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To: aposiopetic
It depends on what you think a recovery is though. An economic expansion is a increase of the nation's capital stock. A recession is a contraction in the capital stock. (Unemployment has nothing to do with the definition of a recession). Digging ditches and filling them back in again may lower unemployment and put money in people's pockets, but it is consuming capital, not growing it. So ditch digging can never get you out of a recession. The same logic applies to munitions. Consumers don't chose to buy munitions so building munitions is a dead loss in terms of capital. A recession ends only when natural resources and labor are directed to the production of things consumers want to buy, and when plants, tools, and inventories dedicated to these productive activities begin to increase.

Now it is often argued that making munitions (or digging ditches) puts money in the pockets of workers, who then spend the money back into the economy creating demand for the goods and services they consume. This is called the Broken Window Fallacy. Its true the workers will get paid and spend the money. But it ignores what the money would have been spend on and what effect that would have had if the government hadn't taxed it away from those who earned it. Others workers will not get the benefit of the lost spending power of the taxpayer.

As for conscripting workers... There's no denying slaves have capital value just like machines. That's not what you had in mind though.

Printing money is never helpful. It just transfers wealth through inflation from savers to the government. It's more beneficial to the economy to let savings remain in the economy. An efficient economy is one that maximizes consumers ability to have what they want to have and do what they want to do, given a scarce pool of resources. If the things government spends money on were economically efficient consumers would have chosen them in the first place so taxation and inflation (money printing) always reduce the efficiency of the economy.

36 posted on 07/29/2009 8:57:11 PM PDT by SeeSharp
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To: SeeSharp
An economic expansion is a increase of the nation's capital stock. A recession is a contraction in the capital stock. (Unemployment has nothing to do with the definition of a recession).

My posts above do not say that a recession requires unemployment, and I am not disagreeing with your definitions as such. Let's stay focused on what we are in fact disputing here: either the economy grew during FDR's tenure, or it did not. From what I read, it did, regardless of his presidency, and I figure that at least some growth in the economy was as a practical matter virtually inevitable given how profound the contraction had been from late 1929 through early 1933. If you have facts to the contrary to show that it did not, feel free to offer correction.

38 posted on 07/30/2009 5:02:40 AM PDT by aposiopetic
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