<li> The Sphere of Economic Calculation</li>
<li> Monetary Calculation as a Tool of Action</li>
</ol>

=== Part Four: Catallactics or Economics of the Market Society ===

<ol style="list-style-type:upper-roman;" start="15">
<li> The Market</li>
<li> Prices</li>
<li> Indirect Exchange</li>
<li> Action in the Passing of Time</li>
<li> Interest</li>
<li> Interest, Credit Expansion, and the Trade Cycle</li>
<li> Work and Wages</li>
<li> The Nonhuman Original Factors of Production</li>
<li> The Data of the Market</li>
<li> Harmony and Conflict of Interests</li>
</ol>

=== Part Five: Social Cooperation Without a Market ===

<ol style="list-style-type:upper-roman;" start="25">
<li> The Imaginary Construction of a Socialist Society</li>
<li> The Impossibility of Economic Calculation Under Socialism</li>
</ol>

=== Part Six: The Hampered Market Economy ===

<ol style="list-style-type:upper-roman;" start="27">
<li> The Government and the Market</li>
<li> Interference by Taxation</li>
<li> Restriction of Production</li>
<li> Interference with the Structure of Prices</li>
<li> Currency and Credit Manipulation</li>
<li> Confiscation and Redistribution</li>
<li> Syndicalism and Corporativism</li>
<li> The Economics of War</li>
<li> The Welfare Principle Versus the Market Principle</li>
<li> The Crisis of Interventionism</li>
</ol>

=== Part Seven: The Place of Economics in Society ===
<ol style="list-style-type:upper-roman;" start="38">
<li> The Nondescript Character of Economics</li>
<li> The Place of Economics in Learning</li>
<li> Economics and the Essential Problems of Human Existence</li>
</ol>

==Links==
''{{Store|http://www.mises.org/store/Human-Action-The-Scholars-Edition-P119.aspx|Human Action (Scholar's Edition)}}''
* ''[http://www.mises.org/resources/3250 Human Action]'' complete text ([http://mises.org/humanaction/pdf/humanaction.pdf pdf])
* ''[http://mises.org/media.aspx?action=category&ID=139 Human Action]'' audiobook, read by Jeff Riggenbach
* ''[http://www.mises.org/books/humanactionstudy.pdf Human Action Study Guide]''(pdf), also [http://www.mises.org/store/Human-Action-Study-Guide-P547.aspx for sale]
* ''[[Wikipedia:Human Action|Human Action]]'' on Wikipedia

{{See also|Human Action Comics}}
[[Category:Writings of Ludwig von Mises]]
[[Category:Writings on economics]]

Great Depression

2011-02-01T20:35:08Z

RayBirks: /* Prelude */ wikify

{{RightTOC}}
The '''Great Depression''' was the longest and most severe economic depression ever experienced by the Western world.<ref name="Britannica_debt">Encyclopædia Britannica. [http://www.britannica.com/EBchecked/topic/243118/Great-Depression "Great Depression"], Encyclopædia Britannica Online, referenced 2010-06-12.</ref>

==Prelude==
From June 1914 to January 1920, when [[Demand deposits|demand deposits]] grew by 96.9 percent, [[Time deposits|time deposits]] rose by 126.1 percent. In the great boom of the 1920s, that started after the [[Wikipedia:Depression of 1920–21|recession of 1920–21]] (a short recession, thanks to the budget cutting and lowering of taxes by [[Wikipedia:Warren Harding|Warren Harding]]<ref name="Woods_Harding">Thomas E. Woods, Jr. [http://www.firstprinciplesjournal.com/articles.aspx?article=1322&theme=home&loc=b "Warren Harding and the Forgotten Depression of 1920"], First Principles, Fall 2009 issue of The Intercollegiate Review. See also the [http://www.youtube.com/watch?v=czcUmnsprQI video]. Referenced 2009-10-11.</ref>), total demand deposits rose from 1921 to 1929 by 36.5 percent. Time deposits in banks expanded in the same period by 75.9 percent. The great boom of the 1920s (also called "[[Wikipedia:Roaring Twenties|Roaring Twenties]]") was largely fueled by credit expansion going into time deposits. The greatest expansion of time deposits came in Central Reserve Cities (New York and Chicago), where the [[Federal Reserve System|Fed]]’s open market operations were all conducted, as opposed to Reserve Cities and Country Banks. As acknowledged by Federal Reserve officials, time or savings deposits were then, for all practical purposes, equivalent to demand deposits and should be paid on demand in case of a run on a bank.

With the passage of the [[Federal Reserve Act]], [[Woodrow Wilson|President Wilson]] appointed [[Benjamin Strong, Jr.|Benjamin Strong]] to the most powerful post in the Federal Reserve System, Governor of the [[Reserve Bank of New York|Federal Reserve Bank of New York]]. He made quickly this position dominant in the System and decided on Fed policy without consulting or even against the wishes of the Federal Reserve Board in Washington. Strong was the dominant leader of the Fed from 1914 until his death in 1928. He pursued an inflationary policy, to finance the war effort for [[World War I|WWI]]], connected to the interests of the [[J.P. Morgan & Co.|House of Morgan]]. Another motivation was the attempt to prop up the [[Bank of England]] in the 1920s, when it returned to the [[gold standard]] with an overvalued pound. To prevent the loss of gold to the States, its governor [[Wikipedia:Montagu Norman, 1st Baron Norman|Montagu Norman]] secretly convinced Strong to inflate in order to help England. The expansion ended only after Strong's death and the '''Great Depression''' followed soon after. In 1928 Strong admitted that "very few people indeed realized that we were now paying the penalty for the decision which was reached early in 1924 to help the rest of the world back to a sound financial and monetary basis" - that is, to help Britain maintain a phony and inflationary form of gold standard.<ref name="Rothbard_Federal_Reserve">[[Murray N. Rothbard]]. [http://mises.org/books/mysteryofbanking.pdf "The Mystery of Banking"] (pdf), Chapter XVI: Central banking in the United States IV: The Federal Reserve System, p.235-246, referenced 2009-10-03.</ref>

The inflation was also motivated by a desire to help American exporters (particularly farmers), by stimulation of foreign lending. At the same time the U.S. turned to a sharp protectionist policy with the [[Wikipedia:Fordney–McCumber Tariff|Fordney–McCumber Tariff]] of 1922. In the foreign lending boom, other countries were hampered in trying to sell their goods to the United States, but were encouraged to borrow dollars. The government did not have any peacetime authority to interfere with loans, but did so illegally. In 1921, President [[Warren G. Harding|Harding]] and his cabinet conferred with several American investment bankers, at the instigation of Secretary of Commerce [[Herbert Hoover|Hoover]], to be informed in advance of foreign loans, so that the government "might express itself regarding them". The bankers agreed. Hoover commented that even bad loans helped American exports and provided a cheap form of relief and employment. Later Hoover demanded from bankers, that foreign loans would be inspected by agents of the [[Department of Commerce]]. Both requests were mostly ignored. While admitted to be legally unenforceable, it was all in the name of "national interests".<ref name="Rothbard_pre_Depression">[[Murray N. Rothbard]]. [http://mises.org/rothbard/agd.pdf "America’s Great Depression"] (pdf), 5. The Development of the Inflation, p. 137-167, referenced 2009-11-17.</ref>

{{See also|Federal Reserve System}}

==The Crash==
The great boom of the 1920s began around July, 1921, after a year or more of sharp recession, and ended about July, 1929, when the production and business activity began to decline, although the [[Wikipedia:Wall Street Crash of 1929|famous stock market crash]] came in October of that year. [[Wikipedia:Herbert Hoover|Herber Hoover]], an avid proponent of interventionism became President. Characteristic for him were "voluntary" measures that the government desired, with the implicit threat that if business did not "volunteer" properly, compulsory controls would soon follow.<ref name="Rothbard_1920s_boom">[[Murray N. Rothbard]]. [http://mises.org/rothbard/agd.pdf "America’s Great Depression"] (pdf), 5. The Development of Hoover's Interventionism: Unemployment, p. 188-189, referenced 2009-11-20.</ref>

After the stock-market crash, Hoover began a series of conferences with big business and labor leaders, telling them that cutting wage rates (the standard response in previous depressions) would be disastrous, because then the workers wouldn't make enough to buy the products. This "liquidation" of labor would only deepen the depression by reducing their "purchasing power". Leading industrialists have pledged to maintain wage rates, expand construction, and share any reduced work. At the same time, the Federal Reserve expanded rapidly and lowered its interest rates. Its member banks expanded their deposits in the last week of October 1929 alone by 10%, mostly in New York. Hoover praised the Fed for the saving of shaky banks and restoring confidence. The depression should be over in a few months. A large public works program was also initiated.<ref name="Rothbard_public_works">[[Murray N. Rothbard]]. [http://mises.org/rothbard/agd.pdf "America’s Great Depression"] (pdf), 8. The Depression Begins: President Hoover Takes Command, p. 209-217, referenced 2009-11-21.</ref>

Hoover promised the farm bloc to support farm cooperatives and prices and established the [[Wikipedia:Federal Farm Board|Federal Farm Board]] (FFB). It would make all-purpose loans to farm cooperatives at low interest rates and establish "stabilization corporations" to control farm surpluses and bolster farm prices. Its board was dominated by representatives of these farm cooperatives. To combat falling prices, it made loans to farmers to keep wheat and cotton off the market and later started to buy the surpluses. For a while, prices were held up and farmers increased production, only to find that prices would fall even more. As America held wheat off the market, it lost its former share of the world’s wheat trade. The farmers were urged to decrease their acreage, while the government still promoted reclamation projects to increase farm production. The surpluses of wheat accumulated and prices fell to such a degree, that the FFB decided to dump wheat stocks abroad, resulting in a drastic fall in market prices. The attempts to keep up the price of cotton, wool, livestock, etc. failed as well. A "[[Wikipedia:Farmers' Holiday Association|Farm Holiday]]" was declared to stop production, The movement soon turned to violence and failed to stop the falling farm prices. but succeeded to avoid some foreclosures of its members.<ref name="Rothbard_Agriculture">[[Murray N. Rothbard]]. [http://mises.org/rothbard/agd.pdf "America’s Great Depression"] (pdf), The New Deal Farm Program, p. 217-237, referenced 2009-11-21.</ref>

In 1930, the [[Wikipedia:Smoot–Hawley Tariff Act|Smoot–Hawley Tariff]] was passed, despite objections of many economists and industrial leaders. Hoover originated a higher tariff on agricultural products to help farmers, but it was raised on many other products. Many other countries have retaliated with their own tariffs and foreign trade declined significantly. (From 1929 to 1932, U.S. imports from Europe decreased from $1,334 million to just $390 million, while U.S. exports to Europe decreased from $2,341 million to $784 million. Overall, world trade decreased by some 66% between 1929 and 1934.<ref>U.S. Department of State. [http://future.state.gov/when/timeline/1921_timeline/smoot_tariff.html Smoot-Hawley Tariff], referenced 2009-11-22.</ref>) Also, to relieve the unemployment problem, and to help keep wage rates up, the President effectively banned further immigration into the United States.<ref name="Rothbard_Depression_1930">[[Murray N. Rothbard]]. [http://mises.org/rothbard/agd.pdf "America’s Great Depression"] (pdf), 9. 1930, p. 239-256, referenced 2009-11-22.</ref>

===In Europe===
In Europe, the crisis began in earnest with the ''Boden–Kredit Anstalt'', the most important bank in Austria and Eastern Europe. It had to merge with the [[Wikipedia:Creditanstalt|Oesterreichische–Kredit–Anstalt]] after rescue attempts by its government and other banks. When Austria declared a customs union with Germany in March 1931, the French government feared this development and several French banks suddenly insisted on redemption of their debts from both countries. The bank collapsed. After more rescue attempts has the Austrian Government voted a $150 million guarantee to the bank, but the its credit was by the time worthless, and Austria soon declared national bankruptcy by going off the gold standard. Later, Germany, England, and most other European countries renounced their obligations and went off the gold standard as well. While the impact on United States was not very large due to the lowered international trade, it certainly did not help, neither did the many loans granted to prop up foreign banks.<ref name="Rothbard_Depression_1931_Europe">[[Murray N. Rothbard]]. [http://mises.org/rothbard/agd.pdf "America’s Great Depression"] (pdf), 10. 1931—"The Tragic Year", p. 257-284, referenced 2009-11-27.</ref>

==1931, "The Tragic Year"==
The crisis worsened in the US in 1931. Production continued to fall drastically, as did prices and foreign trade, and unemployment ran up to almost 16 percent of the labor force. The Federal Reserve Board (FRB) index of manufacturing production, which had been 110 in 1929 and 90 in 1930, fell to 75 in 1931. Hardest hit, in accordance with Austrian [[ABCT|cycle theory]], were producers’ goods and higher order [[capital]] goods industries, rather than the consumer goods’ industries. Despite attempts to inflate, bank deposits and the aggregate [[money supply]] fell sharply, particularly at the end of the year. The British abandoning of the gold standard, bank failures abroad and the growing number of failures at home, caused a growing loss of confidence by Americans in their banking system. The wages were also beginning to fall, first secretly, then openly by the end of 1931.

The gross national product fell from $91.1 billion in 1930, to $76.3 billion in 1931. Total government receipts fell from $13.5 billion to $12.4 billion, but total government expenditures rose from $13.9 billion to $15.2 billion, in federal, rather than state and local, spending (federal expenditures rose from $4.2 billion in 1930 to $5.5 billion in 1931). In the middle of a great depression when people needed to be relieved of governmental burdens, the dead weight of government rose from 16.4 percent to 21.5 percent of the gross private product. From a modest surplus in 1930, the Federal government so ran up a huge $2.2 billion deficit in 1931.<ref name="Rothbard_Depression_1931_Europe" />

Direct relief was just about the one sphere where President Hoover seemed to prefer voluntary to governmental action. The [[Wikipedia:Red Cross|Red Cross]] opposed a bill, in early 1931, that would grant it $25 million for relief, declaring that it would "to a large extent destroy voluntary giving". Many private charity organizations, philanthropists, and social workers had the same views. Governmental unemployment relief was seen to have a role in creating and perpetuating unemployment in Britain (the "dole"). It was attacked by many business leaders, including [[Wikipedia:Henry Ford|Henry Ford]], the leaders of the [[Wikipedia:National Association of Manufacturers|National Association of Manufacturers]] and the [[Wikipedia:United States Chamber of Commerce|Chamber of Commerce]], and former President [[Wikipedia:Calvin Coolidge|Coolidge]].<ref name="Rothbard_Depression_1931_Europe" />

The [[Davis-Bacon Act]] was signed by President Hoover in 1931. It mandated that prevailing (union) wages be paid by the Federal Government for public works projects. It has been argued that the Davis-Bacon Act was a [[Jim Crow law]], since its intent <ref name=”williams”>Walter Williams, [http://www.jewishworldreview.com/cols/williams031203.asp "Congress' insidious discrimination"], ''Jewish World Review'' (March 12, 2003), accessed 2011-02-01.</ref> and its effect <ref name=”cato”> David Bernstein, [http://www.cato.org/pubs/briefs/bp-017.html "The Davis-Bacon Act: Let's Bring Jim Crow to an End"], ''Cato Institute Briefing Papers'' (January 18, 1993), accessed 2011-02-01.</ref> was to prevent lower-paid, non-unionized black laborers from competing against higher-paid, unionized white laborers. Hoover promoted and supported the legislation, as he believed that "[t]he very essence of great production is high wages...because it depends upon a widening range of consumption only to be obtained from the purchasing power of high real wages...." <ref name="hoover108">Herbert Hoover, ''The Memoirs of Herbert Hoover: Volume 2, The Cabinet and the Presidency, 1920-33'', (New York: Macmillan, 1952) 108.</ref>

==1932, The Hoover New Deal==
In an atmosphere of crisis, President Hoover called for more drastic measures, including more government aid and loans. With a $2 billion deficit during annual year 1931, Hoover felt that he had to do something to combat it and chose to increase the taxes. The [[Wikipedia:Revenue Act of 1932|Revenue Act of 1932]] was one of the greatest increases in taxation ever enacted in the United States in peacetime. Many wartime
excise taxes were revived, sales taxes were imposed on gasoline, tires, autos, electric energy, malt, toiletries, furs, jewelry, and other articles; admission and stock transfer taxes were increased; new taxes were levied on bank checks, bond transfers, telephone, telegraph, and radio messages; and the personal income tax was raised drastically as follows: the normal rate was increased from a range of 1½ percent–5 percent, to 4 percent–8 percent; personal exemptions were sharply reduced, and an earned credit of 25 percent eliminated; and surtaxes were raised enormously, from a maximum of 25 percent to 63 percent on the highest incomes. Furthermore, the corporate income tax was increased from 12 percent to 13: percent, and an exemption for small corporations eliminated; the estate tax was doubled, and the exemption floor halved; and the gift tax, which had been eliminated, was restored, and graduated up to 33⅓ percent. The postal rates were raised as well.

Despite the drastic increase in tax rates, total Federal revenue for 1932 declined because of the deepened depression—itself partly caused by the increase in tax rates. Total Federal receipts, excluding government enterprises, declined from $2.2 billion in 1931 to $1.9 billion in 1932; including government enterprises, Federal receipts fell from $3.4 billion to $3 billion.

Total government receipts fell from $12.4 billion to $11.5 billion. As a result, the huge Federal deficit continued despite a drop in government expenditures in 1932: Federal expenditures falling from $5.5 billion to $4.4 billion, and aggregate government expenditures falling from $15.2 billion to $13.2 billion (all numbers including government enterprises). Of the $1.7 billion in total government deficit, the bulk of it — $1.4 billion — was in the Federal government account. The state and local governments were forced to cut back their expenditures to near the level of their dwindling receipts. One of the most ominous projects for Federal spending during 1932 was a Congressional move for a huge $2 billion veterans bonus, to be financed by an issue of new currency. It was its final defeat in the Senate in June that did most to defeat a general clamor for much larger government spending.

Meanwhile, however, President Hoover himself was beginning to have doubts about one of his favorite policies: public works. In a conference at the end of February, Hoover admitted that his public works program, which had nearly doubled Federal construction since the start of the depression, had failed. It was very expensive, costing over $1200 per family aided, it was unavailable to the needy in remote regions and to those who were unable to perform such labor, which was, after all, unskilled make-work. By May, Hoover had openly reversed his earlier position. As a result, Federal public works only increased by $60 million in 1932, to reach the $333 million mark. Public works was not to come really to the fore again until the Roosevelt administration.

If Hoover eagerly embraced other forms of [[intervention]], he gave ground but grudgingly on one issue where he had championed the voluntary approach: direct relief. Governor [[Wikipedia:Franklin D. Roosevelt|Franklin D. Roosevelt]] of New York led the way for state relief programs in the winter of 1931–1932, and he induced New York to establish the first state relief authority: the Temporary Emergency Relief Administration, equipped with $25 million. Other states followed this lead, and a bill was introduced for a $500 million federal relief program. The bill was defeated, but, with depression deepening and a Presidential election approaching, the administration all but surrendered, passing the [[Wikipedia:Emergency Relief and Construction Act|Emergency Relief and Construction Act]] of July, 1932 — the nation’s first Federal relief legislation. All in all, total public relief in 120 of the nation’s leading urban areas amounted to $33 million in 1929, $173 million in 1931, and $308 million in 1932.

One thing Hoover was not reticent about: inflation. The administration first cleared the path for the program by passing the [[Wikipedia:Glass–Steagall Act|Glass–Steagall Act]] in February, which (a) greatly broadened the assets eligible for rediscounts with the Fed, and (b) permitted the Federal Reserve to use government bonds as collateral for its notes, in addition to commercial paper. At the end of February, 1932, total bank reserves had fallen to $1.85 billion. At that point, the [[Federal Reserve System|FRS]] launched a gigantic program of purchasing U.S. government securities. By the end of 1932, total reserves had been raised to $2.51 billion. This enormous increase of $660 million in reserves in less than a year is unprecedented in the previous history of the System. If the banks had kept loaned-up, the money supply of the nation would have increased by approximately $8 billion. Instead, the money supply fell by $3.5 billion during 1932, from $68.25 to $64.72 billion at the end of the year, and with the bank deposit component falling by $3.2 billion. Until the second quarter of 1932, the nation’s banks had always remained loaned up, with only negligible excess reserves. After, the banks accumulated excess reserves, and it is estimated that the proportion of excess to total bank reserves rose from 2.4 percent in the first quarter of 1932, to 10.7 percent in the second quarter. By the fourth quarter of 1932, excess reserves were estimated to a double of 20.3 percent of total bank reserves.

During the 1920s, a typical year might find 700 banks failing, with deposits totaling $170 million. In 1930, 1350 banks failed, with deposits of $837 million; in 1931, 2,293 banks collapsed, with deposits of $1,690 million; and in 1932, 1,453 banks failed, having $706 million in deposits. This enormous increase in bank failures was enough to give any bank pause—particularly when the bankers knew in their hearts that no bank (outside of the nonexisting ideal 100 percent bank) can ever withstand a determined run. Consequently, the banks permitted their commercial loans to run down without increasing their investments. Inflation by the government was turned into deflation by the policies of the public and the banks. The American economy reached the depths of depression during 1932 and 1933, and yet it had begun to turn upward by mid-1932. It is not far-fetched to believe that the considerable deflation of July 1931–July 1932, totaling $7.5 billion of currency and deposits, or 14 percent, was partly responsible for the mid-summer upturn.<ref name="Rothbard_Depression_1932">[[Murray N. Rothbard]]. [http://mises.org/rothbard/agd.pdf "America’s Great Depression"] (pdf), 11. The Hoover New Deal of 1932, p. 285-320, referenced 2009-11-27.</ref>

As the Depression got worse and people lost their confidence in the banks, they decided to take custody of their cash. Seeing people in large numbers pulling their money out of banks — money the banks had promised to provide on demand — President Hoover blasted them for their "traitorous hoarding." He organized an antihoarding drive and delivered a radio address ([http://www.bobsuniverse.com/BWAH/31-Hoover/19320306a.pdf transcript], pdf) in which he pleaded with the public to stop hoarding (i.e., to stop converting their bank deposits into cash).<ref name="Smith_hoarding">George F. Smith. [http://mises.org/story/3707 "The Virtue of Hoarding"], Mises Daily, posted on October 09, 2009, referenced 2009-11-18.</ref>

Nominal paychecks fell much more slowly during the early years of the Great Depression than the general [[price]] level (wholesale prices fell by 10 percent in 1930, by 15 percent in 1931)<ref name="Rothbard_Depression_1931_Europe" /> - and those who kept their job experienced a higher increase in real (inflation-adjusted) wages, than during the Roaring 1920s!<ref name="ohanian"> Lee E. Ohanian, "What - or Who - Started the Great Depression?", ''NBER Working Paper No. 15258'' (August 2009). Free copy online [http://www.econ.ucla.edu/people/papers/Ohanian/Ohanian499.pdf "here"]</ref> And so has unemployment reached record highs during Hoover's first and only term. When FDR went back on the US government's promise to redeem dollars for gold, the Federal Reserve could flood the economy with new dollars, the prices began to rise again. Because wage rates were not allowed to fall to their new, market-clearing level, [[Inflation|inflating]] the currency has paradoxically reduced unemployment.<ref name="Murphy_Depression">Robert P. Murphy. [http://mises.org/story/3778 "The Gold Standard and the Great Depression"], Mises Daily, posted on October 30, 2009, referenced 2009-11-18.</ref>

The Fed has expanded bank reserves in the 1930s. Panicking at the inflationary potential, it doubled the minimum reserve requirements to 20 percent in 1938, sending the economy into a tailspin of credit liquidation. The Fed, ever since that period, has been very cautious about the degree of its changes and changed bank reserve requirements fairly often, but in very small steps, by fractions of one percent.<ref name="Rothbard_Fed_requirements">[[Murray N. Rothbard]]. [http://mises.org/books/fed.pdf "The Case Against the Fed"] (pdf), How the Fed Rules and Inflates, p. 144, referenced 2010-03-23.</ref>

After 1933, Federal Reserve Notes and deposits were no longer redeemable in gold coins to Americans, their gold was confiscated and exchanged for Federal Reserve Notes, which became legal tender; and Americans were stuck in a regime of fiat paper issued by the government and the Federal Reserve.<ref name="Rothbard_Fed_gold">[[Murray N. Rothbard]]. [http://mises.org/books/fed.pdf "The Case Against the Fed"] (pdf), The New Deal and the Displacement of the Morgans, p. 131-132, referenced 2010-05-10.</ref>

===Tax revolt in the USA===
There has been a widespread opposition to real estate taxes in cities across America and some Americans were in fact not paying their taxes. The movement declined quickly, some scholars acknowledge certain influence, but ultimately declare it a failure.<ref name="Beito_revolt">David T. Beito. [http://mises.org/books/taxpayersinrevolt.pdf Taxpayers in Revolt - Tax Resistance during the Great Depression] (pdf), referenced 2010-06-15.</ref> Others consider it a resounding success, however.

President Hoover's massive tax increase bill that passed into law as the [[Wikipedia:Revenue Act of 1932|Revenue Act of 1932]], with many new taxes. The most burdensome taxes for many Americans, however, was the property tax. Property taxes required taxpayers to make an explicit tax payment of significant size from which they could not evade without losing what was often their most significant piece of property and wealth. The property taxes have risen in the decade before the Depression; throughout the 1920s, the general property tax accounted for over 90 percent of taxes levied by all cities over 30,000 in population. One reason for this dependence was that alcohol revenue from sales taxes and licenses had "dried up" due to prohibition. The burden of taxes increased significantly, even if tax rates remained the same. Another source of taxpayer ire was that the real wages of public employees rose nearly 12% between 1929 and 1933.

Tax delinquency increased from its normal rate of 10% to more than 30%. Tax protest organization formed quickly and spontaneously in rural regions in response to tax authorities selling the land of farmers. Estimates placed the number of taxpayer organizations at between 3,000 and 4,000 organizations nationwide.

The tax limitation movement was effective in several states in establishing cuts and limitations on property tax rates. The second success, which was both more important and far less obvious, was the passage of the 21st Amendment that repealed alcohol [[Wikipedia:Prohibition in the United States|prohibition]]. The legalization of alcohol sales in most states provided federal, state, and local government with increased tax revenues to offset cuts in property taxes while simultaneously providing a drastic decrease in the price of alcohol and in effect granting the American public a type of tax cut. Income tax revenue fell 60% from 1930 to 1933 placing a severe financial constraint on Congress. The search for an alternative revenue source led to the conversion of F.D.R. from a "dry" to a "wet" and resulted in the 1932 Democratic party platform to call for Repeal in order to provide "a proper and needed revenue." Revenue shortfalls made Repeal possible and the alcohol tax provided 13% of all federal revenue by 1936.<ref name="Thornton_revolt">Mark Thornton and Chetley Weise. [http://mises.org/journals/jls/15_3/15_3_4.pdf The Great Depression Tax Revolts Revisited.] (pdf), Journal of Libertarian Studies, Volume 15, no. 3 (Summer 2001), referenced 2010-06-15.</ref><ref name="Thornton_success_revolt">Mark Thornton and Chetley Weise. [http://mises.org/journals/scholar/Thornton1.PDF The Success of the Great Depression Tax Revolts] (pdf), referenced 2010-06-15.</ref>

==1933, end of Hoover's term==
Seeking reelection, Hoover boasted of his many interventions with the economy. In his acceptance speech for the Presidential renomination he said:
<blockquote>''"We might have done nothing. That would have been utter ruin. Instead, we met the situation with proposals to private business and to the Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put that program in action."''<ref name="Hoover_nomination">Herbert Hoover. [http://americanhistory.about.com/library/docs/blhooverspeech1932.htm "Address Accepting the Republican Presidential Nomination"], August 11, 1932. The address was carried over the National Broadcasting Company and the Columbia Broadcasting System radio networks. This is a transcript taken from a sound recording of the address. Referenced 2010-06-20.</ref></blockquote>

After the election of [[Wikipedia:Franklin D. Roosevelt|Roosevelt]], as the new Presidential term approached, dark rumors circulated about the radicalism of Roosevelt’s advisers, and of their willingness to go off the [[gold standard]]. Consequently, not only did gold "hoarding" by foreigners develop momentum, but even gold hoarding by domestic citizens. For the first time in the depression, American citizens were beginning to lose confidence in the dollar itself. The loss of confidence reached its apogee in February, 1933, the month before the Roosevelt inaugural. In that one month, the monetary gold stock fell by $173 million, and money in circulation increased by the phenomenal amount of $900 million, the reflection of domestic loss of confidence. Money in circulation totaled $5.4 billion at the end of January, and $6.3 billion by the end of February. $700 million of this increase was in Federal Reserve notes, and $140 million in gold coin and gold certificates.

The Federal Reserve did its best to combat this deflationary pull on bank reserves, but its inflationary measures only served to diminish confidence in the dollar still further. Total money supply fell from $64.72 to $61.61 billion over 1933, and all or more of this fall took place in the first half of the year. Bank failures skyrocketed during this period. The number of commercial bank failures increased from 1,453 in 1932 to 4,000 in 1933 (most of which took place in the first quarter).

The reaction to this growing insistence of the people on claiming their rightful, legally-owned property, was a series of attacks on property rights by state after state. One by one, states imposed "bank holidays" by fiat, permitting the banks to stay in business while refusing to pay virtually all of the just claims of their depositors. The bank holiday movement began in earnest with the proclamation of an eight-day holiday on February 14, 1933, by Governor William Comstock of Michigan. This precipitated the bank runs and deflation of the latter part of February and depositors began an intense scramble to take their money out of the banks. Many national banks, which had worked hard to keep themselves in an at least relatively sound position, did not want to use the special privilege of bank holiday, and had to be coerced into doing so.

By March 4, every state in the Union had declared a bank holiday, and the stage was set for President Roosevelt’s dramatic and illegal closing of all the banks. President Roosevelt closed down all the banks throughout the nation for an entire week, from March 6 to 13, with many banks remaining closed even longer. Restrictions against so-called "hoarding" were continued afterward, and much hoarded gold returned to the banks following a Federal Reserve threat to publish a list, for full public scorn, of the leading "gold hoarders."

Mr. Hoover left office in March, 1933, at the very depth of the greatest depression in American history. Production had fallen by more than one-half: industrial production had been at an index of 114 in August, 1929, and then fell to 54 by March, 1933. Unemployment was persisting at nearly 25 percent of the labor force, and gross national product had also fallen almost in half. Hardest hit was investment, especially business construction, the latter falling from about $8.7 billion in 1929 to $1.4 billion in 1933. The index of non-durable manufacturing production fell from 94 to 66 from August, 1929, to March, 1933—a decline of 30 percent; the index of durable manufactures fell from 140 to 32, in the same period, a decline of 77 percent. In durable goods industries (e.g., building, roads, metals, iron and steel, lumber, railroad, etc.) it was estimated that their total employment fell from 10 million in 1929 to 4 million in 1932–1933, while employment in consumer goods industries (e.g., food, farming, textiles, electricity, fuel, etc.) only fell from 15 million to 13 million in the same period. Stock prices (industrials) fell by 76 percent during the depression, wholesale prices fell by 30 percent, and the total money supply declined by one-sixth.

Wage rates were kept very high during the first two years of the depression. By 1932, however, with profits wiped out, the pressure became too great, and wage rates fell considerably. Total fall over the 1929–1933 period, however, was only 23 percent - less than the decline in wholesale prices. Therefore, real wage rates, for the workers still remaining employed, actually increased. While real average hourly earnings rose, actual hours worked in industry fell drastically during the depression. Weekly hours averaged over 48 in 1929, and fell to less than 32 by mid-1932. In no previous depression had hours worked fallen by more than 10 percent. This was a form of reduced employment caused by the high-wage policy. As a result, average weekly earnings fell by over 40 percent during the depression, and real weekly earnings fell by over 30 percent. But hardest hit were the unemployed, the percentage of whom rose to 25 percent by 1932–1933, and reached 47 percent in selected manufacturing industries. The fall in man-hours combined with the fall in average hourly earnings caused a truly precipitate drop in total factory payrolls - the base of the very "purchasing power" that the policy was supposed to sustain.<ref name="Rothbard_Hoover_End">[[Murray N. Rothbard]]. [http://mises.org/rothbard/agd.pdf "America’s Great Depression"] (pdf), 12. The Close of the Hoover Term, p. 321-337, referenced 2010-06-20.</ref>

==The New Deal==
===Roosevelt's Campaign===
Under the Democratic platform of 1932, which Franklin D. Roosevelt endorsed, contained several subsidies and regulations, but it hardly embraced the enormous expansion in federal power that FDR would achieve. The very first plank called for "an immediate and drastic reduction of governmental expenditures by abolishing useless commissions and offices, consolidating departments and bureaus, and eliminating extravagance to accomplish a saving of not less than twenty-five per cent in the cost of the Federal Government."<ref name="Woolley_Dem_1932">John T. Woolley and Gerhard Peters. [http://www.presidency.ucsb.edu/ws/index.php?pid=29595 "Democratic Party Platform of 1932"], June 27, 1932, from The American Presidency Project [online]. Referenced 2010-06-20.</ref> Subsequent planks demanded a balanced budget, a low tariff, the repeal of Prohibition, "a sound currency to be preserved at all hazards," "no interference in the internal affairs of other nations," and "the removal of government from all fields of private enterprise except where necessary to develop public works and natural resources in the common interest." The document concluded with a quote from Andrew Jackson: "equal rights to all; special privilege to none."

FDR's campaign reflected that platform. He accused Herbert Hoover of "reckless and extravagant spending," and he further denounced the Republican incumbent for believing "we ought to center control of everything in Washington as rapidly as possible." Even when he called for interventions in the economy, he generally couched his words in the old liberals' language of equal treatment rather than the new liberals' vision of enlightened central planning. In his famous Forgotten Man speech of April 1932 (see [http://newdeal.feri.org/speeches/1932c.htm transcript]), the Democratic candidate pointed to the wave of foreclosures sweeping the nation. Noting that Hoover had created a "two billion dollar fund...put at the disposal of the big banks, the railroads and the corporations of the Nation," FDR averred that the government should "provide at least as much assistance to the little fellow as it is now giving to the large banks and corporations." Once in office, the new administration did indeed repeal Prohibition, and it eventually lowered some trade barriers as well. By the time of FDR's death, the federal bureaucracy's power had grown so enormously that Hoover was widely remembered as the last apostle of laissez faire.<ref name="Walker_FDR">Jesse Walker. [http://reason.com/archives/2008/04/10/the-new-franklin-roosevelts "The New Franklin Roosevelts"], April 10, 2008. Referenced 2010-06-20.</ref>

===Policy===
A principal feature of '''[[Wikipedia:New Deal|New Deal]]''' economic policy was government-sponsored industrial [[cartel]]s (the [[Wikipedia:National Industrial Recovery Act|National Recovery Act]]); agricultural cartels (the [[Wikipedia:Agricultural Adjustment Act|Agricultural Adjustment Act]]); and labor cartels (the [[Wikipedia:Norris – La Guardia Act|Norris-LaGuardia]] and [[Wikipedia:National Labor Relations Act|Wagner Acts]]). The purpose of any cartel is to restrict output and raise prices. Lower levels of production leads to higher unemployment, which is exactly what the NRA and AAA did.

The NRA was almost identical to the Italian corporatist system that existed at the time. In Italy each trade or industrial group was organized into a government-controlled "corporative" association that had the power to plan production and pricing. In the U.S. the NRA organized each industry into federally-supervised trade associations called "Code Authorities" which could also limit output and set prices. The antitrust laws were explicitly set aside.

Over 700 industrial codes were created and were rigorously enforced by thousands of government code enforcers who, "could enter a man's factory, send him out, line up his employees, subject them to minute interrogation, take over his books on the instant." A hapless New Jersey tailor named Jack Magid became nationally famous after he was arrested, convicted, and imprisoned by the code police for the "crime" of pressing a suit of clothes for 35 cents when the Tailors' Code fixed the price at 40 cents. The NRA was ruled unconstitutional by the U.S. Supreme Court on May 27, 1935.<ref name="DiLorenzo_New_Deal">Thomas J. DiLorenzo. [http://mises.org/daily/55 "A New, New Deal"], Mises Daily, October 1998, referenced 2010-06-20.</ref> A study of the Act noted that "the licensing provision, giving the president the power of life or death over business enterprises, is the ultimate weapon of enforcement and the capstone of the powers granted to the president ... the most extraordinary extension of presidential power in American history." The Supreme Court's decision has noted, that 'fair competition' is not defined in the law and could be a convenient designation for whatever set of laws that is proposed and the president may approve. It ruled that NIRA was "an unconstitutional delegation of legislative power."

But after [[Wikipedia:Judiciary Reorganization Bill of 1937|Roosevelt's court-packing threat]] of 1937, the justices succumbed to whatever creative definition of fairness that Congress or federal agencies chose to proclaim. For instance, in 1942, Congress passed the Emergency Price Control Act, which created an Office of Price Administration. The OPA had sweeping power to set or strike down prices in any industry or activity that it considered to be "defense-related" — a vague term that could have encompassed practically the entire national economy. The act contained no substantive guidelines for the administrator's decisions but merely required prices that "in his judgment will be generally fair and equitable."<ref name="Bovard_Cuttthroat">James Bovard. [http://www.fff.org/freedom/0499d.asp "Cutthroat Competition and Dead Chickens"], The Future of Freedom Foundation, April 1999. Referenced 2010-06-20.</ref>

===Effects===
The Roosevelt administration also orchestrated various price-fixing schemes in labor markets, principally for the benefit of unions. Payroll taxes to finance Social Security and Unemployment Insurance programs increased employers' wage bills even further, which also reduced the level of employment. According to an econometric estimate, government-mandated payroll cost increases added nearly 1.2 million people to the unemployment rolls by 1938.

The unemployment rate during the 1933-1940 period averaged about 18% and was as high as 28.3% in March of 1933. By the end of 1938, on the eve of World War II, the U.S. unemployment rate still hovered at just over 18 percent and was higher than it was in 1933, President Franklin D. Roosevelt's first year in office. This occurred despite (or rather, because of) six years of unprecedented levels of government intervention into the U.S. economy. The American recovery was slower than in most European nations; by 1937 Great Britain's unemployment rate had declined to 10.3 percent.

Herbert Hoover's [[Wikipedia:Reconstruction Finance Corporation|Reconstruction Finance Corporation]] was greatly expanded by Roosevelt, but its effect was to make capital markets less efficient, thereby prolonging the Depression even further. As explained by RFC director Jesse Jones in his autobiography, ''Fifty Billion Dollars'', "The law specified that we should lend only where the borrower could not get the money from others on reasonable terms." That is, only to uncreditworthy borrowers. Guided by this directive, Jones and the RFC redirected billions of dollars in valuable capital to politically-connected but economically-questionable businesses. "We even loaned money to [the owners of] a drove of reindeer in Alaska," Jones boasted. The RFC was abolished in the 1955 under a cloud of corruption and scandal.

Roosevelt's public works programs may have been an economic failure, but they were a resounding political success as they provided virtually unlimited opportunities for political patronage. In 1939 a special U.S. Senate Committee on Campaign Expenditures investigated the programs and found that in many states workers were required to sign a pledge to vote Democratic and, in some cases, to make campaign contributions, as a condition of employment. Businesses that sold supplies to the government were in some places required to make campaign contributions to the Democratic party in return for the contracts. The New Deal was largely a legalized [[Wikipedia:Extortion|shake-down]] operation.<ref name="DiLorenzo_New_Deal" /><ref name="Anderson_WPA">William L. Anderson. [http://mises.org/daily/3921 "The Curse of Good Government"], Mises Daily, December 2009, refers to the spending of New Deal money. Referenced 2010-06-20.</ref>

Roosevelt's billions, adroitly used, had broken down every political machine in America. The patronage they once lived on and the local money they once had to disburse to help the poor was trivial compared to the vast floods of money Roosevelt controlled. And no political boss could compete with him in any county in America in the distribution of money and jobs.<ref name="Flynn_Roosevelt">John T. Flynn. [http://mises.org/books/rooseveltmyth.pdf "The Roosevelt Myth"] (pdf), p. 65; 1948. Referenced 2010-06-21.</ref>

As Henry Morgenthau, the secretary of the treasury and one of the most powerful men in America, said before the Democrats on the House Ways and Means Committee in 1939<ref name="Folsom_spending">Burton Folsom Jr. [http://search.barnesandnoble.com/New-Deal-or-Raw-Deal/Burton-Folsom-Jr/e/9781416592228#EXC "New Deal or Raw Deal?: How FDR's Economic Legacy Has Damaged America"], an excerpt from the book. Referenced 2010-06-21.</ref>:

<blockquote>''"We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong...somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises....I say after eight years of this Administration we have just as much unemployment as when we started....And an enormous debt to boot!"''</blockquote>

==During World War II==
The recovery from the Great Depression in the United States is usually associated with the advent of World War II, a period when real GDP appeared to increase phenomenally and the rate of unemployment fell almost to zero. A more detailed view produces a different picture, with large government "make-work" programs at first and military employment during the war - but a very slow actual recovery. When using hours worked as measure of employment, only in 1941 total work hours exceed the 1929 value (by 3 percent), with the population vigorously engaged in mobilization for war.<ref name="Higgs_hours">Robert Higgs. [http://www.independent.org/pdf/tir/tir_14_01_8_higgs.pdf "A Revealing Window on the U.S. Economy in Depression and War - Hours Worked, 1929–1950"] (pdf), The Independent Review, v. 14, n.1, Summer 2009. Referenced 2010-06-21.</ref>

Private [[investment]] has fallen significantly. Gross private investment plunged from almost 16 percent of GDP in 1929 to less than 2 percent in 1932; recovered to 13 percent in 1937 before falling again in the recession of 1938; and as late as 1941 stood at only 14 percent. During the war years, private investment ratios ranged from 3 to 6 percent. From 1946 through 1950 they ranged from 14 to 19 percent and averaged 16 percent — the same as in 1929. In 1929, when gross private investment was $16.2 billion, net investment was $8.3 billion. Net investment fell precipitously to $2.3 billion in 1930 and then became negative during each of the following five years. For the eleven-year period of 1930 to 1940, net private investment totaled minus $3.1 billion. Only in 1941 did net private investment ($9.7 billion) exceed the 1929 amount. During the 1930s, private investment remained at depths never plumbed in any other decade for which data exist.

One hypothesis is, that the New Deal prolonged the Great Depression by creating an extraordinarily high degree of '''[[regime uncertainty]]''' for the investors. Given the unparalleled outpouring of business-threatening laws, regulations, and court decisions, the oft-stated hostility of President Roosevelt and his lieutenants toward investors as a class, the political climate could hardly have failed to discourage some investors from making long-term commitments. There also exists a great deal of direct evidence that investors felt extraordinarily uncertain about the future of the property-rights regime between 1935 and 1941. Historians have recorded countless statements by contemporaries to that effect; in the years just before the war most business executives expected substantial weakening of private property rights ranging up to "complete economic dictatorship". The possibility that the United States might undergo an extreme regime shift seemed to many investors in the late 1930s and early 1940s not only possible but likely.<ref name="Higgs_investment">Robert Higgs. [http://www.independent.org/pdf/tir/tir_01_4_higgs.pdf "Regime Uncertainty - Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War"] (pdf), The Independent Review, Vol, I, No. 4, Spring 1997. Referenced 2010-06-21.</ref><ref name="Higgs_China">Robert Higgs. [http://www.independent.org/blog/index.php?p=2620 "Regime Uncertainty in the 1930s: A New Deal Insider’s Account"], ''The Beacon'', blog of the The Independent Institute, Jun 29, 2009. Referenced 2010-08-15.</ref>

==See also==

* [[Austrian Business Cycle Theory]]

==References==
{{Reflist}}

==External links==
* [http://www.lewrockwell.com/gordon/gordon-gd-biblio.html Bibliography on the Great Depression] by David Gordon, 2009
* [http://mises.org/daily/3941 The Myth that Is FDR] by Garet Garrett, January 2010
* [http://mises.org/daily/4350 Did Hoover Really Slash Spending?] by Robert P. Murphy, May 2010
* [http://www.ameshistoricalsociety.org/exhibits/events/rationing.htm World War II Rationing], collected by the Ames Historical Society and the [[Wikipedia:Rationing|Wikipedia]] article on the same
* [http://www.mackinac.org/article.aspx?ID=4028 Free Markets or Free Lunches?] by Lawrence W. Reed, January 1998
* [http://www.mackinac.org/article.aspx?ID=4013 Great Myths of the Great Depression] by Lawrence W. Reed, January 1998
* [http://mises.org/daily/3778 The Gold Standard and the Great Depression] by Robert P. Murphy, October 2009
* [http://mises.org/daily/1623 The New Deal Debunked (again)] by Thomas J. DiLorenzo, September 2004
* [http://www.independent.org/newsroom/article.asp?id=138 Wartime Prosperity? A Reassessment of the U.S. Economy in the 1940s] by Robert Higgs, March 1992
* [http://mises.org/daily/4039 Dangerous Lessons of 1937] by Jonathan M. Finegold Catalan, February 2010
* [http://mises.org/daily/4797 The Real Reason for FDR's Popularity] by Mark Thornton, October 2010
* [[Wikipedia:Great Depression|Great Depression]] on Wikipedia

[[Category:History of the United States]]

Tariff of 1828

2011-02-01T20:21:35Z

RayBirks: /* Links */ add link re Morrill Act

The '''Tariff of 1828''', often called at the time the '''Tariff of Abominations''', was a [[Protectionism|protectionist]] [[tax]] of 48% on goods imported into the [[United States]]. It was implemented to protect industries primarily in the Northern states. Tariffs were the primary source of revenue for the federal government, that is, until the [[Income Tax in the United States|income tax]] on individuals was implemented in 1913.

Southerners were duly outraged at the tariff, as it compelled them to pay tax on goods that they themselves did not import. [[South Carolina]] passed the [[Ordinance of Nullification]] and refused to collect the tariff at [[Charleston, South Carolina|Charleston]] Harbor. The states of [[Virginia]], [[North Carolina]], and [[Alabama]] subsequently denounced the tariff as well.

In 1833, South Carolina shifted gears after much contention and agreed to collect the tariff but only at a much lower rate.

The compulsory collection of tariffs was one of many issues that drove Southern states to secede from the Union beginning in 1860.

==Links==
* [[American Civil War]]
* [http://www.lewrockwell.com/dilorenzo/dilorenzo199.html "Another Court Historian’s False Tariff History"]: [[Thomas J. DiLorenzo]] debunks a misleading narrative on U.S. tariffs, January 2011
* [http://www.kosmosonline.org/group-post/did-tariffs-really-cause-civil-war-morrill-act-150 Did tariffs really cause the Civil War? The Morrill Act at 150], by Phil Magness, January 2011
{{stub}}
[[Category:History of the United States]]
[[Category:Interventions]]

User talk:Mark

2011-01-30T20:02:41Z

RayBirks: /* On welcoming */ new section

==Welcome==
Hi Mark, welcome to the Mises Wiki! Thanks for your contribution at [[Communist Terrorism]]. So that we can be sure we are crediting the original authors and complying with any copyright restrictions, could you tell us where this text came from? Thanks! --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 13:42, 7 January 2011 (CST)
:The text was written by myself. I am the original author. [[User:Mark|Mark]] 13:50, 7 January 2011 (CST)
::Okay, great. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 14:19, 7 January 2011 (CST)
==Table of contents template==
*Hey, Mark! Yes, I have been adding the '''<nowiki>{{TOC right}}</nowiki>''' template in a lot of places, as at your entry of [[Communist Terrorism]]. (More on the Table of Contents template [http://en.wikipedia.org/wiki/Wikipedia:TOC#Table_of_contents_.28TOC.29 here].)
* I am certainly enjoying and appreciating your contributions to the wiki. As a matter of fact, after reading the entry of [[Anna Geifman]], I have since corresponded with her and purchased her latest book at her suggestion. Keep it coming!
* (Separately, I tidied your talk page here just a tad. Hope that's ok.) -- [[User:RayBirks|RayBirks]] 18:15, 9 January 2011 (CST)

== Finding categories ==

Hey, Mark! A quick tip: If you're not sure which category to add to a new page (besides {Stub}), click on the word '''Categories:''' (or sometimes just '''Category:''') at the bottom of almost any regular page, and a full list of available categories will appear for your consideration. Hope this helps a bit. Cheers! --[[User:RayBirks|RayBirks]] 13:31, 15 January 2011 (CST)
:Thank you, I had not even noticed that :) [[User:Mark|Mark]] 18:15, 15 January 2011 (CST)

== Felix Dzerzhinsky‎'s occupation ==

Mark, my question is over [[Talk:Felix Dzerzhinsky‎|here]] for your consideration. -- [[User:RayBirks|RayBirks]] 21:50, 28 January 2011 (CST)

== On welcoming ==

Welcome to [[User talk:Ana Vasconcelos|welcoming!]] :)
A tip or two to consider [[User talk:RayBirks#Welcoming newcomers|here]]. Let me know of any questions! -- [[User:RayBirks|RayBirks]] 14:02, 30 January 2011 (CST)

User talk:RayBirks

2011-01-30T19:57:22Z

RayBirks: /* Welcoming newcomers */

User talk:Forgottenman

2011-01-30T19:54:52Z

RayBirks: /* Renaming a page via 'Move' */ new section

{{User:Forgottenbot/archive
|algo = old(10d)
|archive = User talk:Forgottenman/Archive/%(year)d/%(monthname)s
|minthreadstoarchive = 1
}}
<div style="text-align:center; font-size:larger;">'''This is my talk page'''. Click the "New section" tab ("+") above to start a new topic, or simply <span class="plainlinks">[http://wiki.mises.org/mediawiki/index.php?title=User_talk:Forgottenman&action=edit&section=new click here]</span>. <br />Sign your name with <nowiki>~~~~</nowiki> when you're finished, and click "Save page." Thanks!</div>

== Extensions and interwiki links ==

A few questions:
# What Wikimedia extensions are installed here?
# What types of interwiki links are available for external wiki-linking? [[User:Mcornelius|Mcornelius]] 03:59, 12 November 2010 (CST)
:The extensions we have right now can be seen at [[Special:Version]]: we have categorytree, charinsert, parserfunctions, and cite. If we need more, however, we can ask our developers to install them.
:As far as interwiki links go, it looks like we can use the full names of Wikimedia wikis, but not shortcuts. So, [[wikipedia:Ludwig von Mises]] or [[wiktionary:praxeology]]. For Wikisource, we have to specify the language: [[wikisource:en:The Law]]. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 06:49, 12 November 2010 (CST)

==Rights==
Seems like your rights issue is solved --[[User:Jatucker|Jatucker]] 12:16, 12 November 2010 (CST)
:What do you mean? --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 12:24, 12 November 2010 (CST)
::I thought your permissions were somehow limited but I see that they are not --[[User:Jatucker|Jatucker]] 16:09, 12 November 2010 (CST)
:::No, you gave me "bureaucrat" status, which is pretty much the highest available without being a developer. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 18:57, 12 November 2010 (CST)

== Missing Templates ==

Impressive work on all the background mechanisms, Forgottenman! May I request a few more templates for citing resources, that seem to be necessary for the many articles and parts imported from Wikipedia (e.g. [[Austrian School|here]])? [[User:Pestergaines|Pestergaines]] 08:25, 16 November 2010 (CST)
:I'll have a look; they would be useful. Hopefully though their existence doesn't encourage more copy / pastes from Wikipedia... we have the opportunity to create articles that have much more detail and a less restrictive license, but if we start with WP text, our article is a derivative work of WP forever. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 08:42, 16 November 2010 (CST)
::Well, we can always start from scratch if needed. :)
::Oh, and: big thanks for help with the BookSources! It's a small detail, but very useful when needed! [[User:Pestergaines|Pestergaines]] 14:41, 16 November 2010 (CST)
:::I'm thinking that starting from scratch may be a good idea. I'm not convinced that converting everything into metadata is really that useful. I'll start by adapting Wikiqoute's model of cite journal and we can go from there. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 14:54, 16 November 2010 (CST)

[http://wiki.mises.org/wiki/Full_reserve_banking#cite_note-5 Full reserve banking] has also some template error, as in [[Criticism of fractional reserve banking|this]]; and a video template is required [[Peter Schiff|here]]. That is hopefully all!

On a different topic - do you think it would make sense to start organizing projects in this wiki, or is that premature? [[User:Pestergaines|Pestergaines]] 06:15, 17 November 2010 (CST)
:I'll try to take a look at those templates later today. Are you talking about Wikiprojects? Setting them up is probably best done by someone interested in the subject and not for its own sake – so I wouldn't suggest creating a wide variety of projects, but if there's a particular subject or type of article that interests you, go for it. Active projects can be great ways for people to get involved; abandoned projects make the place look like a big empty building. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 09:40, 17 November 2010 (CST)
::I've created the [[MisesWiki:WikiProject Economic History]], although the name seems a little unwieldy. Before I start creating more pages, do you think the name and (category) is appropriate, or could we shorten WikiProject to Project? [[User:Pestergaines|Pestergaines]] 05:51, 20 November 2010 (CST)
:::Sounds fine to me. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 09:32, 22 November 2010 (CST)

Would it be possible to get some CSS added to [[MediaWiki:Common.css]] to fix the formatting on [[Template:Header]]? I would do it myself but I don't have the required permissions. [[User:Anarchei|Anarchei]] 01:43, 29 November 2010 (CST)

==Innovation and original work.==
I've already logged in and made a very small edit to the mises wiki: pollution. I'm trained in sustainable development and pollution related problems and solutions. All I've done is add the word '''soil''' pollution to the list. Its often overlooked but it is useful because it illustrates the property rights, disclosure aspect, knowledge issues and the issue of people going to the hazard.

My question is not about pollution, its about charity and new tools like [http://www.thepoint.com/ The Point], hopefully you know of that because of Bob Murphy's challenge to Krugman.
Both need to be covered but in many cases the ideas of using charitable solutions are very new, particularly using the pledge based strategy in the Point, would they be considered original work?
Charity is critical because we often argue that charity can pick up some key externalities or public goods; particularly welfare. However charities are very restricted, often because they compete with government as a solution, [ Marx saw them as the major threat to socialism and Lenin wiped out church based charities in the first months ]. They have cash flow problems often because they are "not for profit" and this restricts their investment and banking options and because of donor fatigue and recipient privacy constraints. There's much stuff on this in the writings but its blurred a bit by Ayn Rand's opposition to religion and charity. [Yes I know she's not an Austrian school but most don't know that.] How do we deal with the newest solutions.
I've done some work in this field: [http://appliedimpossibilies.blogspot.com/2010/07/saving-world-by-burying-greens.html Saving the world by burying greens.]
The catch is that in a wiki sense this is classic ''"original work"'' but there are so few of us this could become a largish problem. What's plan A when your the only Austrian school player writing in a given field?
[[User:Wesleybruce|Wesleybruce]] 00:07, 17 November 2010 (CST)

:There are writings around on pretty much any topic, but sometimes one needs to pick and choose a little. A Stub for [[Charity]] was created with a few links that could be of use - perhaps that could help out? [[User:Pestergaines|Pestergaines]] 05:39, 17 November 2010 (CST)
:Regarding "original work," I wouldn't worry about it too much. I doubt that we are going to be as hardheaded about that as Wikipedia is in articles on "new" subjects. The preferred approach might be to build articles based on current work, with references, and then branch off based on that. Thus, Hayek said xyz about charity (he didn't think it had much hope of solving the problem), but his paradigm didn't include new charity options. Or Walter Block and Murry Rothbard say xyz about pollution, but other areas that haven't been looked into are ___.
:You might also get in touch with Stephan Kinsella; he runs Libertarian Papers and if you put something together he might be inclined to have it reviewed and published, especially in a new area like this. That way we'd end up with a published, reliable article to cite. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 07:10, 17 November 2010 (CST)

==Mises Bust for Meritorious Editing==
{| style="border: 1px solid {{{border|gray}}}; background-color: {{{color|#fdffe7}}};"
|rowspan="2" valign="middle" | [[Image:MisesBust.jpg|100px]]
|rowspan="2" |
|style="font-size: x-large; padding: 0; vertical-align: middle; height: 1.1em;" | '''Mises Bust for Meritorious Editing'''
|-
|style="vertical-align: middle; border-top: 1px solid gray;" | For his numerous and highly clueful edits in the early days of the Mises Wiki, I hereby present this Mises Bust to Forgottenman. [[User:DickClarkMises|DickClarkMises]] 13:18, 19 November 2010 (CST)
|}
:That put a smile on my face. Just awesome; thanks. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 13:20, 19 November 2010 (CST)

== The 'Anniversaries' project ==

Hey, Forgot, a question: With all the unfinished anniversary pages, might you be able to create a little "Project Page" (like the "Economic History" project) that gives us a few guidelines about what to put where? I was wondering because the anniversary dates show up as top-ranked in the [[Special:WantedPages|Most wanted pages]] list and it might be helpful for us folks to know how to add things. Thanks in advance! -- [[User:RayBirks|RayBirks]] 14:32, 27 November 2010 (CST)
:I've added instructions to [[MisesWiki:Anniversaries]]. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 16:04, 27 November 2010 (CST)
::Yes, noticed almost right away. Thanks! -- [[User:RayBirks|RayBirks]] 18:16, 27 November 2010 (CST) Wondering now about:

==The concept of "Projects"==
Our only official "project" to date is the [[MisesWiki:WikiProject Economic History|Economic history project]]. Do these four pages qualify as "projects" worthy of the category "WikiProjects" ?

:* [[MisesWiki:Meetups|Meetups]]
:* [[MisesWiki:Anniversaries|Anniversaries]]
:* [[MisesWiki:Current events|Current events]]
:* [[MisesWiki:Community portal|Community portal]]

They all have "project page" as their first tab, yet I don't see any code inside the Economic History project page that makes it unique to be a special project. Seems these four may also be special cases needing focus, building, expansion, explanations, etc. Am not pushing hard for these necessarily. I am just looking to see if these deserve the designation. Thanks for your thoughts as time permits. Maybe we can discuss this in our soon-to-be-developed forum! :) If this is too much for your talk page, I could move to the Google mailing list, if you like. -- [[User:RayBirks|RayBirks]] 18:16, 27 November 2010 (CST)
:On Wikipedia at least the Wikiprojects are primarily for content creation or specific maintenance tasks. My preference would be to continue in that tradition; the other pages you mention seem different from that. "Anniversaries" would be closest, I think, to being an actual Wikiproject, but the thing is that it really isn't a project that will need a lot of maintenance once it is set up (though that will take at least several months). I'd say put it on the Community portal to draw attention to it, but I wouldn't call it a wikiproject. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 19:55, 27 November 2010 (CST)
::'k. -- [[User:RayBirks|RayBirks]] 21:03, 27 November 2010 (CST)

== Placement of stub tags ==

The stubs category page had suggested including the tag at either the beginning or the end of the article. As I see you moving them to the end of various pages, shall we change the instruction as well? Thanks for all your good works. -- [[User:RayBirks|RayBirks]] 11:09, 29 November 2010 (CST)
:Thanks, I didn't realize it said that. If anyone disagrees with my edit comment in my edit to [[:Category:Article stubs|that page]], I'm happy to discuss it. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 11:19, 29 November 2010 (CST)

== idioms ==

Hello
Can i write in spanish my contributions, changes and wikis?

thanks. {{unsigned|09:15, 3 January 2011|Arenas}}
:Hola Arenas: Es posible que vaya a ser un Mises Wiki en español en el futuro, si hay interés. Pero en este momento hay solamente un Mises Wiki en inglés. Si quieres contribuir, sugiero que agregues contribuciones en español en las páginas de "Talk," y yo puedo traducirlas y añadir el texto al artículo. Por ejémplo, si quieres crear un artículo llamado [[Vicente Fox]], añadir tu contribución en [[Talk:Vicente Fox]] y avísame. Dime si tienes otras preguntas; ayudarte es un placer.
:Hi Arenas: It's possible that in the future there will be a Mises Wiki in Spanish, if there's enough interest. But for now there is only a Mises Wiki in English. If you would like to contribute, I suggest that you add Spanish text to Talk pages, and I can translate them and add the text to the article. For example, if you want to create an article called [[Vicente Fox]], add your text to [[Talk:Vicente Fox]] and let me know. If you have other questions let me know; I'm glad to help. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 09:40, 3 January 2011 (CST)

== Don't remove ==

See http://wiki.mises.org/wiki/MisesWiki:Commons#Most_wanted_Stub. --[[User:Reserved|Reserved]] 12:26, 6 January 2011 (CST)
:Ah, if that's what you're referring to then let's create a page and link to it. Putting a red link on a page meant to guide new folks is counterintuitive. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 12:35, 6 January 2011 (CST)
:: Is only an open idea. When you think, it's practicable, then create it, please. --[[User:Reserved|Reserved]] 12:38, 6 January 2011 (CST)
:::I rather doubt it's practicable, but others think so, so I've put it at [[MisesWiki:Most wanted]]. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 12:55, 6 January 2011 (CST)
:::: I don't know, too. But a test is no risk. --[[User:Reserved|Reserved]] 13:21, 6 January 2011 (CST)

== Template ==

I see from above you are the goto guy for requesting templates :) Might I ask for the <nowiki>'''{{reflist|2}}'''</nowiki> one to be activated? It will allow for a far tidier article layout. Thanks [[User:Mark|Mark]] 14:00, 7 January 2011 (CST)
:I just worked on it a bit but it doesn't appear to be working yet; I'll need to do more research to figure it out. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 14:20, 7 January 2011 (CST)
::Thank you very much :) [[User:Mark|Mark]] 14:25, 7 January 2011 (CST)
Thank you for doing the reflist|2 template, I have another request, would it be possible to get the <nowiki>{{refbegin|2}} and {{refend))</nowiki> done also? <span style="font-size:smaller;">—''unsigned comment by'' [[User:Mark|Mark]] ([[User talk:Mark|talk]]) {{#if:Mark|11:42, 11 January 2011}}.</span>
:I've set up the framework, but I'm not familiar with these templates and so I don't know if they are working right now or not. I'll research them later and see what I can find, and write some documentation as well. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 11:08, 11 January 2011 (CST)
::Thanks. I have tried it out here [[Fighting Communist Organizations]] if you look t othe article`s end you will see that any section below the templates (In this case further reading) appears to get squished up? [[User:Mark|Mark]] 11:19, 11 January 2011 (CST)
::Thank you for setting up the template, there is one further issue with it however, '''</dl>''' is showing at the end of the references section? Any idea as to why? [[User:Mark|Mark]] 10:44, 28 January 2011 (CST)
:::Odd. Somehow on Wikipedia that dangling <code><nowiki></dl></nowiki></code> is hidden. Those five characters are only needed if {{tl|refbegin}} uses the "indent" parameter, so I've made them hide unless {{tl|refend}} also uses the indent parameter. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 11:14, 28 January 2011 (CST)
::::Excellent, thank you. [[User:Mark|Mark]] 13:41, 28 January 2011 (CST)

== About ==

Well edit, but you don't need to make a bow to one person. Tucker said it, I copied it.

The hope that this wiki can eventually come to replace major sections of mises org, is also from him. --[[User:Reserved|Reserved]] 11:15, 11 January 2011 (CST)
:You are the one who introduced the language that the Mises Institute "rules" this wiki; my edit provided support for that claim. --[[User:Forgottenman|Forgottenman]] ([[User talk:Forgottenman|talk]]) 11:33, 11 January 2011 (CST)
:: My language is influenced by my troublesomeness to think in English as German. Mr. Tucker may edit this article himself to advance the site (without to quote himself). We are no footmen. --[[User:Reserved|Reserved]] 11:50, 11 January 2011 (CST)

== More on sub-categories ==

I have created a new sub-category of "History of the Soviet Union". When you have a moment, please take a look to see if it is set up properly. You can find it by way of [[Felix Dzerzhinsky]]. Thx. :) -- [[User:RayBirks|RayBirks]] 19:54, 28 January 2011 (CST)

== Renaming a page via 'Move' ==

When offline I recalled the "move" concept. Found the short explanation in the [[Help:Wiki FAQ#Fixing wiki mistakes|'Help' FAQ]]. Have never 'moved' a page before, that I can recall. Would that have worked recently on the original misnaming of the ''History of the Soviet Union'' category as well? I am guessing all live links to the moving page are automatically changed as well, yes? TIA. -- [[User:RayBirks|RayBirks]] 13:54, 30 January 2011 (CST)

Category:Government police

2011-01-30T03:53:21Z

RayBirks: create Occupation sub-category 'Government police'

[[Category:People by occupation]]

Felix Dzerzhinsky

2011-01-30T03:51:04Z

RayBirks: add cats

'''Felix Edmundovich Dzerzhinsky''', born in [[Lithuania]] in 1877, was the founder of the first [[Soviet Union|Soviet]] secret police, the [[Cheka]].<ref name="William E. Duff">Duff p 45</ref><ref name="Nikolai Shmelev, Vladimir Popov">Shmelev p 17</ref>

==References==
{{Reflist|2}}

==Bibliography==
{{refbegin|2}}
*William E. Duff. ''A time for spies: Theodore Stephanovich Mally and the era of the great illegals.'' Vanderbilt University Press. 1st edition 31 December 1999. ISBN 978-0826513526
*Nikolai Shmelev, Vladimir Popov. ''The turning point: revitalizing the Soviet economy.'' I.B.Tauris. New edition 31 December 1990. ISBN 978-1850432135
{{refend}}

{{stub}}
[[Category:Economists]]
[[Category:Government police]]
[[Category:History of the Soviet Union]]

Talk:Felix Dzerzhinsky

2011-01-30T03:49:47Z

RayBirks: more ideas on a 'police' category

==Occupation category: ?==
At this writing, there isn't an occupational category that fits this person. (See current list below of the sub-categories under the ''Biographies'' category.) I suppose he is a ''Policeman'' of sorts, but not quite a ''Soldier''. ''Henchman'' comes to mind, or perhaps ''Enforcer''. Maybe ''Secret policemen'' could be a category. ''Bureaucrat'' is a possibility, and there have certainly been lots of those around the world. :(

(Separately, he could also be described by his politics, which would be both ''interventionist'' and ''statist'', but that is my inference only.)

*Occupational categories (as of January 2011)
:Businessmen
:Economists
:Historians
:Journalists
:Jurists
:Neurobiologists
:Novelists
:Philosophers
:Political theorists
:Politicians
:Psychiatrists
:Soldiers

For the moment, I'll just assign the higher-level Biographies category until something more specific comes along. Ideas welcome. -- [[User:RayBirks|RayBirks]] 21:44, 28 January 2011 (CST)
:He was also an economist, he was commissar for transport and ran the VSNKh (Supreme Soviet of the National Economy) [[User:Mark|Mark]] 02:35, 29 January 2011 (CST)
::Perhaps a category of ''Government police'' is sufficiently generic. This could include any and all of those individuals who are or were enforcers of involuntary, coercive, "top-down" orders. It is generic enough to include, say, [[J. Edgar Hoover]]. A super-category of ''Police'' may be in order with sub-categories of varying degrees of repressiveness. Perhaps also police in a voluntary, natural order could be included in another sub-category. Those could be incorporated later, so I'll run ''Government police'' up the proverbial flagpole to see if anyone salutes. :) Separately, I'll add ''Economists'' to our current subject as well. -- [[User:RayBirks|RayBirks]] 21:49, 29 January 2011 (CST)

Brad DeLong

2011-01-29T20:25:05Z

RayBirks: clarity, wikify, + cats

{{stub}}
'''James Bradford DeLong''' (born June 24, 1960) is an American economist, and Professor of Economics at the [[University of California]] at Berkeley. He received a Ph.D. from [[Harvard University]] in 1987, and has previously served as Deputy Assistant Secretary for Economic Policy, [[United States]] Department of the Treasury, from April 1993 to May 1995. <ref name="Academic CV"> [http://delong.typepad.com/sdj/j_bradford_delongs_academ.html "J. Bradford DeLong Academic CV"], “Grasping Reality with Eight Tentacles”. Referenced 2011-01-29.</ref>

Unfortunately, DeLong is also known for frequently deleting or truncating comments on his blog ''Grasping Reality…'', that refute or object to the premise of his assertions.<ref name=”Horwitz”> Horwitz, Steve.[http://austrianeconomists.typepad.com/weblog/2009/03/why-not-to-bother-with-brad-delong.html “Why not to bother with Brad DeLong”] ''Coordination Problem''. March 6, 2009. Referenced 2011-01-29.</ref><ref name=”Murphy”>Murphy, Robert.[http://consultingbyrpm.com/blog/2008/12/brad-delong-doesnt-even-know-who-hes-dealing-with.html “Brad DeLong Doesn’t Even Know Who He’s Dealing With”], ''Free Advice''. December 3, 2008. Referenced 2011-01-29.</ref>

These apparent lapses in scholarship are important to [[free market]] thinkers because DeLong, a [[John Maynard Keynes|Keynesian]],{{fact}} has cited the “liquidationist” philosophy of [[Herbert Hoover]] as so-called "proof" that Hoover preferred a [[laissez faire]] approach to fighting the [[Great Depression]], and "proof" that it failed. He has quoted selected portions of Hoover’s memoirs:

<blockquote>Now Prof. Boldrin is following a very old trail, all right, his trail was in fact the ruling theory behind the Hoover Administration’s policies in the 1930s. And to quote from President Herbert Hoover’s autobiography, during his administration economic policy was made by quote "the leave-it-alone liquidationists headed by my Secretary of the Treasury [[Andrew W. Mellon|[Andrew W.] Mellon]], who felt the government must keep its hands off the economy and let the slump liquidate itself."<ref name=”Hoover Quotes”> [http://www.iga.ucdavis.edu/Events/stimulus-smackdown-can-deficit-spending-save-the-economy “Stimulus SmackDown: Can Deficit Spending Save the Economy?”], A Debate Between Michele Boldrin and J. Bradford Delong, March 4, 2009. Referenced 2011-01-29.</ref></blockquote>

while ''omitting'' Hoover’s conclusion three paragraphs later:
<blockquote>But other members of the Administration, also having economic responsibilities–Under Secretary of the Treasury Mills, Governor Young of the Reserve Board, Secretary of Commerce Lamont and Secretary of Agriculture Hyde–believed with me that we should use the powers of government to cushion the situation.<ref name=”Hoover Memoirs”> Hoover, Herbert (2007). The Memoirs Of Herbert Hoover: The Great Depression, 1929-1941. Kessinger Publishing, LLC. ISBN 78-0548453933</ref></blockquote>

==References==
<references/>

==Links==
*[http://delong.typepad.com/sdj/ “Grasping Reality…] by The Semi-Daily Journal of Economist J. Bradford DeLong: Fair, Balanced, and Reality-Based

[[Category:Economists]]
[[Category:Interventionists]]