We Are Not Depression Proof | The American Spectator

Old age. Terrifying. Really scary. An invariably lethal disease. Not just sometimes. Invariably. And I used to think it was lethal, mostly because of mistakes we individuals make: obesity, smoking, careless driving. But it’s not. It can be caused by government mistakes. The rate of suicides spikes because of economic catastrophes caused by federal mistakes on a huge scale.

The Great Depression was sparked by an insanely wrong-headed mistake in 1929 and then another one in 1931. The Depression was largely cured by the Federal Deposit Insurance put in place by the New Deal. Then it was born again in an evil way by the Federal Reserve’s catastrophic mistake of drastically tightening money in 1937.

The American economy was revived dramatically by the Japanese bombing of Pearl Harbor and the U.S entry into World War II, which led to a huge and needed increase in Federal spending and growth in the money supply.

After that, the economy roared back for about 65 years. Immense increases in the defense budget, a constant growth in the money supply, and making America into a permanent welfare state created what were called “automatic stabilizers” that kept the economy permanently in deficit but also stable and strong.

Then there were some hiccups, and then a huge pothole in the road.

The hiccups were gimcracks on Wall Street that allowed banks and even groups of buccaneers to create stupendous liabilities with basically the hope and prayer that other buccaneers would always be there to bail them out — and that in the worst possible case, the federal government in the form of the Treasury and or the Fed would bail them out.

After all, who would conceivably want to see the USA go into another Depression?

But then it happened. Something unimaginable. A personal grudge between the Secretary of the Treasury, formerly head of an immense investment bank called Goldman Sachs, and the head of another investment bank called Lehman led to stepping onto the precipice of disaster.

Lehman was wildly overleveraged. Its assets were shaky. It needed a “bailout” just for a week or so to keep it from collapse, and the Treasury could have done it with the stroke of a pen and no long-term cost to the taxpayers.

But Treasury would not do it, likely because of the grudge between the two Wall Street bigwigs.

Then other dominoes began to fall. Had it not been for heroic work by the Bank of America and Merrill Lynch, there would have been grass growing on Wall Street and another Great Depression.

It came within inches of calamity. This was only years ago.

This tells us something: we are NOT Depression Proof still. If there are foolish people playing games with our lives, we can have another Great Depression. A strange phenomenon called Bitcoin has swept the world. Even Mr. Buffett, the world’s smartest man, does not understand it. His late pal, Mr. Munger, called it “rat poison squared.”

If he does not get it, if no one I have ever talked to can explain it to me, then it’s dangerous.

But TRILLIONS of dollars are invested in it. If the Emperor’s New Clothes are ever stripped away, grass could grow on Wall Street. People will lose everything. Some people. And there will be suicides. And other forms of death.

I don’t know if it scares you — but it scares me.

READ MORE from Ben Stein:

Saving Is a Must

Mr. and Mrs. Bureaucrats, Show Us Some Mercy

How to Break Inflation’s Back