The 1921 Recession
Did you know that in 1921 we had a one day market drop that was larger than the market drop in 1929?
You know why you probably aren’t aware of this? The government did nothing. By 1923 the markets started on one of the biggest periods of economic growth in the history of the US.
In 1929 when the markets dropped, it actually made a rebound by 1930 when it returned to April, 1929 levels. Keep in mind that the market had risen 30% from April to September of 1929. In a panic to try to drive the market back to September 1929 levels congress stepped in and passed the Smoot-Hawley Tariff Act. This, along with other tariffs and price controls only exacerbated the situation by stifling global trade. US exports decreased by half by 1933. From late 1930 the market declined steadily until it hit bottom in 1933.
If the Federal Government had let the markets perform as they should, we could have been out of the depression much earlier.
This is not me being a libertarian, these are commonly accepted facts. Even Fed Chairman Ben Bernanke conceded that government interference prolonged the depression when he and Secretary Paulson were pitching the bailout to the House Financial Services Committee.