Posted on 09/13/2011 3:07:14 AM PDT by 1010RD
1. the reduction in the fiscal deficit and the Federal Reserves decision to double reserve requirements do not appear to have been powerful enough to generate a recession of the magnitude seen.
2. 'It suggests that, in a weak recovery, a pre-emptive monetary strike against inflation (which was very low at the time, as it is today) is capable of producing a devastating recession.'
3. It indicates that the policy of 'repatriation of profits' being held overseas by transnationals can have a very stimulative effect on the US economy in the same way that gold inflows did during the Depression.
FDR and the Communists in his administration.
I tend to agree that the gold-sterilization policy was the primary cause of the recession within a depression. Secondary causes were the passage of the National Labor Relations Act in 1935 and Roosevelt’s threats to tax corporate retained earnings.
The former set off a firestorm of strikes and violent union organization. The latter, designed to get business to invest, served only to reinforce fears and led business to cling to its capital more fiercely.
In the end, FDR’s patrician disdain for common merchants (capitalists) caused him to implement scores of policies which worked against what he claimed to promote. It’s interesting to re-live those times now.
Bush’s fault.
Some have suggested that we have little inflation despite an expansionist monetary policy because of excess supplies of both capital and labor and because of a lack of velocity. People and companies that have money are saving it or using it to reduce debt, rather than spending it. For example, many people are refinancing their mortgages not primarily to reduce their monthly payments but to reduce the term of the debt and the total interest they will pay over time. They are moving to 15 year and even 10 year mortgages.
Perhaps people (and companies) are choosing this conservative path because they believe that the risks of using their capital in more agressive ways are not justified by the potential returns. If so, the challenge for policy makers at all levels is to find ways to reduce the risks and increase the potential return associated with the deployment of capital. The threat of higher taxes and the actual imposition of an expanded regulatory regime by the Obama administration would seem to be exact of oppositie of what we need in that regard.
I would strongly recommend a reading of The Forgotten Man (2007). It lays out the 1920s, and how things fell apart, and how the prolonged depression just kept going. Excellent reading and worth the effort.
Interestingly, we may now be seeing one of the negative impacts of the "Bush tax cuts" of the early 2000s. The reduction in the tax rate on qualified corporate dividends has reduced (or eliminated) the gap between the tax rate on capital gains and the tax rate on corporate dividends. Without that preferential tax treatment for capital gains, many investors have simply decided that earning current income is a far better proposition than investing for the future.
"A bird in the hand is worth two in the bush," as they say.
the key domino was smoot-hawley....and the sudden contraction of the money supply...
Outstanding and correct. Patrician, here meaning arrogant, is completely accurate and describes liberals to a T. Their desire for elitism causes them to disdain all others as unsuited to the task. That's Obama & Co.
FDR's antisemitism was also a cause and is repeated by Obama.
This is why we should seriously look at going to the Steve Forbes no-loophole 17% flat-rate income tax with its generous initial earned income exemptions as the minimum for a massive income tax reform that will hyper-stimulate the economy.
Can/did Obama time-travel?!?
Damned effective, too. What Obama is up to (stand by for blinding glimpse of painfully obvious) is building a re-election case based upon the "need" for more spending to "keep the recovery going." Cleverly offering that $250 a week forever to the 20% of the work force who remain unemployed is the key. The "Infrastructure jobs," with its retro-emotion of the WPA is also a wonderful ploy. (This also reinforces the latino vote, because every, i.e. EVERY infrastructure job I have seen is staffed by Mexicans!)
The recession of '37-39 gradually ended, not because of any government action, but because the British Empire was at war and transferred a major portion of its very considerable wealth to the US in payment for war materiél. Employment picked up and finally took off when the Japs and Hitler declared war in 1941.
Team Obama might be out looking for a war right now. The difference is that even with Roosevelt and his marxist-dominated administrations, the government was nowhere near the the vast economic sinkhole it is nowadays. That means we would risk collapse supporting the government and a war.
The government(s) is simply consuming too much of the country's wealth. IMHO, about 25% too much. How the hell do you end that?
At this point, I don't think "we" can end it. It's going to have to fall apart for us to have a chance of rebuilding it now, as it seems to have gained a life of it's own.
The argument could be made though that FDR was able to use what Woody left him to do the damage that he caused.
Excellent and worth its own thread. Harding suffered from a terrible administration and cronyism. He isn’t the worst President in history, but liberals do all the picking so they skip their heroes. Harding’s death gave us Coolidge and Coolidge’s son’s death gave us Hoover.
From Wikipedia: Coolidge had been reluctant to choose Hoover as his successor; on one occasion he remarked that “for six years that man has given me unsolicited adviceall of it bad.”
http://en.wikipedia.org/wiki/Calvin_Coolidge#1924_election
Hoover gave us FDR and a line of socialist refuse running right to the current occupant of the WH.
On a related note, contrary to popular belief, the depression wasn’t caused by the stock market collapse. The economy was limping along after the crash until Hoover decided to put the recovery on the backs of the rich in the form of absurd tax hikes for the “rich”. It was at that point the economy slipped speedily into a depression.
They just never learn, & those that don’t learn form history are doomed to repeat it.
Excellent and worth its own thread. Harding suffered from a terrible administration and cronyism. He isn’t the worst President in history, but liberals do all the picking so they skip their heroes. Harding’s death gave us Coolidge and Coolidge’s son’s death gave us Hoover.
From Wikipedia: Coolidge had been reluctant to choose Hoover as his successor; on one occasion he remarked that “for six years that man has given me unsolicited adviceall of it bad.”
http://en.wikipedia.org/wiki/Calvin_Coolidge#1924_election
Hoover gave us FDR and a line of socialist refuse running right to the current occupant of the WH.
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