How not to learn from the Great Depression

[^_^ 5,021]

I do apologize if it sounded like I was ranting at you personally Legacy it wasn't intended that way.

it's ok man, I can't read anything that long anyway.

I am a social Darwinist. If you can't make it on your own, so sorry, you die. Survival of the fittest, and all that.

you are also a single payer advocate for healthcare.

reconcile that for us?

[Heracles 417]

FDR's biggest mistake was raising taxes and cutting spending in 1937, and this mistake prolonged the Great Depression.

Bingo.

A well know fact by most that have studied economics in a reputable college.

[Heracles 417]

You're, quite frankly, are a horrible person if you think that is true and you validate the criticism directed towards conservatives.

No he's just an idiot. I gave up trying to have a discussion with the guy a long time ago. It gets tiring trying to communicate using crayons for him to understand basic concepts.

Edited July 1, 2010 by Booyah!

[alienlovechild 75]

A well know fact by most that have studied economics in a reputable college.

The Great Depression ended to due to WWII. FDR's programs alone wouldn't have brought us out the depression until 1950's according to some economists. The allies, especially the U.S. profited by government spending on the war but also because economic rivals like Germany, Japan and much the the industrial world was wrecked by the warfare.

[Heracles 417]

The Great Depression ended to due to WWII. FDR's programs alone wouldn't have brought us out the depression until 1950's according to some economists. The allies, especially the U.S. profited by government spending on the war but also because economic rivals like Germany, Japan and much the the industrial world was wrecked by the warfare.

Yes according to some. Heck, according to some the earth is still flat. The double dip during the depression was caused by cutting spending. You said it yourself, "profited by the government spending".

What tea-party/repubs/libertarians don't realize is that spending is not the issue but the solution to the current crisis. The issue is clearly what it's spent on and how it's spent. Repubs disingenuously group all spending together and try to make a case against it, when that is not the problem. Spending $200,000 at a casino is quite different to using [spending] the money to build an investment property.

Edited July 1, 2010 by Booyah!

[Heracles 417]

Same deal with debt or government debt, there is good debt and bad debt. It's flawed and silly to assume that all debt is just bad and wrong. Anyone who is actually wealthy knows exactly what I am taking about here.

The lack of investment is why the Midwest and South are where they are. Basically, because the fools they have for leaders don't want to invest and build up their state or key cities. Which kills me because they have so many good honest and smart people, yet are being beating by the fools in NYC or the West coast; who over the years, heavily invested in their cities and progressed with the times.

Edited July 1, 2010 by Booyah!

[alienlovechild 75]

What tea-party/repubs/libertarians don't realize is that spending is not the issue but the solution to the current crisis. The issue is clearly what it's spent on and how it's spent. Repubs disingenuously group all spending together and try to make a case against it, when that is not the problem. Spending $200,000 at a casino is quite different to using [spending] the money to build an investment property.

The reverse is true as well as the Dems think any government spending (they increased defense spending, too, BTW) is equally effective in stimulating the economy and there's little evidence of it to most people. The people who should be angry, the poor and unemployed are picking up their government checks and keeping their mouthes shut for the most part. If the Republicans were running things, you can bet there would riots by now and people lamenting them but saying the anger is justified at some level.

[Usui Takumi 1,562]

The reverse is true as well as the Dems think any government spending (they increased defense spending, too, BTW) is equally effective in stimulating the economy and there's little evidence of it to most people. The people who should be angry, the poor and unemployed are picking up their government checks and keeping their mouthes shut for the most part. If the Republicans were running things, you can bet there would riots by now and people lamenting them but saying the anger is justified at some level.

Very true, and I think thats booyah's arguement as well. Reckless spending on congressman's pet projects isn't nearly as effective as spending in a targeted way that becomes an investment. Such as a 21st century grid along with loosening of environmental laws on wind and solar projects.

[Heracles 417]

The reverse is true as well as the Dems think any government spending (they increased defense spending, too, BTW) is equally effective in stimulating the economy and there's little evidence of it to most people. The people who should be angry, the poor and unemployed are picking up their government checks and keeping their mouthes shut for the most part. If the Republicans were running things, you can bet there would riots by now and people lamenting them but saying the anger is justified at some level.

I agree with that. Who else here has been so against providing illegal aliens with services than I? You give me the the money wasted on them alone and I can turn any ghetto city into a Sydney or Vancouver. Dems have a history of wasting both time and money on irrelevant issues.

The Achilles Heel of American conservatives is your inability to learn from others, furthermore, accept that other conservatives abroad are doing a number of things better, more efficiently and cheaper. Instead of learning from them, you stick to idealism and some misguided we're American and we dont listen to nobody rhetoric. For example, you guys are against the federal sales tax; which would save billions and billions lost in the black market or money that is not currently taxed.

Personally, I learn from those doing things better as it saves me time and in inevitably discovering the same thing myself. In other words, I don't waste time reinventing the wheel or sticking to outdated practices.

Edited July 1, 2010 by Booyah!

[alienlovechild 75]

Reckless spending on congressman's pet projects isn't nearly as effective as spending in a targeted way that becomes an investment. Such as a 21st century grid along with loosening of environmental laws on wind and solar projects.

Saw all of this before in the 1970s when the government had subsidies on alternative energy sources. Once the subsidies were removed, the solar panels and windmills fell into disuse. The idea that green investments will somehow spark a huge new industry isn't happening because there's no major increase in fossil fuel prices. There's no real economic benefit in increasing energy costs to pay for subsidies but then again it's dumb to have tax breaks on SUVs and no increase in the gas tax either.

[luckytxn 2,264]

Actually anyone that has taken economics in college have learned that the spending and social programs that FDR tried PROLONGED the depression and deepened it.

The south and midwest have actually been hit far less and are the engines of job creations not NYC or the west coast. Just drove by a huge new plant on the Georgia/Alabama border. Another one as usual.

We will not be spending ourselves out of any recession. The recession will end when the economics are right. The Feds are not going to help us by spending us into record debts.

[evli1966 88]

Actually anyone that has taken economics in college have learned that the spending and social programs that FDR tried PROLONGED the depression and deepened it.

The south and midwest have actually been hit far less and are the engines of job creations not NYC or the west coast. Just drove by a huge new plant on the Georgia/Alabama border. Another one as usual.

We will not be spending ourselves out of any recession. The recession will end when the economics are right. The Feds are not going to help us by spending us into record debts.

it is a balance of good spending verses a blanketed spending program to allow all government projects for general welfare.

The midwest has it's problems and is not without blame in some areas but you dont see out of control property values, large debt from mundane projects etc.

The largest unemployment rates except for Detroit have been the east and west coast where weak companies have failed to secure themselves against economic issues or were practicing immoral ethics

Speaking of the balance of spending here is a blog from Mish.

Flashback June 25, 2008: Peak Credit

Lessons Of The Great Depression Forgotten

The lessons of their great grandfathers who lived in the great depression era were forgotten. Over time, everyone learned to ignore the dangers of debt, risk, and leverage. Belief in the Fed and the government to bail out any problem are ingrained. Bank failures are distant memories.

Peak Credit

Peak credit has been reached. That final wave of consumer recklessness created the exact conditions required for its own destruction. The housing bubble orgy was the last hurrah. It is not coming back and there will be no bigger bubble to replace it. Consumers and banks have both been burnt, and attitudes have changed.

Children whose parents are being destroyed by debt now, will keep those memories for a long time.

[one...two...tree 2,762]

Actually anyone that has taken economics in college have learned that the spending and social programs that FDR tried PROLONGED the depression and deepened it.

I challenge you to cite a mainstream economic analysis written more than a decade ago which supports your claim.

from Charles McMillion's The 'FDR Failed' Myth:

The Washington Post featured on Page One of its Outlook section an article by Amity Shlaes headlined "FDR Was a Great Leader, But His Economic Plan Isn't One to Follow." Underscoring Shlaes's made-up claims, the Post ran the continuation of her piece under the title: "FDR's Plan Failed to Spark Real Growth." In it, Shlaes, having passed over the anything-goes policies that led to the financial crash in 1929—and, to a great extent, the devastating economic losses that occurred between 1929 and Roosevelt's 1933 inauguration—also completely leaves out any specific data on gross domestic product, incomes, consumer spending, production, investment or jobs even for the New Deal period she presumes to explain. Indeed, her pitch is based entirely on emotional misrepresentation.

The basic economic facts from the 1930s—according to the Department of Commerce, the Federal Reserve, and other official sources—are fundamentally different from the unsupported claims put forward by Shlaes and prominent in popular myth. The monthly data for industrial production show a near three-year collapse under President Hoover, ending when FDR came to office in March 1933. Production rocketed by 44 percent in the first three months of the New Deal and, by December 1936, had completely recovered to surpass its 1929 peak.

GDP, only available as annual averages, plunged 25.6 percent from 1929-1932, including by 13.0 percent in 1932. It stabilized in 1933, and then soared by 10.8 percent, 8.9 percent and 12.0 percent, respectively, in 1934, 1935 and 1936. Real GDP surpassed its 1929 peak in 1936 and never again fell below it. After-tax personal income, consumer spending, real private investment and jobs all reached or surpassed their 1929 peaks by late 1936.

In fact, like every decade between 1850 and 1990, the 1930s suffered two distinct downturns. The official U.S. Business Cycle Dating Committee established that the downturn that began in August 1929 ended in March 1933 with the remarkable economic expansion that started within days of FDR's bold—if trial and error—New Deal programs. By any normal definition, the Great Depression had ended by late 1936, with all major indicators surpassing their previous peaks.

A second cyclical downturn officially began in May 1937 when FDR, always a fiscal conservative, mistakenly thought the economy had become self-sustaining and slashed public spending programs to balance the budget. These harsh and premature spending cuts caused another severe recession that ended after 13 months in June 1938.

Even in this severe downturn, annual GDP did not fall back below its 1929 peak. And although many suffered and most economic measures did fall back below their 1929 levels, not one fell anywhere close to its March 1933 low. For example, although industrial production fell sharply in the 1937-38 recession, at its low point, in April 1938, it remained 49 percent above its level of March 1933.

When the economy again contracted sharply in late 1937 and early 1938, FDR quickly reversed course and rapid growth immediately began again. GDP soared by 10.9 percent in 1939 and industrial production soared by 23 percent.

...

Like other ideological critics of government, Shlaes sites only two economic indicators of the 1930s: the falling but persistently high unemployment rate and the length of time required for the stock market to recover after its bubble burst. Neither of these is used in any serious economic or policy analysis.

Media emphasize the unemployment rate but, because it is known to be lagging and misleading, it is not considered at all by economists in determining the start or end of a recession or depression. This is because people stop looking for jobs when there are none to be found and begin looking again when conditions improve. Serious analysis, including recession and depression dating, use the separate business reporting of actual jobs added or lost.

Despite the new record peak in the number of jobs by late 1936, because of population growth and because more people were encouraged to seek jobs, the unemployment rate did remain very high until public spending programs truly exploded with the start of World War II. But even here, it was again vastly expanded government spending, this time to fight the war, that ended high unemployment.

...

Myth and ideology aside, the data show that from 1933 through 1936 the New Deal produced double-digit annual growth in GDP, production, after-tax income and private investment, with strong consumer spending and job growth exceeding their peaks in the 1929 bubble. The Great Depression ended by late 1936.

While a new, severe recession began in May 1937 because FDR prematurely slashed public spending on New Deal programs, rapid growth quickly resumed in late 1938 when funding was restored.

http://www.ourfuture...fdr-failed-myth

Bio on the author:

Dr. Charles W. McMillion is president and chief economist of MBG Information Services, a business information, analysis and forecasting firm based in Washington, DC. He is a former contributing editor of the Harvard Business Review and a former associate director and professor of the Johns Hopkins University policy institute. He is a founder of the bi-partisan US Congressional Competitiveness Caucus and was its first policy director.

Edited July 1, 2010 by El Buscador

[mendeleev 68]

The reverse is true as well as the Dems think any government spending (they increased defense spending, too, BTW) is equally effective in stimulating the economy and there's little evidence of it to most people. The people who should be angry, the poor and unemployed are picking up their government checks and keeping their mouthes shut for the most part. If the Republicans were running things, you can bet there would riots by now and people lamenting them but saying the anger is justified at some level.

It is well known, to those who pay attention to these things, that spending in different areas (or taxes different interest groups) is more or less stimulatory to the economy.

Tax cuts to the poor stimulate the economy more than tax cuts to the rich, because the poor will spend all the money in the tax cut and the resultant multiplier effect will result in more expansion. Similarly, raising taxes on the rich contracts the economy less than raising taxes on the poor.

In the spending regime, military spending is relatively ineffective at stimulating the economy because this spending is pretty capital (as opposed to labor) intensive. Spending on domestic roads and infrastructure is quite effective as a stimulus, as is spending on creating new energy infrastructure.

That's enough before morning coffee.

[evli1966 88]

It is well known that not all of what FDR did was helpful to the economy during that time. It was a new clamity across the world and new measure had to be taken.

spending has to occur to help fuel the economy but not the to the excess we are see currently in this administration.

Also actually tryin gto pay the debt down as FDR did during the depression is what prolonged it; where as moderate spending increasing the defict moderately will spur the economy slowly.

The real truth is that the build up of military prior to WW2 is what brought the world out of depression.

and Post WW2 industry of new inovated products coupled with the safe feeling the population had due to the winning of the war is what BOOMed the economy.

maybe I am wrong