Tuesday, October 7, 2008

History is Repeating Itself

Herbert Hoover was one of the top 10 worst presidents this country has ever seen. His actions helped exacerbate the Great Depression, and it was because he ignored the good advice given to him by Andrew Mellon, His secretary of Treasury.

Read the following quote from this Forbes Magazine article very closely;

Mellon remembered 1907 and 1920 and knew that a key to capitalism is allowing badly run businesses to go bust in a down cycle. He told President Hoover that the destructive forces unleashed by the crash should be left free to "liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate [and so] purge the rottenness from the economy."

Unfortunately, social engineer Hoover rejected this wise advice and began to do a great deal of fiddling. As the recession deepened and persisted, he fiddled more and more. But all this fiddling did, in effect, was to keep badly run and fundamentally insolvent businesses afloat.

Jump ahead 80 years later and you have Ron Paul, Peter Schiff, Many Free Market Economist and Internet bloggers saying the same thing Mellon did... Lets let the bad debt be liquidated and the insolvent companies and banks go bust. Instead, the congress and senate pass the bailout package and continue to try hopeless fiddling, just as Hoover did, and make the problems worse.

Hoover Ignored Andrew Mellon and the Great Depression became a reality. Now we are once again ignoring the same voices of reason and repeating the same mistakes that will inevitably lead lead to the next depression.

Those who don’t learn from the mistakes of the past are destined to repeat them

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