Posted on 09/07/2009 4:07:42 PM PDT by Shellybenoit
One of the biggest myths about the great depression is that FDR's NEW Deal and the related government intervention and public works projects got us out of the Great Depression. The truth is that the New Deal did not work. Instead of creating growth in the private sector, it created government growth that squeezed out the private sector.
Of course, the number one public golf course in the country Bethpage Black (where the US Open played this year) was a was a New Deal Federal works project, but that only cures MY depression, it did little for the country.
As late as 1938, nine years into the depression, almost one out of five workers remained unemployed. What the government gave with one hand, through increased spending, it took away with the other, through increased taxation. But that was not an even trade-off. As the root cause of a great deal of mismanagement and inefficiency, government was responsible for a lost decade of economic growth which the US did not climb out of until World War II.
Some leading economists are now saying, that in many ways, President Obama's economic policies are a repeat of FDR's new deal and will possibly lead to the same long term economic malaise
(Excerpt) Read more at yidwithlid.blogspot.com ...
Well..., I did read that it took World War 2 to get out of it, so maybe we wait for World War 3?
Ever thought of the possibility of "Civil War II"?
- Margaret Thatcher
Ain't "lookin' good" for Socialism coming to America.
this would be the plan. if the dems can get us into 1929 ... while being able to blame republicans... they believe they will get generational power as everyone will need food stamps, welfare, and jobs programs
to avoid this... the republicans would have to make sure 0bama owns it... but they are not. why? because they also would like the power it would yield, foolishly thinking they’d be able to gain the WH afterwards
they all need to be tossed. we need a buzzsaw to clear the dead wood and parasites... a buzzsaw called...
SARAH
I’m already in a depression...Mission Accomplished!
Jerk.
I was thinking more like blowing up things in another country... not here... LOL...
If deficit spending could keep us out of a recession, then why in hell do they keep blaming things on George Bush?
There ya go! Someone needs to bring that up with Gibby.
------------------------ http://www.econbrowser.com/archives/2009/09/state_and_local_1.html
Posted by: GK at September 5, 2009 11:51 AM
A history lesson.
In 1947 Herb Stein, Keynesian Chairman of Richard Nixon's Council of Economic Advisors developed the "full employment budget concept." In summary the concept was that the federal government excelled at tax collection, states excelled at government spending. The Keynesian tax policy (used by Kennedy) was inefficient. If congress was encouraged to lower taxes they would lower too much creating an “overheated" economy, but if congress was encouraged to increase taxes they would drag their feet allowing inflation. A better Keynesian idea, Stein postulated, is for the government to deficit spend as if the country were at full employment (4%), what Keynesians today would call "potential" GDP. If the government spends as if the economy were producing at full employment, then the economy would actually reach full employment and the deficit spending could slowly decrease. While no evidence indicats this would work small details have never stopped government economists from experimenting, after all "we must do something."
Nixon faced a budget problem when he entered office. Lyndon Johnson's "Great Society" not only took current tax revenues, it also took future revenues; budgets arrived in congress with a built in deficit. The Great Society passed tax collection to the states in what we today call unfunded mandates. The Great Society would provided 75% funding for a program if the state provided 25%. The states, not wanting to lose federal funding to other states, increased taxes to fund the 25% of the Great Society program.
By the time Nixon took office the states were crying to Washington to help fund federal social programs so state politicians did not have to continue to raise taxes.
The climate in 1970 was ripe. Unemployment was climbing and Nixon needed a new way to feed his "New Federalism," so Stein easily sold his 1947 idea. In January 1971 Nixon proposed a $4 billion revenue sharing scheme telling congress it would be a self-fulfilling prophecy.
But for the scheme to work Federal Reserve Chairman Arthur Burns had to expand the money supply. In April 1971 the National Observer reported that Burns at the beginning of the year was slow in providing the credit needed, but in April Burns proudly stated the country is "awash in credit." In the first two quarters of 1971 Burns increased the money supply 11% to stimulate the economy.
But the harsh world of unintended consequences – actually intended consequences since any rational economist should have seen them – US interest rates fell from 8% to 3.5% and money that was flowing into the US now flowed back to Europe, and gold flowed out of the US Treasury. The design of the Bretton Woods system made all currencies extensions of the dollar, so dollar inflation spread directly to the rest of the world. At the end of March 1971 the European bankers visited Burns begging him to slow his loosening of credit.
The US refused to end Stein’s Keynesian experiment, Burns continued his stimulus, and the Bretton Woods system exploded.
But wasn’t it worth it to reach Nixon’s goal of full employment? Unemployment at 5.6% in November 1971 moved up to 6% in April 1971 after Burns stimulus.
Today the Obama administration is repeating the foolishness of Nixon, Stein and Burns, but the difference is credit expansion funds “bubbles” rather than gold out-flow. Ultimately credit expansion will fund inflation just as Nixon’s policies created the inflationary 1970s. But more serious to the average person is unemployment. Those whose mantra is “unemployment is a lagging indicator” become tedious when rates are forecast to continue near Great Depression levels more than two years after stimulus was to have solved the problem.
“Those who don’t know history are destined to repeat it.” Edmund Burke
WW2 didn't get us out of the depression, it was more along the lines of the end of WW2 got us out of it. Something like that, all those soldiers returning to the country and all those factories being put into civilian production...
Or maybe it was the death of FDR that did it
Just like Yale University couldn't find anyone who thought it might be a bad idea to yank the cartoons out of a book about the islamic cartoon controversy.
That is what I believe too...
The Liberals, Communists and Progressives have a big problem. They think the only cure for problems caused by the policy is more Liberalism.
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