1929, Credit Cards & Cold Medicine

[jimmygu3]

Just a thought: What would have happened after the 1929 crash if average people had access to the kind of credit we see today? Yes, investors in the '20s had access to margin credit, but the average joe didn't have pre-approved credit card offers sitting in his mailbox and the ability to cash out 110% of his home's value. Would the Great Depression have happened? Would it have been postponed and magnified? Might we be now living in the equivalent of 1935 with credit cards (and a Fed that ensures a growing supply of fake money)?

It's like a person who takes cold medicine for symptomatic relief but doesn't discontinue the unhealthy activity that caused the cold in the first place. Sometimes you can ride it out, making the symptoms milder and the duration longer (soft landing), or sometimes you end up in the hospital with pneumonia. Either way, you're walking around in a fog for a while.

[Spartacus]

Re: 1929, Credit Cards & Cold Medicine

Whenever I see the charts of absolutely massive credit growth, and some accompanying (outraged) commentary, I accept it, and at the same time remember the doom-saying books of the early 90s.

those also proclaimed an absolute peak of credit and predicted massive collapse.

I think the case is much stronger today than it was then, but can't get away from the feeling that in 2020 I may be writing "remember the doomsaying of the early 90s and 07 and 08? M3 is now 1000 times higher than in 07, but things just keep getting better. " (it sounds silly, but there it is).

Just a thought: What would have happened after the 1929 crash if average people had access to the kind of credit we see today? Yes, investors in the '20s had access to margin credit, but the average joe didn't have pre-approved credit card offers sitting in his mailbox and the ability to cash out 110% of his home's value. Would the Great Depression have happened? Would it have been postponed and magnified? Might we be now living in the equivalent of 1935 with credit cards (and a Fed that ensures a growing supply of fake money)?

It's like a person who takes cold medicine for symptomatic relief but doesn't discontinue the unhealthy activity that caused the cold in the first place. Sometimes you can ride it out, making the symptoms milder and the duration longer (soft landing), or sometimes you end up in the hospital with pneumonia. Either way, you're walking around in a fog for a while.

[Sapiens]

Re: 1929, Credit Cards & Cold Medicine

I think the case is much stronger today than it was then, but can't get away from the feeling that in 2020 I may be writing "remember the doomsaying of the early 90s and 07 and 08? M3 is now 1000 times higher than in 07, but things just keep getting better. " (it sounds silly, but there it is).

Quite true, but there is a limit and while you are within bounds of the limit there is a way to make money. Check this article by Fekete for some insight:

http://www.gold-eagle.com/editorials...ete120701.html