As Meat Loaf would say: 'You took the words right out of my mouth'.
Posted on 02/13/2011 9:05:00 AM PST by reaganaut1
Economists still argue about what caused the Great Depression of the 1930s and what got the nation out of it.
But 43% of Likely U.S. Voters think government policy mistakes converted a normal recession into an unprecedented Depression. A new Rasmussen Reports national telephone survey shows that just 26% disagree, and 31% are not sure.
The Smoot-Hawley Tariff Act of June 1930, signed by President Herbert Hoover, dramatically raised U.S. tariff rates and is often cited as a contributing cause of the Depression. Within a few years, world trade fell by more than 50%. The Federal Reserve also dramatically cut the monetary supply as the economy tumbled from its peak in 1929 to the trough in 1932.
Some have argued that the problems of the Great Depression were created by a lack of government spending. However, federal government spending actually increased by 50% during Herbert Hoover’s time in the White House from 1928 to 1932. Spending during the next four years, Franklin D. Roosevelt’s first term in office, nearly doubled.
The survey of 1,000 Likely Voters was conducted on February 4-5, 2011 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology. By a 55% to 16% margin, Mainstream voters believe it was government policies that caused the Depression. The Political Class, by a 49% to 15% margin, disagrees and says the government was not to blame.
Most Republicans (56%) and a plurality of unaffiliated voters (41%) believe that government policies created the Depression. Democrats are fairly evenly divided on the question.
Fifty-three percent (53%) of conservatives believe the government was to blame, while a modest plurality (39%) of liberals disagree.
(Excerpt) Read more at rasmussenreports.com ...
We have created a nation of financial and economic illiterates. I'm not entirely convinced that it wasn't by design.
It is often amazing that common sense will trump education.
Though the fact that any conservatives remain in the country in spite of the Left dominating education for the last fifty years is a clear indication that evidence will trump education every time.
And we STILL don’t learn from our mistakes.
I don’t remember who posted this first, so unfortunately I can’t give him/her credit, but I saved the original article, which is very relevant to this.
Here is the link:
FDR’s policies prolonged Depression by 7 years, UCLA economists calculate
http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx
“Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.
After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.
“The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes,” Cole said. “Ironically, our work shows that the recovery would have been very rapid had the government not intervened.”
Massive bank failures cut the money supply, not the Federal Reserve. The Fed's mistake was not counteracting the massive collapse in money supply.
They're not making the same mistake this time around.
Agreed. When one looks at the data, we see that Smoot-Hawley had nowhere near the effect that is ascribed to it, either in the overall US economy, or in trade levels.
The Smoot-Hawley Tariff Act of June 1930, signed by President Herbert Hoover, dramatically raised U.S. tariff rates and is often cited as a contributing cause of the Depression. Within a few years, world trade fell by more than 50%. The Federal Reserve also dramatically cut the monetary supply as the economy tumbled from its peak in 1929 to the trough in 1932. Some have argued that the problems of the Great Depression were created by a lack of government spending. However, federal government spending actually increased by 50% during Herbert Hoover's time in the White House from 1928 to 1932I haven't read the rest of the thread, but chances are good the other shoe will drop pretty soon, if it hasn't already.
That is a good point. We are walking on a tight rope. Flooding dollars into the system will likely create inflation, but should the economy tank and people start defaulting on loans that will rapidly shrink the money supply, which will send us in the other direction of economic collapse. Not many good choices out there right now.
This is really refreshing. It means that the academic careers of Burt Folsom, Charlie Calomiris, and myself haven’t been in vain!
Pat’s as wrong as ever. Doug Irwin, an actual ECONOMIST, did a powerful study showing that when you combine the actual rate hikes with the deflation (another government-induced problem), the impact of the Smoot-Hawley tariff was a whopping 5% hit on GNP by 1935 or 1936. To put that in perspective, Smoot-Hawley had a more devastating impact on the U.S. than Katrina and 9/11 put together, and almost double that of the Arab Oil Embargo in the 1970s. You might also look at the studies (again, by actual SCHOLARS) by Crucini and Kahn on the impact of Smoot-Hawley Tariff.
Scholars disagree. Ravi Batra, an actual economist at SMU, supports my point of view (I also majored in undergraduate economics and have had the opportunity to look directly at economic theory and compare theory to real world results...while Keynesians are flat our wrong, Adam Smith types are wrong when attempting to extend their theories beyond the borders of a nation state).
Is there a big problem with impostor economists at SMU, or is it just impressive that Mr. Batra has become one?
As Meat Loaf would say: 'You took the words right out of my mouth'.
America’s greatest depression fighter was Warren Gamaliel Harding. The people running the show today could learn something from him including the Fed.
“In the fall of 1921, Harding’s Secretary of Commerce Herbert Hoover prompted him to call a Conference on Unemployment. Hoover wanted government intervention in the economy, which as president he was to pursue when he faced the Great Depression a decade later, but Harding would have none of it. Good thing, since Hoover’s policies were to prolong the Great Depression. Harding said, “There will be depression after inflation, just as surely as the tides ebb and flow.”
http://www.lewrockwell.com/orig4/powell-jim4.html
Warren Harding and the Forgotten Depression of 1920
“The connection between this version of history and the events of today is obvious enough: once again, it is claimed, wildcat capitalism has created a terrific mess, and once again, only a combination of fiscal and monetary stimulus can save us.
In order to make sure that this version of events sticks, little, if any, public mention is ever made of the depression of 1920—21. And no wonder: that historical experience deflates the ambitions of those who promise us political solutions to the real imbalances at the heart of economic busts. 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—21, 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.”2 By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and was only 2.4 percent by 1923.”
http://www.lewrockwell.com/woods/woods125.html
The 45% of the those polled simply do not understand capitalism.
Historically, the United States periodically finds itself in a severe capitalistic imbalance.
It is quite clear that the U.S. Government has not only failed to curb this predicament, it fueled the extension of it.
Nevertheless, these global imbalances will eventually correct themselves. It is the responsibility of the governments of this world to help improve the situation through prudent measures, not attempt to resolve the problem altogether by enforcement of poor policies and laws.
What did Pat have to say? Wait a minute, let me guess. The Jews caused it right?
My money supply is not being helped. Is yours?
Law of supply and demand. We have too much socialism and not enough capitalism.
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