Talk:Crash of 1929

Mild Downturn???

Friedman and Schwartz noted that during the sixty days prior to the Crash, productivity was falling at annual rate of 20%, prices were falling at an annual rate of 7.5%, and personal income was falling at an annual rate of 5% <1963, p. 306>. Raburn Williams <1994, pp. 138-9> notes that the index of industrial production declined from 125 in June to 118 in October, which is an annualized drop of around 27%. If a 20% (or 27%) annualized decline is "mild" I'd hate to see what is meant by severe. Russell D. Jones 18:29, 9 June 2010 (UTC)

So these data, it seems to me, show that the cause of the crash was that speculators finally came to realize that the commodity in which they were speculating was loosing value and they got out. That's the cause of the crash. This article tends to focus on what caused the speculative bubble in the first place. Russell D. Jones 18:51, 9 June 2010 (UTC)

Russell - I am pleased to have someone take an interest in this article - especially someone who is far better qualified to contribute than I am. As far as I can recall, I drafted the present version as a stopgap to provide the bare essentials necessary to support a reference to it in the article on the Great Depression. I should be glad to see it replaced by something more substantial.

I seemed to have accepted Bernanke's account of what happened without checking on the relevant statistics, and to have aped his use of the adjective "mild". I have now deleted the passage "comparatively mild", leaving unchanged the implication of the rest of the sentence that it was less severe than what followed. Perhaps I should have questioned Bernanke's diagnosis:

The correct interpretation of the 1920s, then, is not the popular one--that the stock market got overvalued, crashed, and caused a Great Depression. The true story is that monetary policy tried overzealously to stop the rise in stock prices.[1]

I don't feel inclined to return to the subject and review the evidence, but I should be more than happy if you were to do so. (The article on the Great Depression would, no doubt, benefit from your editing as well). Nick Gardner 09:15, 10 June 2010 (UTC)

PS: the language of the article is, at present, British English so I have reversed your Americanisation of one of its words. Nick