Replies

BE CAREFUL WHAT YOU ASK FOR YOU JUST MAY GET IT

(more debunking of the FDR myth) This is an excerpt from a larger story posted by a Freeper in Jan 07

Most modern economists have not yet realized what Henry Hazlitt already knew in the 1930s that FDR’s New Deal made the Great Depression last longer and deeper. It is a myth that Franklin D. Roosevelt “got us out of the Depression” and “saved capitalism from itself.” However recently a few modern macroeconomists have finally come to this conclusion as witnessed by an article in the August 2004 Journal of Political Economy entitled “New Deal Policies and the Persistence of the Great Depression: This is a big deal, since the JPE is arguably the top academic economics journal in the world.
“Real gross domestic product per adult, which was 39 percent below trend at the trough of the Depression in 1933, remained 27 percent below trend in 1939,” and “ private hours worked were 27 % below trend in 1933 and remained 21 % below trend in 1939.”
This should come as no surprise to anyone who has studied the reality of the Great Depression without a preconceived political agenda. The U.S. Census Bureau of statistics shows that the official unemployment rate was still 17.2 % in 1939 despite seven years of “economic salvation” at the hands of the Roosevelt administration (the normal, pre-Depression unemployment rate was about 3 percent). GDP was lower 10 years later, in 1939 than in 1929 ($847Billion vs. $857Billion), as were personal consumption expenditures ($67.6 billion in 1939 vs. $78.9 billion in 1929), and Net private investment was minus a total $3.1 billion from 1930-40.
Most people including most economists are surprised-even shocked-to discover these facts, primarily because are brain washed to accept the Ivy League Socialist leftist propaganda at face value. They can’t seem to understand the fact that the recovery from the Great Depression was “very weak”: simply because this data contrasted sharply with neoclassical theory and popular beliefs; that state that there should have been a booming robust economy. The weak recovery is puzzling to the Socialist Neoclassical economists because the large negative shocks that they believe caused the 1929-33 downturn, including monetary shocks, productivity shocks, and banking shocks-become positive after 1933.” Thus, according to neoclassical theory, the economy during a depression is somewhat dead but is then “shocked” back into becoming a living breathing dynamic economy by the sharply lowered interest rates, the dramatic money supply increases and the massive demand augmentation by government spending.. The monetary base increased more than 100 percent between 1933 and 1939,” making the case that such a “monetary shock” should have returned the economy to normalcy, according to some well-known macroeconomists who once proclaimed that “positive monetary shocks should have produced a strong recovery, with employment returning to its normal levels by 1936.” However, it was just those very same, easy money policies of the mid to late 1920s that created all the Over-investment, that inevitably resulted (as it always has and will) in the great Bubble followed by the Great Depression in the first place. The only wise thing that should have been done was to allow the liquidation of unprofitable and overcapitalized businesses to occur., as was done in 1919-1920 (President Harding stopped Hoover, then secretary of commerce, from implementing, those very same policies that he eventually implemented as President in 1930) that held that even sharper recession of 1919-1920 too less than two years. Instead, the Fed beginning after the 1929 crash drastically increased the monetary base by 100 percent in less than five years, causing more of the same overcapitalization problems that were the main source of the depressions problems in the first place.