Re: An Early Christmas Present for the Neocons [OT]


"Hugh" <hbdandvsd@xxxxxxxxx> wrote

And FDR was thwarted big time by the Supreme Court. It shut down many
programs that were working and stopped others from ever being started. Why
else do you think he fought so hard to pack the court.
Hugh - not expecting a real answer

I considered not answering your post, because I know you don't want to hear
the facts of the situation, and providing an education in economics is a job
for college, not newsgroups, but, what the hell, I'll give it a try.

First, it was government intervention in the economy that caused the
depression to last 13 years, rather than end in a couple years. Check the
economic downturn of 1920, it was much worse than 1929, but because the
government stayed out of it completely, it was over in a year.

One of the things that happened between 1920 and 1929 was the
formation/expansion of trade guilds that instituted "fair trade" regulations
on businesses. Those trade regulations forbade competition among
businesses - it was even considered unfair to have sales to bring in
customers. This led to higher prices than there should have been, and no
new businesses were allowed to come in and compete, so there was no infusion
of new blood into the economy. It amounted to a defacto monopoly - the
total collusion among business eliminated any benefit of competition to the
consumer - and all with the approval/encouragement of the government. What
that meant was that when the depression came, there was no business
competition to help snap the economy out of its funk, so things just stayed
bad.

Secondly, the government intimidated the business guilds into maintaining
high wages (high by their standards, not ours), and later pushed minimum
wage laws thru, eliminating the possibility of market forces correcting the
problems. If prices (including wages) had been allowed to go up or down, as
needed to keep the economy moving, things would have fixed themselves in a
couple years. The very best thing that could have happened would have been
for wages and prices to fluctuate according to supply and demand (meaning
they would have gone down), so that the market could self correct.
Government interference was the worst thing for the situation.

Third, government programs like the NRA, the CCC and whatever else they had
going stifled the economy. I know the standard argument is that it put
people to work, but the truth is that taking money out of the economy
(taxes) does not EVER contribute to growth. If that money had been left
where it belonged - in the hands of the people - it would have been spent
for things people wanted and needed (food, clothes, shoes, cars, etc.). As
it was, it was taken from people and used to build bridges, and meaningless
make work projects. Instead of going thru the whole economy, it went to a
very few people. Again, those programs slowed the growth of the economy and
extended the depression for several more years.

Forth, government intervention into the money supply meant that the economy
was not allowed to function normally. In a normal economy, when people are
buying, businesses devote the profits (capital) to production, and; when
buying is down, they devote capital to improvements (buildings, assembly
lines, paying down debt, etc.). When the government interferes with the
money supply, businesses have money coming in during what should be
slowdowns, distorting their perception of what is happening, so they produce
when they should be investing and vice versa. In the end that prevents the
economy for self correcting, and during the depression, the government
interfered with the money supply at least as much as they do today. (For
reference, look at the current mortgage crisis - caused entirely by the
government making money cheap when it should not have been.)

Of course there's more, but time and space is limited, so I'll stop here
for now. If you really cared about the subject, the barest minimum of
research would teach you that it was Roosevelt (and before him Hoover) who
exacerbated and extended the depression. Oh, and by the way, the myth of
the war ending the depression is not true either, except as a peripheral
side effect.

Bruce



.

Relevant Pages

  • Re: where is the money coming from?
    ... The new money and credit issued by the Fed ... Rather than try to pay for the war in cash ... the day today running of the government by the same method - these are ... we are not in a hard cash economy. ...
    (misc.survivalism)
  • Re: Where is tax stimulas Check as Promised
    ... WHAT WILL YOU DO WITH YOUR FUNNY MONEY? ... media are all agog over it) the United States government, ... others to come just like it, has its poisonous effect on the economy. ... One hundred seventy million victims of gun control. ...
    (misc.taxes)
  • Re: Boycott Foreign Products, Buy American
    ... federal government will send to taxpayers. ... Q. Where will the government get this money? ... Q. But isn't that stimulating the economy of China? ...
    (misc.survivalism)
  • Re: Who Benefits from Seigniorage?
    ... The minter made money ... Government Done to Our Money_.) ... monetary base and stifle the economy. ... economy as one spent by the private sector. ...
    (rec.collecting.coins)
  • Re: where is the money coming from?
    ... The new money and credit issued by the Fed ... Rather than try to pay for the war in cash ... the day today running of the government by the same method - these are ... we are not in a hard cash economy. ...
    (misc.survivalism)