Chapter 44 8. The 1929 Bubble Burst: Another Shearing Operation

The Federal Reserve's tightening of money circulation by one-third from 1929 to 1933 was bound to cause a Great Recession.Milton.Friedman After the secret meeting, the Federal Reserve Bank of New York acted immediately, and the interest rate was reduced from 4% to 3%.5 percent, and in 1928 alone issued $60 billion in currency to its favored member banks, which pledged their fifteen-day promissory notes as collateral.If all the money is converted into gold, it will be equivalent to six times the total gold circulation in the world at that time!The amount of dollars issued in this way was thirty-three times greater than the amount of money issued by the Federal Reserve Bank of New York buying notes on the open market!Even more astonishing, in 1929 the Federal Reserve Bank of New York issued another $58 billion in currency to its member banks!

The New York stock market at that time allowed traders to buy stocks with 1% of the funds, and the rest of the money was provided by the traders' banks as loans.When a hot-tempered bank holding a huge amount of credit meets a greedy and hungry securities dealer, the two hit it off. Banks can borrow from the Federal Reserve Bank of New York at an interest rate of about 5%, and then resell it to securities firms at an interest rate of 12%, eating a full 7% spread. Such a wonderful thing in the world! At this time, it is impossible for the stock market in New York not to skyrocket. At this time in the United States, from south to north, from east to west, people were encouraged to take out all their savings to invest in stocks.Even the politicians in Washington were mobilized by the old men of Wall Street. The Secretary of the Treasury, Meron, assured the people in a formal speech that the stock market in New York was not high. Addressing the nation also said stocks were safe.

In March 1928, the directors of the Federal Reserve responded to the Senate's question on whether the loans of securities firms were too high: I can't say whether the loans of securities firms are too high, but I am sure they (securities firms) tend to Safe and conservative. On February 6, 1929, Norman of the Bank of England came to the United States mysteriously again, and then the Federal Reserve began to abandon the loose monetary policy since 1927.The British bankers seem to be preparing for a big event, and the time for the United States to take action has come. In March 1929, the godfather of American finance Paul.If this unbridled greed continued, Warburg warned at the annual meeting of shareholders of the International Acceptance Bank that the eventual collapse would not only hit the speculators themselves, but plunge the entire country into recession.

Paul, who had been silent for three full years of unrestrained greed, suddenly jumped out and warned. Because of his influence and status, his speech immediately caused panic in the market when it was reported by the New York Times. The final death sentence for the stock market came on April 20, 1929, when the New York Times headlined the day with an important announcement: Secret Meeting of the Federal Advisory Committee in Washington Federal advisory committees have formed resolutions and presented them to the Fed's board, but their intentions remain closely guarded.A deep air of mystery remains shrouded in the next steps of the Federal Advisory Council and the Fed's board.The secrecy surrounding this unusual meeting was very strict.Reporters could only get some ambiguous answers.

On August 9, 1929, the Federal Reserve raised interest rates to 6%, and then the Federal Reserve Bank of New York raised the interest rates of securities dealers from 5% to 20%. Speculators fell into a capital trap in an instant. There is no way out of the stock market.The situation in the stock market took a turn for the worse. Sell orders swept the entire stock market in October and November like a river bursting its embankment. The wealth of 160 billion US dollars was wiped out immediately.What is the concept of 160 billion US dollars?That's close to the sum total of all the supplies the United States produced in enormous quantities during World War II.

A Wall Street securities dealer at the time described it this way: After precise planning, the supply of loans to invest in stocks in the New York money market suddenly and sharply decreased. The crisis in 1929 was actually calculated by the international money tycoons. , a shearing operation against the public. In the face of the devastated American economy, the New York Times on July 4, 1930 could not help lamenting that the prices of raw commodities had fallen to 1913 levels.A total of four million people lost their jobs due to a surplus of labor and reduced wages.Morgan controlled the entire Fed system by controlling the Federal Reserve Bank of New York and the mediocre Fed Board of Directors in Washington.

Wall Street continues to eliminate dissidents through financial crises. From 1930 to 1933, a total of 8,812 banks failed. The banks that bought it went bankrupt.