The Fake History of the Depression

Mises Daily ^ | 4/20/2009 | Robert P. Murphy

[LS]

You'd admit that government takes money from the productive economy, right?

Absolutely. And war is anti-capitalist/anti-market because it kills consumers and destroys capital. But that doesn't mean it's unecessary or even undesirable at times.

[1010RD]

That is correct and we agree. I feel the same way towards killing, but wouldn’t hesitate to use lethal force to stop someone from hurting you, me or anyone else, on or off a battlefield.

The political reality of that time is war was inevitable and not fighting would have placed us in a foolish position. You must act in your national/personal interests. Just like arguing over the invasion of Iraq/Afghanistan devolves into “what if” scenarios.

Wouldn’t it be heaven if the world were peopled with angels.

The economic reality, though, is that war is a net negative on an economy. Just getting your students to understand that would go a long way towards correcting liberal myths about the GD. (interestingly, as you pointed out in another post - private uses of war materiel - guns, canon, tanks, APCs, etc. can be net positive to wealth)

BTW my son (we home school) is studying for the AP US History. It is taught wrongly on many historical “facts”. What do I do? Tell him to study for the test or teach him the truth and let him fail?

We’ve compromised - he answers the lies on the test, but knows the truth. Multiply him by thousands and thousands of our best and brightest over decades and you get an idea of what government education has done to our elites.

It is why the Left is so inane - they’ve been lied to for 16+ years. It must be true!

[LS]

Good question on the AP. As I tell all conservative parents or students, you have to decide what your goals are: do you want a high score on the test? If so, “teach to the test” and study for what they will ask (some PC stuff, though not as much as you think). If you want to answer “correctly,” be prepared to pay a penalty. Same in classes with radical profs. If you want to stand up, good for you. It will come at a cost, usually. Ask Miss California.

[investigateworld]

One of the characteristics of debt deflations is that the easy debt leading up to the crash fuels an expansion of production capacity that cannot be supported without ever-increasing private sector debt. At some point, the “tower of debt” totters over, and suddenly we’re left with a huge excess of capacity.

Thanks ..... makes it simple for guys like me to understand.

Sooooooooooo how do we get out of this?

[SomeCallMeTim]

The premise of your question is incorrect. Unemployment never made it back down to 10% before the war... I didn’t think so.. as, I’ve read several times that 1938 was a VERY bad year, economically... the following are statistics from the US.Gov, Bureau of Labor Statistics:

Year Unemployment rate
1923-29 3.3
1930 8.9
1931 15.9
1932 23.6
1933 24.9
1934 21.7
1935 20.1
1936 17.0
1937 14.3
1938 19.0
1939 17.2
1940 14.6
1941 9.9
1942 4.7

[Eagle Forgotten]

Thanks for the specific unemployment data. According to your numbers, unemployment first got back to the single digits in 1941, not 1940 as I had thought.

BUT — even 1940 was still significantly better than 1932 or 1933. So it’s not correct to picture the country drifting along, caught up in an unchanging Depression, until World War II bailed us out. Things did improve under Roosevelt. The issue is whether the improvement came because of his policies or in spite of them.

[10Ring]

4. Remember that FDR took us off the gold standard, in effect inflating the currency.

Great insight, but this point really deserves more elaboration. FDR did not take the U.S. off the Gold Standard (that was actually Nixon in 1971). What FDR did was really much worse. FDR decided that Americans just weren't going to spend their money. There's that confounded debt deflation again. What to do? In comes an executive order forbidding the hoarding of bullion, coins, certificates. Let's say you have an ounce of gold you are forced to turn over to the FED for FRNs. They peg gold at $20/ounce. Shortly after the "hoarding" is eliminated the Treasury decides that an ounce of gold is really worth $35 (well, now that the govt holds all the gold, why not?).

Can you say ka-ching (FDR sure could)?

Except for that whole 69% devaluation thingy. That's the kind of "beggar thy neighbor" thinking that is cropping up again. Very naive and very dangerous, but I'm sure Robert Gibbs could do a bang-up job explaining it to the press.

If I listen very closely, I can still hear my Grandfather rail about the "gold confiscation".

[US Navy Vet]

2 books that everyone needs to read to “understand” FDR

1. Liberal Facists(tells you about the Woodrow Wilson/FDR/LBJ unbroken thread of Liberalism).

2. FDR’s Folly(tells how FDR’s policies prolong the Great Depression).

[SomeCallMeTim]

So it’s not correct to picture the country drifting along, caught up in an unchanging Depression, until World War II bailed us out

I don't know... As I said, from everything I've read, things were heading in the wrong direction again by 1938.... that's 6 years into FDR's Admin... I mean, >14% unemployment in 1940 is still pretty darn bad... especially, when you consider, that by 1939, the US was already ramping up production of weaponry to "Lend" to our European allies. I suspect, this program helped to put a lot of people back to work.

[iacovatx]

In the midwest, new jobs appeared in the form of day labor, farm hands, small jobs in terms of tasks performed and wages paid. For example, the engineers at Fisher Controls in Iowa were kept on as janitors, sweeping floors. A manager at FC told me that they did not lay off any engineers, for which they were proud, but the engineers were “sweeping the floors”. I spoke with one farmer who worked for the WPA making park benches, park facilities, and other miscellaneous public works projects. He and others also worked for the railroad on maintenance gangs when the railroad was hiring for short term work. These were not steady jobs but they kept people working part time here and there. So, employment came from a combination of gov’t program work, short term labor jobs, and lowered responsibility jobs. Some folks had regular jobs that continued from before the Depression and some of those people worked in public and private jobs as police, postal workers, milkmen, etc. If you worked in an agricultural industry job or in a bank (driven by mortgages, especially farm related loans) then the Depression may have seen you out of a job completely as farm income dropped and farms went under.