Crash The Damn Banks And Let’s Roll!

From The Forgotten Man: A New History of the Great Depression by Amity Shlaes [Kindle, Sony, Kobo]:

The nation’s first impulse was correct. Washington might not have needed to do much. The miracle of the 1920s had followed a rough downturn at the start of the decade, and then a comeback. Such crashes—or panics, as they were known—did not make a lengthy slump an inevitability. Perhaps all that was needed now was for owners to sell their holdings, so that the market could find its own bottom. This was what [Secretary of the Treasury Andrew] Mellon would mean when he recommended that stockholders, banks, and farmers liquidate their holdings. The phrase “to liquidate” sounded harsh, but it also represented an old and important argument. Uncertainty was one of the market’s problems. Only when stocks or wages were “marked to market” and found their bottom could they rise again.

Boldfaced emphasis added by me.

And:

Mellon’s “liquidate” phrase sounded harsh but was far less constraining than the president’s restrictions on short selling. When a man marked your stocks to the market price and sold, everyone knew what everything was worth. The dread uncertainty of a further decline would diminish, and stocks might begin to move up again.

Boldfaced emphasis added by me.

The banks refuse to liquidate and mark to market. They refuse to admit their greed has doomed them to insolvency. They’d rather strangle all of us in the years ahead than give up their perks and positions and power.

They want their shell game of hiding objective market values to continue.

If Obama was on the ball — and so far he damn well hasn’t been — he’d force this liquidation. He’d excise the cancer from the economy and get us moving again.

Bernanke prides himself on being a scholar of the Great Depression. So far all I’ve seen him do is repeat the mistakes of back then — you can see it for yourself by reading this book.

Crash the goddam banks and let’s roll.

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Filed under Collapse, Pottersville

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