Another Depression Parallel

I found another interesting parallel to the depression. The first one was the rise Installment Accounts - the Credit Cards of the 1920's. Today's parallel is about the moratorium on foreclosures. This is from a living history site based in Nebraska and how it was thought that a hold-off on the foreclosures would help the problems.

Eventually, several Midwestern states, including Nebraska, enacted moratoriums on farm foreclosures. Generally the moratoriums lasted a year. The theory was that the Depression couldn't last that much longer, and then farmers would have the income to make their payments. But the Depression continued, the moratoriums ran out and farmers continued to lose their farms.

It reminds me of people talking today about holding the reset rates on ARMs for another 5 years and how that would help all the foreclosure problems. Even though most of the people could never afford their houses at anything other than a very, very low teaser rate. They think if they just hold off the consequences long enough there won't be consequences.

We hear so often about how Ben Bernanke, Chairman of the Board of Governors of the U.S. Federal Reserve, is an expert on the Great Depression. From Wiki-

Bernanke is particularly interested in the economic and political causes of the Great Depression, on which he has written extensively. On Milton Friedman's ninetieth birthday, November 8, 2002, he stated: "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."

However maybe he is too familiar with it, so familiar that so many things are seeming eerily similar. Perhaps coincidence, perhaps self-fulling prophecy.