I think I may have also been gone on vacation when Lucky posted the article. What I found astonishing were the similarites of the bubble, but of course the differences in how it was handled.
“That’s not to say that it was an era of perfect laissez-faire; human beings are not capable of it and likely wouldn’t want it if they were. A powerful voting bloc arose that clamored for continued government intervention since it was political manipulation of the markets that had created them in the first place. They desperately needed its continuance to sustain them. They demanded taxpayer money to lessen the blow of their mistakes, legal attack on their competitors, and license to disregard their pledge to the rule of law.
These people fell into three broad categories: the debtors looking for relief, businessmen seeking protectionist measures, and the politicians wanting power. Their arguments read like today’s New York Times, and there is no need here to repeat them — you’re no doubt already familiar with them.”
And I love that the understood the problem, didn’t blame the outcome:
“In 1819 America, nobody blamed the effects for the Panic of 1819, they rightly blamed the cause; they blamed (in Caroline Baum’s words) the “friendly central bank.” As Professor John Dobson points out, “the [central] bank’s policies fueled inflation, and it was popularly viewed as a major contributor to the Panic of 1819.” After this encounter with central banks, “hard money leadership was abundant and influential” (Rothbard 2007, p. 207).
The urge to bail out debtors was fought against not only from a practical but from a moral level as well. Besides Tennessee state representative Robert Allen warning his colleagues that “if people learn that debts can be paid with petitions and fair stories, you will soon have your table crowded” (Rothbard 2007, p. 43), the pages of the influential Pennsylvania Aurora argued that any such bailouts would not only be economically unsound, but unjust, being a special privilege to the debtor (Rothbard 2007, p. 56).”
I wonder how long this will last for us.
“The Panic of 1819 lasted about three years — the Great Depression lasted well over a decade. When looking for solutions to our current mess, we should study a winning team; instead we seem determined to channel FDR, the same arrogant fool who took an economic downturn and stretched it into a decade-plus tragedy.”
