The other deflation aside from falling prices—-
contracting money supply—-during the 1920s depression? Was caused by depositors pulling money out of banks which countered the Feds attempt to increase the money supply. I may be able to pull out some of the money aggregates data from that time, later. But clearly Hoover and other economists of that time thought that again stimulating the loan market will get us out of the depression. The same medicine that got the patient sick was the prescribed cure. To his credit, Treasury secretary Mellon, once the bust arrived, opposed Hoovers interventionist proposals. He knew that the hands-off approach worked in the past.
The difference between that bust and todays?
This bust has everyone from the President, both Presidential candidates, The US Treasury Secretary,
The Federal Reserve Chairman, (almost) the entire US Congress, Wall Street (always) and most Americans agreeing that it is in the nations interest to bail out bad investments(and investors) made during the housing boom. With billions of dollars from future tax collections pledged.
