[neffy]

No you´re right. The banking system was bouncing up and down like a yo-yo in the 19th century, on average there was a crisis every 10-12 years (also astonishingly regular). The mean time to crisis is several years longer these days.

[nickik]

Oh, I realize that most people don't study historical banking system but what your saying is only partly and only if you look at specific places.

The crisis in the US system in the 19th century were usually based on bad harvest that lead to a banking crisis. The US was suffering from absolutely horrible banking regulations back then and that was acknowledged by everybody (and was blocked from being reformed for 25 years).

However the severity and duration were not necessary longer then they are today. The Great Depression and Great Recession were easily as bad or worse then any of the recessions in the pre-WW1 era.

Furthermore Canada, who was just north of the US and with a similar economy suffered no banking crisis at all during that period. So saying that it was like a yo-yo in the 19th is simply not true unless you are locking at the US. Even in the US banking systems in some states performed significantly better then others (more diversity in regulation back then).

[neffy]

Actually, some of us do, and some of us study it rather more widely than the US - which is actually regarded as having one of the world's more dubious banking systems during the 19th century.

Some of us would also make the claim that the reason the European banking system was also bouncing up and down like a yo-yo in the 19th, was that the American system kept crashing it (cascade failure.)

Canada's branch banking system was quite different to that used in America, and probably played a part in the relative stability. It probably also helped that during that period Canada was a big exporter, and was to some extent protected by the Sterling zone. However the British banking system was also suffering from periodic crashes during this period.. so it's unwise to get too carried away with that analysis.

[nickik]

Great. So we are in agreement. 19th century banking was not 'like a yoyo' it depended on lots of factors and was the opposite of a yoyo in some places.

The US history of banking is really a fucking mess. Its a travesty.

This is a fun little podcast about banking history in the US:

- https://soundcloud.com/macro-musings/hughrockoff

[JoeAltmaier]

We had a respite after the Depression and banking regulations. Then Reagan(?) and deregulation, and now we're right back to the yo-yo

[nickik]

Bank failures were very common in the US specifically, especially in the GD. The reason is that the US had 10000s of banks because of a regulation called 'Unit Banking'. This made banks incredibly weak (not diversified) to shocks and failed often. Because of other problem in the US system this often lead to lots of banking failures. 1000s of them went down in the GD for example. Compare to Canada where no bank failed (there were less in the first place of course).

It was deregulation that finally abolished that absurd practice along with other changes, including some more regulation, and the removal of lots of old regulation that lead to an improved banking system.

The Depression of 1929-1933 was followed very quickly by a recession in 1937 but banks didn't fail anymore. Pretty much every economist agree that the reason was the FDIC and the consolidation of the banking system in the following years.

To track bank failures today on deregulation in the 80s is a really hard sell, if you study the history of banking you will see huge changes in regulatory structure, types of regulation and so on all the time, including after Reagan. To sell the old 'evil republic deregulation is cause of all evil' story is always easy but unless you are at a political rally it is a pretty meaningless statement.

[hellogoodbyeeee]

We are not back in a yo-yo compared to the 19th century. We are two recessions apart from the longest period of continued growth in US history (1990's). Then there was a recession in 2001, and then another in 2008-2009.5.

You should check out the Wikipedia article for "list of recessions in the United States." It spells out recession duration and time since previous recession.

[chcknsammich]

Markets and bubbles crash because of a mismatch between a price and actual comparable value (which, in their large form, are usually caused by artificial market levers or _regulations_).

Stop with this mysticism inspired "greed is bad and therefore actions inspired by greed are inherently bad so we need even more powerful people who are of course not influenced by greed to set rules for the greedy" nonsense.