The biggest reason why the interwar period (especially after 1929) was different in terms of equilibrium level of employment was that the economy had grown substantially (at least in the United States) on the back of a particular level of credit being available to facilitate industrial expansion and consumption. While the collapse of this is often emphasized when discussing the stock market crash and far more importantly the bank failures from late 1930-1932. What is often neglected is that the nature of this as a bank sector originated crash and the impact of the collapse of the banking sector would have on the reduction of credit, the reduction of the velocity of money and the reduction of the money supply. This was made worse because the US Federal Reserve actually moved to shrink the money supply (Operating of the same mindset as you described guiding the German Central bank in your video on hyperinflation, but in the opposite direction: less demand for money - reduce the money supply) in 1930 and 1931. This left banks further under capitalized and worsened the bank runs and bank failures. Banking centered crashes feature long recovery times, with prolonged and lingering economic dislocation and unemployment. After the Global Financial Crisis (another bank centered economic crash), unemployment did not reach pre-recession levels until 2014. This is a good reason why the banking sector needs more regulation and oversight than other sectors (even if one is predisposed towards less regulation), because the consequences are greater and the time frame for self-correcting is of such a great length as to render waiting it out politically impossible.
@@kayedal-haddad I am an admirer of Keynes but I wouldn't call myself a Keynesian. I find it hard to say I am one particular thing as I don't think reality can be captured in any one theory. I just like theories full stop!
@@stjohnspipecasts6801 Are you familiar with the Historical School of Economics? Its rejection of uniform approaches, in favor of economic policy being predicated on a number of factors specific to a given country has frequently piqued my interest. Like any approach, it has flaws too, but I would be rather interested to see your take on it.
@@David-fm6go thank you. I know a bit in terms of the big methodological debate in Germany in the late 19th century but not enough alas to sustain a video talk at the moment!
You sir are a gentlemen and a Scholar! I'm watching this to help with A-level economics very well explained.
And you are very kind to take the time to write so kindly. I do hope that the video helps you with A level economics - you will do great!
The biggest reason why the interwar period (especially after 1929) was different in terms of equilibrium level of employment was that the economy had grown substantially (at least in the United States) on the back of a particular level of credit being available to facilitate industrial expansion and consumption. While the collapse of this is often emphasized when discussing the stock market crash and far more importantly the bank failures from late 1930-1932. What is often neglected is that the nature of this as a bank sector originated crash and the impact of the collapse of the banking sector would have on the reduction of credit, the reduction of the velocity of money and the reduction of the money supply. This was made worse because the US Federal Reserve actually moved to shrink the money supply (Operating of the same mindset as you described guiding the German Central bank in your video on hyperinflation, but in the opposite direction: less demand for money - reduce the money supply) in 1930 and 1931. This left banks further under capitalized and worsened the bank runs and bank failures.
Banking centered crashes feature long recovery times, with prolonged and lingering economic dislocation and unemployment. After the Global Financial Crisis (another bank centered economic crash), unemployment did not reach pre-recession levels until 2014. This is a good reason why the banking sector needs more regulation and oversight than other sectors (even if one is predisposed towards less regulation), because the consequences are greater and the time frame for self-correcting is of such a great length as to render waiting it out politically impossible.
Love Keynes!
Hello from a fellow Keynesian!
Thank you for your kind comments!
@@stjohnspipecasts6801 are you Keynesian yourself?
@@kayedal-haddad I am an admirer of Keynes but I wouldn't call myself a Keynesian. I find it hard to say I am one particular thing as I don't think reality can be captured in any one theory. I just like theories full stop!
@@stjohnspipecasts6801 Are you familiar with the Historical School of Economics? Its rejection of uniform approaches, in favor of economic policy being predicated on a number of factors specific to a given country has frequently piqued my interest. Like any approach, it has flaws too, but I would be rather interested to see your take on it.
@@David-fm6go thank you. I know a bit in terms of the big methodological debate in Germany in the late 19th century but not enough alas to sustain a video talk at the moment!
Your approach to subjects are tasteful. Love your content ✌🏻
That is a kind compliment. Thank you!
Greetings from a French conservative
Love the cast, not the pipe
ᴘʀᴏᴍᴏsᴍ