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How Hitler and FDR actually ended the Great Depression
WaPo ^ | 08/18/2011 | Ezra Klein

Posted on 08/18/2011 11:51:30 AM PDT by markomalley

I’m a bit late to commenting on Christina Romer’s Sunday op-ed on monetary policy and the Great Depression, but it makes a point that bears repeating. The story most of us know about the Great Depression, the one in which Herbert Hoover screws up but then Franklin Delano Roosevelt comes in and hires people to paint murals and repair roads and defeat Hitler and that solves the problem, is wrong, or at least incomplete. Monetary policy — Boring, hard-to-understand, no-one-likes-to-talk-about-it, increases in the money base — was really the key to getting the economy back on track.

To get even more specific, the two policies Romer identifies as being key to the recovery were FDR’s decision to sign Executive Order 6102 and Hitler’s decision to overrun Europe.

Executive Order 6102 sounds pretty bizarre when you explain it. Remember that in the 1930s, dollars were backed by gold. Your dollar was worth what it was worth because the American government was committed to giving you a certain amount of gold in exchange for it. In Executive Order 6102, FDR forced every American to turn in almost all of their gold at a price of about $20 an ounce. Then he said that gold would stop being worth $20 per ounce and begin being worth $33 an ounce. This meant a massive devaluation in the dollar, which sounds bad, but actually meant a huge stimulus: our exports became cheaper and more popular, which in turn meant we created jobs because we needed more people to manufacture stuff that we could export.

(Excerpt) Read more at washingtonpost.com ...


TOPICS: Business/Economy; Editorial; Government
KEYWORDS: depression; greatdepression
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So now the WaPo is advocating a massive confiscation of wealth.

Traitorous bastards.

1 posted on 08/18/2011 11:51:35 AM PDT by markomalley
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To: markomalley

WaPo continues the lie that we can’t understand monetary policy because they don’t want us to see that the Federal Reserve is Smoke and Mirrors.

Realmoney would be backed by gold or solver or SOMETHING and not controlled by a few evil men.


2 posted on 08/18/2011 11:56:11 AM PDT by RoadTest (Organized religion is no substitute for the relationship the living God wants with you.)
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To: markomalley

FDR created the depression. He died before it was over. He had NOTHING to due with getting us out of the depression.

PERIOD!


3 posted on 08/18/2011 11:56:55 AM PDT by rightwingextremist1776
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To: RoadTest

Real money would be backed by gold or silver or SOMETHING and not controlled by a few evil men.


4 posted on 08/18/2011 11:57:07 AM PDT by RoadTest (Organized religion is no substitute for the relationship the living God wants with you.)
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To: markomalley

FDR created the depression. He died before it was over. He had NOTHING to due with getting us out of the depression.

PERIOD!


5 posted on 08/18/2011 11:57:09 AM PDT by rightwingextremist1776
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To: markomalley

The dasme Establishment that calls the shotsw today made nothing but money fro9m both sides of WWII. And they are said to have supported both sides. Remember how Eisenhower warned us of the Military Industrial Complex?


6 posted on 08/18/2011 12:00:43 PM PDT by Paperdoll (NO MORE BUSHS!)
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To: markomalley
Great. Christina Romer, architect of the Stimulus, and man-child yearbook editor Ezra Klein.

I suggest we listen to some new voices.

7 posted on 08/18/2011 12:00:48 PM PDT by magellan
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To: markomalley
Also look into the largest printing of the largest notes ever & 'ver 'de' 'vent to( 1928~1933 ).

And whose economy 'vent up 'ven ours 'vent down.

8 posted on 08/18/2011 12:01:29 PM PDT by de.rm ('Most people never believe anything you tell them unless it isn't true."-Groucho Marx)
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To: rightwingextremist1776
And if he had lived through the end of his term in 1949 he would have likely continued his disastrous economic policies after the war and slammed us right back into the Depression. Any bets on whether the wartime food and gasoline rationing would have been lifted if FDR was around in 1946?
9 posted on 08/18/2011 12:01:55 PM PDT by KarlInOhio (The Repubs and Dems are arguing whether to pour 9 or 10 buckets of gasoline on a burning house.)
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To: rightwingextremist1776
FDR created it? Huh?

It's another classic bubble by easy credit and money policies. Throw in terrible drought conditions, and other Gov't spending and you get a Depression.

FDR was not the cause.

10 posted on 08/18/2011 12:03:23 PM PDT by Palter (Celebrate diversity .22, .223, .25, 9mm, .32 .357, 10mm, .44, .45, .500)
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To: rightwingextremist1776

Wilson planted the seeds for the Great Depression. Hoover was straddled with it, and FDR put the cherry on the top!


11 posted on 08/18/2011 12:03:43 PM PDT by Paperdoll (NO MORE BUSHS!)
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To: markomalley
There appears to be an organized effort by the Keynesians to promote a doubling-down on Keynesian economics. It is coming from everywhere, and it is being cross posted by twerps like Klein.

I believe all of this is coming from the White House.

12 posted on 08/18/2011 12:04:41 PM PDT by magellan
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To: rightwingextremist1776

“FDR created the depression. He died before it was over. He had NOTHING to due with getting us out of the depression.”

The death of FDR is what ended the great depression. Can you imagine if he was healthy and lived into his seventies. We would be speaking Russian now.


13 posted on 08/18/2011 12:04:58 PM PDT by forgotten man (forgotten man)
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To: markomalley

Compared the the devastated nations in Europe, the US was indeed a very wealthy nation. But when one compares the standard of living in the late 40s to the 80s or today, the US in the 40s did not enjoy a high standard of living. Maybe we ought to put the effete Ezra Klein in a time machine back to post WW2 America. He would probably be wearing a green uniform and living in a barracks or a flop house with 20 other losers. The command economy may be necessary during a world war for survival but it certainly is not the way for a nation to increase wealth in other times.


14 posted on 08/18/2011 12:05:53 PM PDT by grumpygresh (Democrats delenda est)
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To: markomalley

Ezra Klein is a stupid little smart-ass leftie kid. He’s a regular on MSNBC, so you know he’s an ignorant commie.


15 posted on 08/18/2011 12:05:58 PM PDT by ozzymandus
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To: markomalley

FDR’s monetary policies prolonged the Depression, along with some rather short-sighted protectionist trade legislation. It was indeed the war that ended the Depression, and the fact that we were the only undamaged industrial power in the world when it ended kept it from returning.

You can’t compare the 1930’s to today, though. During the 1930’s, we didn’t have trillions of dollars of existing debt and unfunded future liabilities. We were able to finance the war by gigantic deficit spending and debt (anyone remember war bonds?), but we could afford the debt because it wasn’t piled on top of already incurred excessive debt. And we also had a manufacturing base that is gone today. And government regulation did not choke off development of new industry and economic expansion.

Keynesian monetary policy is still not valid, probably even more so today than in the 1930’s, but it’s still apples and oranges to try to make comparisons between the 1930’s and today.


16 posted on 08/18/2011 12:06:29 PM PDT by henkster (The Federal Reserve is the enabling housewife to an alcoholic husband.)
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To: markomalley

I want to yell wrong, but that word doesn’t seem to cover it. How about wrong, wrong, wrong? What kind of maniac thinks debasing currency is stimulative? And what kinda fool doesn’t know the depression dragged on for more than a decade after FDR stole our gold?


17 posted on 08/18/2011 12:09:32 PM PDT by Tublecane
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To: henkster

Exactly...these Kenyanesian clowns claim we must spend more to get out of an economic downturn but never mention that they have have been spending like drunks through good times and bad for decades.


18 posted on 08/18/2011 12:11:31 PM PDT by dogcaller
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To: markomalley

“Monetary policy — Boring, hard-to-understand, no-one-likes-to-talk-about-it”

Actually, in this case monetary policy is both simple and dramatic. Any rube can sit through a presidential gold heist story without nodding off. What’s hard to understand is how people miss the true significance of the move (i.e. nearly unlimited wealth available for government whims via inflation). It’s not that no one likes to talk about it, any less than people like to talk about history in general, beyond clichéd talking-points. No one talks about it because no one’s told them about it. It went down the old memory hole.


19 posted on 08/18/2011 12:17:10 PM PDT by Tublecane
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To: ozzymandus

Agree. Ezra Klein was also a founder of the Journolists.


20 posted on 08/18/2011 12:20:08 PM PDT by bronxville (Sarah will be the first American female president.)
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To: Palter

“FDR created it? Huh?”

If I may put words in the mouths of others, perhaps the point was that prior to the New Deal it was a recession, not a depression. A severe recession, perhaps. But we’d had those before, as recently as ‘21. Never before FDR’s revolution were they ever so Great.


21 posted on 08/18/2011 12:20:40 PM PDT by Tublecane
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To: dogcaller
Keynesian economics is like communism -- it's got a long history of failure and no successes. Generation after generation have pursued the goal, and it just never works out.

But each time without fail, new fools rise up and say, "This time it will work. I'm smarter than those other guys. I can achieve success with this."

The sin of pride. It's Luciferian.

22 posted on 08/18/2011 12:20:40 PM PDT by ClearCase_guy (The USSR spent itself into bankruptcy and collapsed -- and aren't we on the same path now?)
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To: markomalley

The Feds artificially manipulated interest rates and other stuff which led many investors and companies to take a wrong view of the market and make decisions based on this false view. That is what led to the crash.


23 posted on 08/18/2011 12:22:47 PM PDT by DeoVindiceSicSemperTyrannis (Want to make $$$? It's easy! Use FR as a platform to pimp your blog for hits!!!)
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To: markomalley

Anyone doubt whether Dear Leader would start a World War for a second term?


24 posted on 08/18/2011 12:24:31 PM PDT by Spok (This space left intentionally blank.)
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To: Palter

“Throw in terrible drought conditions, and other Gov’t spending and you get a Depression”

Unless “other government spending” is wider than I guess, you’ve gotta add about a hundred bullet points to understand why the depression lasted so long. Tariffs weren’t FDR’s idea, so I’ll give him that. But squarely on his shoulders lie the bank holidays, destruction of the gold standard, abrogation of contracts, massive work programs, wage and price controls, encroachment on other branches of government, and that vague but never to be underestimated phenomenon called “regime uncertainty,” to name but a few.


25 posted on 08/18/2011 12:26:20 PM PDT by Tublecane
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To: markomalley
Recalling Al Gore's no controlling legal authority; it was never determined if this FDR executive order nor several other actions (e.g., 50 destroyers to Britain) were legal.

But, then, in FDR's time the White House, the Congress, and the Senate were all in dim-0-crat control.

The model for the Clinton DoJ is like that of the Obama DoJ and they also follow the percepts set by FDR's DoJ.

26 posted on 08/18/2011 12:27:03 PM PDT by jamaksin
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To: grumpygresh

“The command economy may be necessary during a world war for survival but it certainly is not the way for a nation to increase wealth in other times.”

You’re on the right track so I hate to criticize, but look at how you phrase it. You say, “it certainly is not the way for a nation to increase wealth in other times.” It’s not the way to increase wealth in war time, either. War economies are NEVER about increasing wealth. They are about fighting wars. Wars consume wealth (unless you use your army to steal wealth, but that never happens on a sufficient scale anymore). Why is this so hard for people to understand?


27 posted on 08/18/2011 12:32:00 PM PDT by Tublecane
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To: Spok
Anyone doubt whether Dear Leader would start a World War for a second term?

I have no doubt he will do something significant next year, just not sure exactly what (race war, martial law, something).

28 posted on 08/18/2011 12:32:12 PM PDT by Marathoner (Government schools = Marxist indoctrination centers)
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To: Spok
Anyone doubt whether Dear Leader would start a World War for a second term?

I have no doubt he will do something significant next year, just not sure exactly what (race war, martial law, something).

29 posted on 08/18/2011 12:32:29 PM PDT by Marathoner (Government schools = Marxist indoctrination centers)
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To: markomalley

If the Democrats want my gold I’m going to give them my lead reserves first.


30 posted on 08/18/2011 12:35:06 PM PDT by MeganC (Are you better off than you were four years ago?)
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To: henkster

“It was indeed the war that ended the Depression”

No it didn’t. War production is not productive. The only reason people were employed to build stuff to be shipped overseas and blown up was because of artificial, non-economic demand. This is not how wealth is created, nor utility met.


31 posted on 08/18/2011 12:37:09 PM PDT by Tublecane
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To: henkster

“And government regulation did not choke off development of new industry and economic expansion”

How do you know? Remember the forgotten man. Broken windows!


32 posted on 08/18/2011 12:38:53 PM PDT by Tublecane
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To: rightwingextremist1776

>>FDR created the depression.<<

In fairness to history, the Great Depression started with the crash of 1929 and was then exacerbated by the great drought in the midwest (that had NOTHING to do with global warming). FDR inherited the Depression and then went right to making it worse by attacking industry and seizing people’s wealth both outright and via confiscatory tax rates. Prior to the New Deal the Depression was arguably ending. The New Deal and FDR’s dictatorial acts (Supreme Court packing) prolonged the Depression.


33 posted on 08/18/2011 12:39:16 PM PDT by MeganC (Are you better off than you were four years ago?)
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To: Tublecane
We are talking about causes. Bush = Hoover. FDR = Obama.

The similarities are striking and true. Once the economy started crashing, both turned to Gov't instead of the markets.

We were already in a Depression when FDR took control, and blamed said problems on the President before him. While he prolonged the Depression, he was not the origin.

And yes, we will continue to spiral down into our Depression today, because our leaders continue down that same path. One merely has to look to the past for answers, and unfortunately, War is on the horizon.

34 posted on 08/18/2011 12:40:24 PM PDT by Palter (Celebrate diversity .22, .223, .25, 9mm, .32 .357, 10mm, .44, .45, .500)
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To: markomalley

It is striking to me that people are so upset about the S&P downgrade.

Obviously, the US government has a long history of defaulting. In 1933 it defaulted on its own citizens by refusing to redeem gold certificates and making ownership of gold illegal. In 1934, it defaulted by unilaterally devaluing the dollar from $20 to $35 per troy ounce of gold. In 1971 it defaulted on the rest of world when Nixon announced that it would no longer redeem dollars at all.

Roosevelt’s executive order was endorsed by Congress when it later enacted the Emergency Banking Act of 1933. Unlicensed private ownership of gold in the US remained illegal until 1975. Even though private ownership is now allowed, at no time did the Supreme Court rule that the confiscation of gold or the prohibition of its ownership violate the constitutional rights of Americans.

In 1933 the Feds paid the official rate of $20.67/oz and shortly thereafter reset the official rate to $35/oz. Today’s official rate is $42.22/oz of gold.


35 posted on 08/18/2011 12:43:22 PM PDT by Skepolitic
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To: Palter

FDR did not start the hole but he broke out bigger shovels and dug more enthusiastically.


36 posted on 08/18/2011 12:48:03 PM PDT by arthurus (Read Hazlitt's "Economics In One Lesson.")
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To: markomalley
What a bunch of baloney. Just look at the unemployment rates during the first 8 years of the Roosevelt Administration.

If this is how a clever use of monetary policy works (and it is!!!) then no thanks. I'll take tax cuts and regulation reform every time over this crap which is really just an excuse for the politicians to do what they like to do most - spend money.

Source: U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1957 (Washington, D.C., 1960), p.70.
Depression Era Unemployment Statistics
Year
Population
Labor
Force
Unemployed
Percentage of
Labor Force
1929
88,010,000
49,440,000
1,550,000
3.14
1930
89,550,000
50,080,000
4,340,000
8.67
1931
90,710,000
50,680,000
8,020,000
15.82
1932
91,810,000
51,250,000
12,060,000
23.53
1933
92,950,000
51,840,000
12,830,000
24.75
1934
94,190,000
52,490,000
11,340,000
21.60
1935
95,460,000
53,140,000
10,610,000
19.97
1936
96,700,000
53,740,000
9,030,000
16.80
1937
97,870,000
54,320,000
7,700,000
14.18
1938
99,120,000
54,950,000
10,390,000
18.91
1939
100,360,000
55,600,000
9,480,000
17.05
1940
101,560,000
56,180,000
8,120,000
14.45
1941
102,700,000
57,530,000
5,560,000
9.66

37 posted on 08/18/2011 12:48:19 PM PDT by InterceptPoint (w)
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To: magellan

We’re way past doubling-down. Bush made the original Keynesian bets and doubled down with TARP. Meanwhile, Bernanke got himself a bazooka. Obama has since quadrupled down and Bernanke has deployed nuclear weapons.


38 posted on 08/18/2011 12:49:20 PM PDT by Skepolitic
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To: grumpygresh

The War did not end or lift the Depression. It simply converted it into a full employment depression. People did not eat any better or live any better. They worked at frozen slave labor wages.


39 posted on 08/18/2011 12:50:00 PM PDT by arthurus (Read Hazlitt's "Economics In One Lesson.")
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To: henkster

Keynesianism is not economics. It is political control of the economy by indirect means for the benefit of the ruling elite. It was near universally adopted because it put control of the economy into the hands of politically chosen “experts” on the specious theory that these experts could tame the chaos of supposedly anarchic markets and create prosperity.


40 posted on 08/18/2011 12:54:09 PM PDT by arthurus (Read Hazlitt's "Economics In One Lesson.")
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To: Palter
Giddy Minds and Foreign Quarrels Charles A. Beard
41 posted on 08/18/2011 12:57:52 PM PDT by jamaksin
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To: Palter

“Bush = Hoover. FDR = Obama.”

This I can except, except to say that Hoover’s inerventionism was unprecedented, whereas Bush’s was much more conventional. There may not have been anything like TARP before, but there have been decades of responding to downturns as emergencies. Hoover was the first to treat a recession as the moral and governmental equivalent of war, which renders his reputation as a do-nothing especially galling to the

“We were already in a Depression when FDR took control, and blamed said problems on the President before him.”

Yes, and especially interesting is how FDR ran on a balanced-budget platform, much like Obama ran on tax cuts. Both were either lying or changed their minds remarkably fast.

“While he prolonged the Depression, he was not the origin.”

No, and I, too, stenuously insist on Hoover’s role in making the depression special. However, it still wouldn’t have been as “Great” without FDR, and I think that’s what the previous poster was getting at. In that case it’s a confusion of origins. Perhaps we should be talking about the greatness instead of the depression.


42 posted on 08/18/2011 12:58:26 PM PDT by Tublecane
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To: Skepolitic

“Unlicensed private ownership of gold in the US remained illegal until 1975.”

Sounds crazy now, doesn’t it? And to think this is precisely the sort of thing this article is applauding. That is not stimulation: it’s theft!


43 posted on 08/18/2011 1:01:05 PM PDT by Tublecane
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To: rightwingextremist1776

The federal reserve killed the 1930-31 recovery when they raised interest rates and started the depression, FDR created a hostile business environment with his policies and continued the depression.

Sad to say the Obamaloon’s going down the same path as FDR. At least the fed learned not to raise interest rates in a recession.


44 posted on 08/18/2011 1:22:08 PM PDT by meatloaf (It's time to push back against out of control government.)
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To: Tublecane

“Why is this so hard for people to understand?”

Because 8th grade social studies teachers and 11th grade civics teachers taught them that war is good for the economy. Most people are mis-educated about economics and never bother to understand the way the free markets work in adulthood. Rather, they retain the indoctrination they obtained in public schools.

And, why do public school teachers teach such nonsense? They not only learned this in their primary and secondary schools, but also at college. Like most people, most teachers never bother to understand the way the free markets work. Rather, they retain the indoctrination they obtained in college.

And, why do colleges teach such nonsense? One need only read the Communist Manifesto for the answer: capitalism requires an unending series of “univeral wars of devastation” to resolve capitalism’s “epidemic of over-production”.

The Communist Manifesto is an excellent source document for answering questions like yours.

Only a small minority of Marxists know that they are Marxists.


45 posted on 08/18/2011 1:25:24 PM PDT by Skepolitic
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To: arthurus

The war prematurely put about 50 million people in an earthen depression and backfilled it. A myriad of other devastations of war certainly put many more in a psychological depression. But, GDP grew, and that’s what these despicable materialists really care about.

It’s pretty easy to reduce unemployment when the government compels about 16 million men to join the armed forces over a few years out of a total population of 132 million. These 16 million suffered more than just “slave labor wages”.


46 posted on 08/18/2011 1:42:43 PM PDT by Skepolitic
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To: Skepolitic

GDP certainly grew by some that was all that machinery and stuffs sent to Europe and the Pacific to be destroyed. Growth in government spending = growth in GDP? Well it does to Democrats and other Keynesians, I suppose.


47 posted on 08/18/2011 1:55:27 PM PDT by arthurus (Read Hazlitt's "Economics In One Lesson.")
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To: meatloaf

“when they raised interest rates and started the depression”

Raising interest rates did not, cannot, start a depression. Sounds like you’re operating under monetarist delusions.

By the way, I don’t even know if they did raise interest rates, but I’ll take your word for it. Certainly they didn’t scatter money to the winds like Helicopter Ben. Look how well that worked.


48 posted on 08/18/2011 2:06:29 PM PDT by Tublecane
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To: Marathoner
I have no doubt he will do something significant next year, just not sure exactly what (race war, martial law, something).

It will be a race war. Count on it.


Where there's a shell, there's a way.

If you can't appreciate the pure beauty of the violin after hearing this, something's wrong with your ears.

Or you can get raw with these strings. Either way, the violin is sweet yet lethal.

Do it!

49 posted on 08/18/2011 2:09:32 PM PDT by rdb3 (The mouth is the exhaust pipe of the heart.)
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To: meatloaf

“The federal reserve killed the 1930-31 recovery when they raised interest rates and started the depression”

To clarify, the only way one could say raising interest rates would start a depression is if rates had been previously too low, with resultant overexpansion of credit and malinvestment of capital. But in that case any rational human being would say that the overexpansion and malinvestment were to blame. All keeping interest rates where they were or lower can accomplish is perpetuate malinvestment. You can’t get good wealth chasing after bad capital.

If you want to see why monetary stimulus doesn’t work, take a look at the current multi-year Era of Zero Interest. According to Friedman, Keynes, and you, the U.S. under Bernanke should be the land of milk and honey. What happened? Underestimate the perfidy of the “malefactors of great wealth” and “economic monarchists,” did we?


50 posted on 08/18/2011 2:13:34 PM PDT by Tublecane
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