Posted on 07/29/2013 4:19:27 PM PDT by Nachum
Paul Krugman has spent the past three years inveighing against any immediate steps to reduce the growth in government spending on the grounds that we would merely be repeating the mistakes that Fed policymakers made in 1937. In that year, spending cuts and insistence on a balanced budget catapulted the United States into a deep recession, one that essentially spelled the end of the New Deal.
On Monday, Krugman doubled down, claiming that policymakers had progressed past 1937, and that we were risking a repeat of 1931. That was the year things really fell apart, when policymakers failed to contain a banking crisis in Austria, which eventually resulted in the spread of a global contagion, bringing down governments worldwide -- and bringing the Great Depression to its crushing denouement.
The European debt crisis is certainly something to be concerned about, but let’s step back a moment and be clear about something: at least in terms of policy, this is nothing like 1937, much less 1931. And if anything, 1937 tells us more about of the dangers of real-world Keynesian experimentation than anything else.
Before going further, it’s worth noting where I’m coming from on this. In a former life, I served as a research assistant on a two-volume history of the Federal Reserve. My assignment was reading, digesting, and summarizing the Board of Governors and FOMC minutes for the 1930s and 1940s. I remember at the time thinking how unfortunate it was to be assigned the ’30s, such a useless decade. After all, the news in 1997 was all about how we had finally defeated the business cycle, with only minor recessions ahead of us. At any rate, I say this to disclose that I don’t have a degree in economics, but I do know a thing or two about
(Excerpt) Read more at realclearpolitics.com ...
Insanity.
Is Krugman saying that the congress tried to slow down public works spending and balance the budget, and that's why unemployment stayed high?
Huh? Even by 1940 unemployment wasn't great, but it was still high.
I probably don't want to know Krugman's answer, but how come when Reagan was President, we went from $hit in 1980, to kicking ass in 4 short years? We cut taxes and regulation and destroyed the soviet empire 5 years after that.
Oh, and with moaning and groaning about $150 billion dollar deficits.
Give me something that has been PROVEN to work, like Reaganomics, over the asinine hamster wheel Obamanomics.
Five years after we elect the guy we're in worse shape on every measurable level.
The Nobel prize was founded upon the guy who gave us dynamite. You, Krugman, could not blow your nose if dynamite were brains.
Note that all these problems are created by government manipulation of the economy, not problems with the economy itself.
Re-elected? Easy. Always come in at the bottom like FDR. Don’t come in a the top like Hoover. By 1936 the economy had been growing since 1934. So FDR could point to how things were improving under his administration, and would only get better in a second term.
Well at least he admits it was the government that screwed up.
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