It is typical of Americans to blame president for anything that goes run, especially when it comes to nationwide financial troubles. From George Washington to Barack Obama, nearly every president has been blamed for some kind of miscalculated fiscal, spending or monetary policy. Yet when you examine the nature of our system, especially so since 1913 (advent of the federal reserve system) the presidents have hardly had any real command of fiscal and monetary policy. In fact, the federal reserve is so separated from the command of the president (really as a protection built into the system) that his only real decision making is in deciding who should run the federal reserve during his administration. In the case of Obama, he actually kept the same federal reserve chairman, Ben Bernanke, as Bush appointed; the person who, in many Americans point of view, is responsible for steps leading up to the crash of 2008. But federal financial policy leading to recessions and depressions is as old as the republic itself. In 1932 Andrew Jackson started to take measures to destroy the second bank of the United States of America, the equivalent to the federal reserve in the early 19th century. In 1936 he succeeded in revoking its charter and by 1937 the country was in deep financial turmoil because credit dried up when the job of the bank of the US was dumped on a number of smaller banks. This credit crunch was coupled by a monetary crisis; many banks wouldn’t accept paper money for loan repayment and many people became out of luck in this department. The crisis was blamed on Jackson, especially so by the whigs (the other party in the two party system of the time). Van Buren (D) was president for only 6 weeks when things took a turn for the worst but even he was blamed. In the case of the panic of 1837, the president’s reckless fiscal/bank/monetary policies were largely to blame with regards to Andrew Jackson. He conducted a ‘war on the bank’, blaming it for all the troubles, but, when finally abolished, no new system was even thought of and thus Jackson’s action and inaction directly caused the panic of 1827. Flash to October 1929. Hoover, the 4th president to work within the framework of the Federal Reserve system, is taken by surprise to find that the federal reserve was lending millions of tax payers dollars to support a system of call-market trading and buying and selling of securities on margin, or with lent out money. Essentially, the federal reserve was loaning at 4% to banks like JPMorgan who would in turn loan to brokerage houses at 6-9% who would then loan money to individuals looking to buy stock on margin for 12-20% (using the stock the people bought with the lent money as collateral in the transaction). Again, Hoover wasn’t even aware of the magnitude of this financial disease, nor of the Federal reserves very key role in getting the ball rolling, until a few weeks before Black Thursday. Thus, by the time he started to take control of things, the stage was already set for a titanic rupture in the financial system. Hoover, hand-cuffed by circumstances, actually decreased the federal reserve interest rate, which caused even more money to flood the call market and even more speculative buying and selling (on one of the days the volume of trading was so great that the meter in the NYSE broke down for 15 minutes causing huge panic on the floor). Thus, all things considered, even though Hoover shouldn’t have appointed ex-bankers to run the Fed and even though he should have paid more attention to the importance of the call-market and buying stock on margin he really can’t be completely blamed. The crisis of 1929 was primarily a crisis of a flawed private financial system and less so a crisis of fiscal/lending/monetary policy of Herbert Hoover. And yet, as the cartoon above shows, he was blamed as if he was the one forcing people to buy stock portfolios with money that they never had in the first place. Fast forward to 2008. Suddenly, in the same week, Lehman Brothers (a bank worth over 100 billion dollars) goes bankrupt, AIG, the second biggest insurance company in the world, is purchased by we the people, and the government leverages a by-out of Merryl Lynch, another multi-billion dollar bank/investment firm on wall street, by Bank of America. What exactly happened in September 2008 is still being sorted out but the Wall Street Journal was spot on when they said that the events would change capitalism forever. Essentially, every major bank and was purchasing and selling billions upon billions in securities pegged to the housing market in the United States of America. One of the culprits, mortgage backed securities, were packages of sometimes million and millions of dollars worth of mortgages were traded by hegdefunds and investment banks. How they figured out how to make money off of rapidly buying and selling what is essentially debt, or owed money, is beyond my understanding of economics. The insurance companies, like AIG, sold credit default swaps, insurance against people defaulting on their loans, to the banks trading MBSs. Thus, when the housing market reached its maxmum (supply in US became higher than demand), everything came crashing down as people defaulted on their loans. This was followed by a credit crunch, trillion dollar stimulus spending, rescuing of the entire private financial infrastructure by us tax-payers and the rest of the story everyone knows. So, who do you blame. Of course you blame that guy George for everything. Surely he cooked up this whole mess as a get rich quick scheme. But wait? Again, George didn’t have anything to do with the day to day of the Fed. So, besides appointing half of the former board of directors of Goldman Sachs to the Federal Reserve board, did Bush really cause this financial crisis? As for the recession, we blame Comrade Barak Obama for forcing us to live under a Stalinist regime as he pumped trillions into the economy with his stimulus plan, which was really a scheme to transfer money from the rich to the poor. But is the stimulus spending to blame for the slow growth rate of businesses in America, or can we blame the banks that are still overly cautious about lending? Again, it still remains to be seen. All three of these events are similar, not only in that they triggered recessions, but also that presidents seemed to be the scapegoats for all of them. This tells us that the American people are quick to blame their executive when things go wrong for them. Instead of realizing that the capitalist system is inherently flawed in that it has recessions and growth periods built right in, the people look to blame the government. That’s the American mentality and that’s what has happened from 1787-present.