Deja vu

If you have been following the mortgage crisis and the downspiralling US economy, you will find the following account interesting. It is an excerpt from A People And A Nation - A History of the United States, detailing an economic depression that started in 1819. The similarities with today's crisis are so similar, I had to rub my eyes and flip to the cover page to make sure I wasn't reading a contemporary magazine. Underlined emphases are all mine.

But hard times spread. The postwar expansion had been built on loose money and widespread speculation. Banks extended credit too freely, fueling a speculative western land boom. When it slowed, the manufacturing depression deepened, and prices spiraled downward. The Second Bank of the United States reduced loans, thus accelerating the contraction in the economy.

Western farmers suffered too. Those who had purchased land on credit could not repay the loans. To avoid mass bankruptcy, Congress delayed payment of the money, and western state legislatures passed "stay laws" restricting mortgage foreclosures.

The only missing measure seems to be tax rebates.

The narrative goes on to describe how the economy eventually revived by the mid 1820's but nonetheless sowed the seeds for political revival through the Jacksonian movement - the creation of the Democratic Party (by the 1820's, the Federalist party has withered out and the Republicans ran a more-or-less one-party state). What will the present period bring?