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What Caused The Great Depression? Essay

708 words - 3 pages

What caused the Great Depression? There is a huge amount of disinformation spread on this subject. The Great Depression was 100% caused by the Federal Reserve. Anyone who suggests otherwise is a propaganda artist or a fool.

In the mid 1920s, the Federal Reserve used its cartel power to set interest rates at a really low level. This caused inflation and an economic boom. Politically-connected insiders knew that an economic boom was being created. At the start of the boom, they loaded up and debt and bought assets before inflation set in.

The Great Depression is blamed on "greedy speculators". With artificially low interest rates, it made sense to borrow and buy assets. If interest rates are ...view middle of the document...



In 1933, President Roosevelt confiscated everyone's gold, defaulted on the dollar, and declared the USA bankrupt. The dollar was devalued relative to gold, from $20/oz to $35/oz. Since the dollar was no longer redeemable in gold, this allowed a further increase in the money supply. The insiders who borrowed to buy assets at the bottom of the Great Depression were allowed to default on their loans, repaying their debts with devalued dollars. Many loan contracts contained "gold clauses" requiring payment to be increased if the dollar were devalued relative to gold. Congress declared these "gold clauses" invalid, ripping off creditors and providing a massive subsidy to debtors.

In this way, politically connected insiders profited from all three legs of the Great Depression. They profited by borrowing and buying assets at the start of the boom. They were first in line to buy assets with the newly printed money, so they were the primary beneficiaries of inflation. Due to their political connections, they were able to foresee the crash coming. They converted their holdings to cash before the crash. At the bottom of the Depression,...

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