Posted by Old John on Wed, Dec 2, 2009, at 7:20 PM:
Our president mentioned the great depression in his latest televised speach. And if you ask most folks today what caused the great depression you will hear of the stock market crash of 1929.
But let's step back a minute. There had been many crashes before that caused at most, serious short term recession. So why was this one different? In 1930 the market even recovered.
Hoover was conservative in his thinking. But he raised tariffs over 50% under pressure of those who said the sky is falling. "So what?, John" Well raising taxes on imports [Let's say steel for example] bolsters the net worth of the competing domestic company short term.
Hoover and his democrat congress also raised income taxes from about 25% to 63%. Roosevelt got elected on point out these failures.
But when Roosevelt took office he gave money to the large banks and other interests via recalling all the gold. This was to spread the wealth into the economy, "Prime the pump" as it was called.
In 1930 unemployment was about 8%, by 1933 it was close to 25%. A faster than '29 crash ocurred in '36 and most of our old trading partners were in much better economics than we.
Could a Bush-Obama era be the new Hoover-Roosevelt days?
sources: Beards' history, Walter E. Williams, and a lot of guess work on my part after reading
random crap.
Replies (15)
If I am not mistaken our treasury still holds a very largre percentage of the world's gold despite India and china buying on the slumps very heavily. What worries me is the inevitable inflation to come might force the U.S.A to sell off the gold in repayment to foriegn debtholders. The only alternative is to nationalize private companies to stop the cash flow. That my friend spells Weimer Republic, with a military last ditch effort or simply become slaves of those holding the money, thus making the world economic policies.
Or maybe I have enjoyed too many fashionable adult beverages too early.
-- Posted by Old John on Wed, Dec 2, 2009, at 8:38 PM
John Old,
I don't think your scenario is that much of a stretch.
1938 and the unemployment rate was still about 19%. WW II brought full employment.
Unemployment would be much higher today if the goverment had not changed it's way of working the numbers.
-- Posted by Have_Wheels_Will_Travel on Wed, Dec 2, 2009, at 8:55 PM
James,
Thanks, knew the method had changed just not how or how much.
-- Posted by Have_Wheels_Will_Travel on Wed, Dec 2, 2009, at 9:27 PM
I forgot to mention in my sources, Hillbilly Economics
-- Posted by Old John on Wed, Dec 2, 2009, at 9:30 PM
It also may help to recall a tremendous progressive movement [hard to argue with considering the times] in the early part of that century. A growing clamor for better working conditions and a more fair system for the down trodden. The unions were on the rise and wage and hour laws were enacted. Was it Wilson who started the movement of farm sudsidies that much later led to the government buying surplus farm products? And eventualy those surpluses were used to give the welfare system it's start?
We now have a big progrssive movement to give everyone health care. Even if that could be done without breaking the economy, it most certainly would lead to less.
-- Posted by Old John on Wed, Dec 2, 2009, at 9:58 PM
With the greatest respect, I thank you for your update!
-- Posted by Old John on Wed, Dec 2, 2009, at 10:09 PM
James, How so? Regaring Japan.
-- Posted by Old John on Wed, Dec 2, 2009, at 10:35 PM
The US went into a depression in 1920, some feel much worse than the depression later on, but there were no quick fixes applied and the economy rapidly returned to normal.
Malinvestments were cleared and the economy picked up steam in 1921. The roaring 20's.
The clearing of malinvestments can be postponed by interference, but they must eventually be cleared.
-- Posted by James Nall on Wed, Dec 2, 2009, at 11:12 PM
It is a clich? that if we do not study the past we are condemned to repeat it. Almost equally certain, however, is that if there are lessons to be learned from an historical episode, the political class will draw all the wrong ones ? and often deliberately so.
Far from viewing the past as a potential source of wisdom and insight, political regimes have a habit of employing history as an ideological weapon, to be distorted and manipulated in the service of present-day ambitions. ... For this reason, we should not be surprised that our political leaders have made such transparently ideological use of the past in the wake of the financial crisis that hit the United States in late 2007. According to the endlessly repeated conventional wisdom, the Great Depression of the 1930s was the result of capitalism run riot, and only the wise interventions of progressive politicians restored prosperity.
...
The conventional wisdom holds that in the absence of government countercyclical policy, whether fiscal or monetary (or both), we cannot expect economic recovery ? at least, not without an intolerably long delay. Yet the very opposite policies were followed during the depression of 1920?1921, and recovery was in fact not long in coming.
The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover ? falsely characterized as a supporter of laissez-faire economics ? urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored.
Instead of "fiscal stimulus," Harding cut the government's budget nearly in half between 1920 and 1922. The rest of Harding's approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.
The Federal Reserve's activity, moreover, was hardly noticeable. As one economic historian puts it, "Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction." By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.
-- Posted by blogbudsman on Thu, Dec 3, 2009, at 7:48 AM
Many have decried President Obama as another Jimmy Carter. Worse than that, he's another Hoobert Herver, er, Hervert Hoober...you know, that guy!
-- Posted by blogbudsman on Thu, Dec 3, 2009, at 8:05 AM
May we conclude that President Harding was a far better president than popular history credits him? Popular thinking lists him near the bottom in presidential ratings.
Except for Albert Fall as Secretary of the Interior (Tea Pot Dome), it seems Harding made some good decisions. Perhaps its time to reappraise his presidency, don't you think.
And maybe Calvin Cooledge had the right idea, come to that.
-- Posted by voyager on Thu, Dec 3, 2009, at 8:57 AM
A big thanks to all. Athough your responses are much more detailed and better written, better backed up than my original post, it would seem the gerneral idea is what I suspected. A government of do nothing is better than a know nothing and do something solution in the case of economics. Darn, that sounded almost like Festus talking to Doc.
-- Posted by Old John on Thu, Dec 3, 2009, at 8:59 AM
THE DIPLOMATIC cost of all this is exorbitant. Governments across the world are losing respect for the US. Turkey, which once didn't lift a finger without America's approval, is openly waltzing into the sunset with Syria and Iran. Iran has made a mockery of Obama's dialogue gesture. China has made a joke of Obama personally, when it censored his very plea that Beijing ease censorship. Saudi Arabia has ignored Washington's pleas to deliver a peace gesture. And finally, in a natural extension of all this accelerating disparagement, Hugo Chavez publicly backed Iran's nuclear adventurism with Mahmoud Ahmadinejad alongside him in Venezuela - a three-hour flight from Miami.
All of them, from Chavez to Kim, are humiliating America because they have concluded that the decade that began with the 9/11 attacks and later saw a meltdown in Wall Street and now a military entanglement in Afghanistan is about to end with America as dwarfed as Russia was last decade.
-- Posted by blogbudsman on Mon, Dec 7, 2009, at 7:06 AM
Let's repeat what we've been doing and see if we get a different result.
The proposals that Obama is pushing this week to use TARP funds to help people to weatherize their homes and to spend money on infrastructure are just about the same thing that the stimulus bill was supposed to be doing. Check the rhetoric - it's almost word for word the same argument.
In other words, Obama's plan to deal with unemployment at 10 percent is exactly the same as his plan to deal with unemployment when it was 7.6 percent.
Then there's Obama's other plan to deal with unemployment. Pretend that all the liberal stuff he's been pushing all year like cap and trade and health care reform are actually jobs bills.
So now he's trying to tell Senate Democrats that passing health care reform will actually help unemployment. How exactly a bill whose taxes and regulations go into effect in 2010 but whose benefits go into effect in 2014 is supposed to help unemployment today is anyone's guess. And remember how cap and trade was all about building green jobs? They seem to think that they can just throw the words "create jobs" around whenever they talk about a massive federal overreach into the economy and jobs will miraculously appear. They don't seem to have a clue about how a healthy economy really generates jobs.
-- Posted by blogbudsman on Tue, Dec 8, 2009, at 10:24 AM
The sky is falling! The sky is falling! Wolf! Wolf!
-- Posted by Hugh M Bean on Tue, Dec 8, 2009, at 11:52 AM
It ain't the sky or the wolf falling. Its jobs and the economy falling!
-- Posted by voyager on Tue, Dec 8, 2009, at 12:01 PM
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Our president mentioned the great depression in his latest televised speach. And if you ask most folks today what caused the great depression you will hear of the stock market crash of 1929.
But let's step back a minute. There had been many crashes before that caused at most, serious short term recession. So why was this one different? In 1930 the market even recovered.
Hoover was conservative in his thinking. But he raised tariffs over 50% under pressure of those who said the sky is falling. "So what?, John" Well raising taxes on imports [Let's say steel for example] bolsters the net worth of the competing domestic company short term.
Hoover and his democrat congress also raised income taxes from about 25% to 63%. Roosevelt got elected on point out these failures.
But when Roosevelt took office he gave money to the large banks and other interests via recalling all the gold. This was to spread the wealth into the economy, "Prime the pump" as it was called.
In 1930 unemployment was about 8%, by 1933 it was close to 25%. A faster than '29 crash ocurred in '36 and most of our old trading partners were in much better economics than we.
Could a Bush-Obama era be the new Hoover-Roosevelt days?
sources: Beards' history, Walter E. Williams, and a lot of guess work on my part after reading
random crap.
Replies (15)