In a speech he gave at a conference in 2002 honoring the great Milton Friedman on his 90th birthday, Ben Bernanke confessed, “Regarding the Great Depression… You’re right, we did it. We’re very sorry. … We won’t do it again.”
Bernanke was referring to the Federal Reserve’s role in bringing about the Great Depression, which resulted in millions of Americans’ livelihoods wrecked, businesses ruined, and lives uprooted… not to mention millions of deaths worldwide.
You see, there’s a little known but important detail that’s often left out when economists – often leftwing professors in their own right – discuss the factors that led to the depression.
What are they hiding?
Well… during the recession that led up to the Great Depression, interest rates were raised multiple times in an attempt to curb what it saw as massive stock market speculation. As we know, the depression itself would likely have been little more than a recession had the government not felt the need to meddle with the economy, thereby shrinking the money supply.
One would think they’d have learned their lesson by now.
But just two short decades after Bernanke’s admission of guilt on the part of the Fed and his promise to the American public that it would not happen again, they’re repeating all of the same mistakes.
Despite what we’re repeatedly told, we entered a technical recession last July, for the first time since 2009. And since then, all indicators point to the fact that the economy is still on a downward trajectory.
But this hasn’t prevented Biden’s Federal Reserve chairman, Jerome Powell, from continuing to hike up interest rates. In fact, since July ‘22, the Fed has increased interest rates six times.
And as if that weren’t enough, it seems there’s another round planned for May.
The last time the Federal Reserve raised interest rates during a recession – first in 1928 to 4%, then 6% in the spring of 1929, the country eventually found itself in the midst of a Great Depression.
The result was a tightening of consumer credit and spending that had been growing at an unprecedented level during the economic boom of the 1920s
What happened next may sound familiar.
The increased prices led to a massive slump in the sales of interest-related sectors like homes and automobiles.
As interest rates increased, overall consumer spending continued to decrease, tailing off in the spring of 1929, not long after the Fed’s second interest rate hike. And then, finally, on October 24th, 1929 (Black Thursday), as we all know, the stock market crashed.
After the crash, chaos followed in nearly every sector of the economy.
There was a decline in consumer spending, factory production came to a standstill, and many workers were let go. Those who didn’t lose their jobs saw drastic pay cuts, making it nearly impossible for them to feed their families. Many Americans had their homes foreclosed upon and either lost or were forced to sell their possessions.
Unfortunately, it looks like we’re poised for a similar situation as Jerome Powell and the Fed continue to raise interest rates in a desperate and futile attempt to stave off rampant inflation.
As Mark Twain once said, history doesn’t repeat itself but it often rhymes.
Within the past 6 months, we’ve seen a dramatic decrease in home and car sales, due in large part to steadily climbing interest rates. In October of last year, we saw the biggest decline in home prices since 2008.
The difference between 2008 and now is that they at least had enough sense to not raise interest rates.
But then again, we didn’t have an administration that kept gaslighting the American public by telling them that what they were seeing with their own eyes wasn’t happening.
As Will Hild, executive director of Consumers’ Research, said back in July:
Regardless of how the White House tries to spin it, the Biden recession is here to stay as everyday Americans are facing higher prices from the grocery store to the gas pump.
Despite the evidence of a recession, the Biden administration continued to peddle the lie that the economy was not slowing down because there was still consistent job growth, which even Politifact called “mostly a lie.”
However, even that narrative has begun crumbling in recent months as more and more companies in different sectors continue to layoff employees by the thousands.At this point, it’s hard not to wonder how long they’ll keep up this charade.
The lies emanating from the White House – along with the continued recklessness of Powell and the Fed – are drastically increasing the odds that we’ll sleepwalk right into another depression.
Except this time, we may not recover from it.