Economic History

Panics of 1792, 1796-97, 1813, 1819, 1825

Panic of 1837

Panics of 1847, 1857, 1866

Free-Banking Era (1837-1862)

The Long Depression (1873-1896)

Starting with the adoption of the gold standard in Britain and the United States, the Long Depression (1873–1896) was indeed longer than what is now referred to as the Great Depression, but shallower. However, it was known as "the Great Depression" until the 1930s.

...Many argue that most of the stagnation was caused by a monetary contraction caused by abandonment of the bimetallic standard, for a new fiat gold standard, starting with the Coinage Act of 1873.

The Great Deflation (1870-1890)

Panics of 1884, 1890, 1893, 1896, 1901

1884 - a panic within the context of the Long Depression and Great Deflation. Fun. (By the way, did you notice that the Great Deflation is dated as beginning 3 years earlier than the Long Depression and ending six years earlier?)

Panic of 1907

Such is his power that JP Morgan single-handedly organizes a private sector bailout, rescuing the American economy. In 1910, America's leading financiers decide to create a National Reserve Bank to prevent future panics from getting out of hand. The "most interesting man in the world" won't always be around to save the day, they reason.

The British Empire maintained the gold standard until Franz Ferdinand's assassination and the onset of World War I.

By the end of 1913, the classical gold standard was at its peak but with the advent of World War I in August 1914, many countries suspended or abandoned the gold standard. According to Lawrence Officer the main cause of the gold standard’s failure to resume its previous position after World War 1 was “the Bank of England's precarious liquidity position and the gold-exchange standard.” A run on sterling caused Britain to impose exchange controls that essentially neutered the international gold standard; convertibility was not legally suspended, but gold prices no longer played the roles that they did under the Classical Gold Standard.

David Glasner argues

According to the Hawtrey-Cassel explanation, the source of the crisis was a deflation caused by the joint decisions of the various central banks — most importantly the Federal Reserve and the insane Bank of France — that were managing the restoration of the gold standard after World War I.

The earlier countries left the gold standard, the earlier they exited the Great Depression. There was also the fiscal government stimulus of arming for World War II.

The Bretton Woods system (1944-1971)

Triffin's Dilemma

In 1960 Robert Triffin, Belgian American economist, noticed that holding dollars was more valuable than gold because constant U.S. balance of payments deficits helped to keep the system liquid and fuel economic growth. What would later come to be known as Triffin's Dilemma was predicted when Triffin noted that if the U.S. failed to keep running deficits the system would lose its liquidity, not be able to keep up with the world's economic growth, and, thus, bring the system to a halt. But incurring such payment deficits also meant that, over time, the deficits would erode confidence in the dollar as the reserve currency created instability.

The rise of Japan and Europe.

In the late 1960s, the dollar was overvalued with its current trading position, while the Deutsche Mark and the yen were undervalued; and, naturally, the Germans and the Japanese had no desire to revalue and thereby make their exports more expensive, whereas the U.S. sought to maintain its international credibility by avoiding devaluation.[21] Meanwhile, the pressure on government reserves was intensified by the new international currency markets, with their vast pools of speculative capital moving around in search of quick profits.[20] 

In contrast, upon the creation of Bretton Woods, with the U.S. producing half of the world's manufactured goods and holding half its reserves, the twin burdens of international management and the Cold War were possible to meet at first. Throughout the 1950s Washington sustained a balance of payments deficit to finance loans, aid, and troops for allied regimes. But during the 1960s the costs of doing so became less tolerable. By 1970 the U.S. held under 16% of international reserves. Adjustment to these changed realities was impeded by the U.S. commitment to fixed exchange rates and by the U.S. obligation to convert dollars into gold on demand.

Nixon cancels the dollar's direct convertibility into gold.

Stagflation

Misery Index

Okun found by adding the unemployment rate to the inflation rate.

1 percent inflation better than 4 percent inflation? Really? Deflation reduces misery? Really?

Misery Index (band) - a deathgrind band from Baltimore, Maryland

Jimmy Carter and Ronnie Raygun deregulate as a means to promote growth (or what their wealthy campaign contributors want). Carter's deregulation and inflation czar was Alfred E. Kahn. Reagan signals war on organized labor by breaking PATCO. Income redistributes upwards. Volcker breaks inflation and tosses many people out of work.

Kahn's strong advocacy of deregulation stemmed largely from his understanding as an economist of marginal-cost theory. In his time at the New York Public Service Commission he was instrumental in using marginal costs to help price electricity and telecommunications services; this was novel at the time but is routinely performed today.

Deregulation (privatization)

LBJ privatizes Fannie Mae (housing)

Jimmy Carter's Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) phased out a number of restrictions on banks' financial practices, broadened their lending powers, allowed credit unions and savings and loans to offer checkable deposits, and raised the deposit insurance limit from $40,000 to $100,000 (thereby potentially lessening depositor scrutiny of lenders' risk management policies). 

In October 1982, U.S. President Ronald Reagan signed into law the Garn–St. Germain Depository Institutions Act, which provided for adjustable-rate mortgage loans, began the process of banking deregulation, and contributed to the savings and loan crisis of the late 1980s/early 1990s. 

In November 1999, U.S. President Bill Clinton signed into law the Gramm–Leach–Bliley Act, which repealed part of the Glass–Steagall Act of 1933.

W. Bush attempts to privatize Social Security but fails.

Obama makes noises about "reforming" Social Security (via price index) and Medicare but hasn't yet. 

Obamacare incomplete (far from it) step in right direction towards single-payer.

Creation of Consumer Finance Protection Bureau 

Krugman says real interest rates were above historic norms during the 80s and 90s.

Savings and loan crisis (1980s)

Black Monday (1987)

Early 1990s jobless recovery Unlike Volcker's recovery, similar to subsequent recoveries after the dot-com and housing bubbles.

Japanese asset price bubble (1980s)

Lost Decade (Japan, 1990s-)

Abenomics

End of the Soviet Empire. West Germany absorbs East Germany. China abandons Marxism, embraces Capitalism. TINA.

European common currency (1 January, 1999)

Swedish banking crisis (early 1990s)

Latin American debt crisis (late 1970s and 80s)

1994 crisis in Mexico Improvised bailout of U.S. banks works.

1997 Asian financial crisis Harsh IMF-imposed structural adjustment programs (courting "investor sentiment") don't work well. China resolves to build up reserves even as its capital controls helped it avoid currency run.

1998 Russian financial crisis

Dot-com bubble followed by jobless recovery in 2000s

Argentine crisis of 2001-2002

US housing bubble (2002-2006)

Global financial crisis of 2007-2012

European Feedback Cycle of Doom

Republicans in Congress push sequestration and fiscal austerity while the Fed maintains ZIRP and quantitative easing.