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Chicago Architecture Boat Tour and the Great Depression

August 30, 2011

The boat tour is wonderful.  It’s astonishing.

What’s even more astonishing is that my wife turned to me and said, “There must have been a huge real estate bubble in the late 1920’s because so many of these buildings were built in 1928, 1929, and 1930.”

I’d say a solid 1/4 of the buildings along the river were built in the years 1927-1931.

 

 

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  1. beowulf
    August 31, 2011 at 9:47 am

    The real estate bubble in Florida popped in 1926. Chicago may have been buoyed a few more years by its bathtub gin-based economy. :o)

    That reminds me, this old piece by Barry Ritholtz I came across reminded me of your point that Fed monetary policy is transmitted to the economy through the real estate market.
    http://seekingalpha.com/article/92006-housing-is-the-business-cycle

    Which might have worked out OK the politicians hadn’t decided sidestep the issue of income inequality with their bipartisan “let them eat credit” policy of giving every American a mortgage, more or less on demand.

  2. TC
    August 31, 2011 at 10:35 am

    The most basic examination of where credit is created in the economy reveals Leamer is very likely correct.

    Just reading the table of contents of his book is an education.

    http://www.springer.com/economics/econometrics/book/978-3-540-46388-7

    He seems to be an “economic engineer”. Brilliant stuff.

  3. beowulf
    August 31, 2011 at 2:19 pm

    Learner’s point (from 2008) that the Taylor rule should use monthly Housing Starts instead of GDP makes a lot of sense. Take a look at the chart (as annotated by Dr. Housing Bubble).

    • TC
      September 1, 2011 at 3:40 pm

      The Dr. is in! I like Dr. Housing bubble and have read him for years.

      It’s a good idea to use housing starts instead of GDP for the Taylor rule, but I still hate that it uses interest rates to expand and contract debt slavery as the primary macro-economic lever.

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