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The Great Depression (NEW CONCEPTS)
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Ishmael


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It is safe to say then that, barring a new argument, the most obvious cause of the Great Depression is not causative at all.

Stock Markets are, by design, anticipatory. They do not cause the events they foreshadow so much as they warn of what may be coming. If the market crash of 1929 was rational, it was a reaction to some factor already present in the market.

We need to find that factor.
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Hatty
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In: Berkshire
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Then the second-worst market-crash in History happened in 1937-1938, but this came at nearly the end of the Great Depression. Indeed, it's a wonder no one has suggested this crash caused the Depression to end.

'37-'38 coincides with the beginning of the end of the Third Reich.

Germany seems to get stronger when everyone else is struggling. We've touched on the growing strength of National Socialism. After Lehman's collapse, coincidentally or not, Angela Merkel gained huge popularity and was successfully re-elected. A German crash would apparently be an unimaginable calamity, but who knows?
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Ishmael


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The key date is 1933.

If my analysis is correct, we may surmise that the Nazis would never have come to power had they not come to power that year.

On what basis do I make this claim?
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Mick Harper
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The second election in late 1932 was the first time the Nazi vote went down.
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Ishmael


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That is probably a clue.
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Ishmael


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I began to reexamine the Great Depression only after first beginning to rethink our present economic crisis. I did so by applying to it a principle similar to that used in some of our historical analysis.

Though it has not yet been raised to full axiomatic status within Applied Epistemology, many of us have long suspected that mass and concentration are greatest at the origin (except where evidence overwhelmingly indicates otherwise -- of course). A prime case being the question of the Jewish homeland which, by weight of sheer numbers and density, would appear to be somewhere in Germany and certainly not Palestine.

Nevertheless, failure thus far to use this axiom to build a complete case for even one thesis has kept it on the AE bench and off the field. It seems a solid principle but we need to use it somewhere convincingly.

It occurred to me that the principle might be applicable to analyzing the current economic crisis, where everyone seems agreed that the U.S. stock market and subsequent real-estate collapse triggered the world-wide decline.

But as we have seen with our analysis of other stock-market collapses, these are not invariably associated with economic downturns. They do not appear causative. They do, however, appear to be diagnostic -- in that every economic downturn is anticipated to some degree on Wall Street.

Wall Street is located in the United States and that also focuses attention on America.. However, this may be misleading. By applying our AE principle -- mass and concentration are greatest at the origin -- we find ourselves looking at another potential point of origin for the crises.
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Ishmael


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It appears to this observer that the current calamity's center of mass is more squarely fixed within Europe than it is within the United States. Most of the disruption and chaos is centered there. If so, our trial axiom tells us that this is where the economic crisis began.

So what of the Great Depression? Might it fit this same pattern? Is it possible that the Great Depression also began in Europe and was only first anticipated by the American Stock market.

There's some evidence here again that the Depression more deeply impacted Europe than it did the United States. After all, the Nazis and Mussolini and Franco came to power in Europe; the fascists didn't achieve this in the United States (though America did indeed produce a President for life). Most historians are not shy about attributing the rise of Fascism to the depth of the economic crises. If we accept this thesis (and lets go ahead and do so provisionally) then we must conclude the Great Depression was worse in Europe than in the United States.

So now we have a pattern: A twice played-out economic crisis that is most strongly felt in Europe but shows no evidence of itself there until after its detection by the American stock market.
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Mick Harper
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As you know, we have to support new ideas. But... your use of the word 'Fascist' is misleading in this context since Musso came to power in 1922, Hitler in 1933 and Franco in 1937-8-9. Moreover, they are only linked via some fairly woolly foreign policy connections -- as regimes they were quite different.

If you are looking for a European cause (and I agree this is a promising new wrinkle) have a look at debt repayment schedules.
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Ishmael


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Mick Harper wrote:
If you are looking for a European cause (and I agree this is a promising new wrinkle) have a look at debt repayment schedules.


That may be relevant. We will see, once I identify the primary trigger. I can name names using AE principles. However, as yet, I don't know the whys and hows.
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Ishmael


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I rely on the fascists only to bolster my claim that the Great Depression was worse in Europe. That's the only role they play in this story.

Ergo: If the Nazis began hemorrhaging votes in 1932, it may suggest Germany had already entered recovery.
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Ishmael


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So my reasoning to this point worked something like this.

1) If concentration and mass are greatest at the point of origin, we must conclude that the current economic crisis originated in Europe, despite its apparent origin in the U.S. stock market crash of 2008.

2) If this is true then what happens if we assume the same pattern for the Great Depression (that it too originated in Europe despite its apparent origin in the U.S. stock market crash of 1929).

What happens of course is that we then have the same phenomena happening twice. That opens space for the application of another AE dictum; same effect, same cause. If the same effect happens twice, the same cause must also happen twice.

Now we finally have a principled means of identifying a potential causative agent. Our candidates are limited to those events that happened in Europe prior to 2008 that also happened in Europe prior to 1929.

Of course, whatever happened in Europe prior to 1929, by definition, also happened there prior to 2008. We aren't looking to attribute the two crises to the same singular event. We really want a second occurrence of the same kind of event. Moreover, related parameters ought to remain as consistent as possible. For example; the number of years between each candidate duplicate trigger and the subsequent stock market crash ought to remain congruent.
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Mick Harper
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1. The adoption of the gold standard in Europe in 1925
2. The adoption of the Euro in Europe in 2002.
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Ishmael


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:-)
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Ishmael


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Now I will actually build a slightly different case but we are both on identical tracks and I believe we are the only persons on the planet headed in the right direction.
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Ishmael


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How many years ought to pass between the triggering event and the appearance of the first symptom of disaster (already identified as the Stock Market crash)?

Reasoning that economic crises move over the world much as might a tsunami, I guessed that the phenomenon must end first where it began, about the same number of years before it finally fades where it is last to strike. Thus the size of a disaster wave can be measured relatively by noting the breadth of time between its disappearance in Europe and its subsequent disappearance in the United States.

In the case of the Great Depression, though historians are quick to attribute the origin of the disaster to a singular event -- the stock market crash -- they credit its end to different factors depending on the specific location discussed. In my judgement, the cause of the Great Depressions ending is simply invariably attributed to whatever big event is happening in the country in question when things finally start looking better.

For example, in the United States, it is taken as Gospel that the Great Depression was ended by World War II, beginning in 1939, when the United States began arming the democracies of Europe. I suggest this attribution is made for no better reason than that World War II happened to start the same year that the American economy began to noticeably improve.

Likewise, in Germany, the man who who would later start World War II is given credit for righting the German economy -- interestingly thought to be the first European economy to emerge from the malaise. Again I suggest this attribution is made for no better reason than that Hitler happened to come to power in 1933 -- the same year that the German economy began to noticeably improve.

(As has been noted however, if the fate of the Nazis was tied to the economy, as historians have told us, there's reason to believe the German economy had begun to improve as early as 1932).

Nevertheless, we now have two points on our measuring rod for the crises wave form. If theory holds, the wave of the Great Depression finally departed Germany in 1933 and dissipated beyond the United States in 1939.

That's a six year gap. The wave that left Germany in 1933 took six more years before it left the United States in 1939. As that is how the Depression ended, might we be able to use this data to find the Depression's origin?

As we know the wave initially hit the United States in 1929, it stands to reason that the same wave might actually have been seen first in Germany six years earlier. That puts us in 1923.

Germany. 1923.
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