>The private sector brought on the depression of 1929 and the great recession of 2008.

Bill, while you can always put 10 economists in a room and get many opinions, the prevailing explanation for the start of the Great Depression is horribly reckless credit expansion by the Federal Reserve (initially pushed by the Coolidge administration). Ironically, one of the goals of the huge credit expansion was to artificially adjust prewar exchange rates w/respect to the British pound. Some view the huge spike in bank credit expansion in 1924 as the "actual start of the New Deal". A few years later the Fed (again, pushed by the federal govt) enacted a second increase in money and credit that jacked up stock prices, railroad stock, the value of mortgages and real estate, etc.

Money and credit expansion ultimately increase business costs. The federal government's initial response was to inject MORE money, until the fears of intense inflation become obvious. Of course, by then it was too late, and you had all the rampant selling leading up to the crash.

But the crash was only part of the story. Hoover ordered deficit spending and increased borrowing and urged businesses NOT to cut prices, but rather to increase wages. This further affected the ability of the U.S. to recover from the crash.

And then you had Smoot-Hawley in 1930, which most historians agree was one of the single biggest acts to prolong the Depression. It caused a horrible domino process that nearly destroyed the U.S. banking system. It ultimately closed foreign markets to U.S. products. Smoot-Hawley destroyed American farms and pushed countless U.S. farmers into bankruptcy. This, of course, harmed their creditors (rural banks), who either closed their doors or suspended operations for years. The ones that didn't close had to dump and liquidate nearly everything they had. So people tend to forget just how badly Smoot-Hawley affected the country (even despite the famous scene in Ferris Bueller's Day Off, ha)

By that time, you had crisis situations in Europe, such as Germany stopping payments and freezing credits. This further affected American banks, who were already in a weakened state. Hoover and his administration went into panic, blamed speculators for his own policies, and then jacked up income taxes in 1932.

So - are you still going to say the private sector brought on the Great Depression??? :)

And I haven't even gotten to the damage done by FDR. His actions were a bit more complicated. That's a story for another day.

So all of this was essentially due to government manipulation of the money supply - which does not occur in a truly free market society.

Because this country had a string of Republican presidents in the years leading up the start of the Great Depression, many conclude that it was "free market capitalism" that caused everything. While I suppose it's understandable to generally equate a string of Republican administrations with free market practices, and it is correct to hold the Republicans accountable for many of the key errors that lead to the Great Depression, it is not good history to blame the Great Depression on the private sectory. It was government manipulation of the money supply.