Are We About to Repeat the Mistakes of 1937?

Discussion in 'Politics' started by Free Thinker, Oct 25, 2012.

  1. if you put republicans back in power this is what we face:

    It is starting to look like 1937 all over again. As the table below indicates, the economy made a significant recovery after hitting bottom in 1932, when real gross domestic product fell 13 percent. The contraction moderated considerably in 1933, and in 1934 growth was robust, with real G.D.P. rising 11 percent. Growth was also strong in 1935 and 1936, which brought the unemployment rate down more than half from its peak and relieved the devastating deflation that was at the root of the economy’s problems.

    By 1937, President Roosevelt and the Federal Reserve thought self-sustaining growth had been restored and began worrying about unwinding the fiscal and monetary stimulus, which they thought would become a drag on growth and a source of inflation. There was also a strong desire to return to normality, in both monetary and fiscal policy.

    On the fiscal side, Roosevelt was under pressure from his Treasury secretary, Henry Morgenthau, to balance the budget. Like many conservatives today, Mr. Morgenthau worried obsessively about business confidence and was convinced that balancing the budget would be expansionary. In the words of the historian John Morton Blum, Mr. Morgenthau said he believed recovery “depended on the willingness of business to increase investments, and this in turn was a function of business confidence,” adding, “In his view only a balanced budget could sustain that confidence.”

    This combination of fiscal and monetary tightening – which conservatives advocate today – brought on a sharp recession beginning in May 1937 and ending in June 1938, according to the National Bureau of Economic Research. Real G.D.P. fell 3.4 percent in 1938, and the unemployment rate rose to 12.5 percent from 9.2 percent in 1937.
  2. You need to get laid.

  4. Lucrum


    He suffers from ED.
  5. Ricter


    Austerity is Austerity and It's Failed in the UK

    By Matthew Yglesias
    Posted Thursday, Oct. 25, 2012, at 10:03 AM ET

    "The failure of austerity policies in the United Kingdom is a bit of an embarrassment for proponents of austerity in the United States, so austerians like Veronique de Rugy have beat a tactical retreat toward arguing that the problem in Britain is too many tax hikes.

    "And I agree—those tax hikes were misguided because austerity was misguided and so a fortiori tax-side austerity was also misguided.

    "But as a simple matter of arguing honestly and clearly, if your policy prescription is "deficit reduction but without any tax increases" then deficit reduction isn't actually your policy prescription at all. The fact that conservative politicians, policy entrepreneurs, and economists favor low tax rates and low revenue levels is well-known and in fact the exact opposite of conservative thinking about how to respond to a special crisis situation.

    "The question on the table was whether deep recessions have some special properties that make large budget deficits less problematic than usual (the Keynesian posture) or whether high debt:GDP ratios have some special properties that make large budget deficits more problematic than usual (the expansionary austerity posture). Insofar as the line is that tax increases harm the economy, that's a huge blow against the theory of expansionary austerity while perfectly compatible with the Keynesian line.

    "To further complicate this, I would say that in many circumstances the distinction between taxes and spending is not that well-defined. If cutting spending in a recession is doubleplus good while raising taxes in a recession is doubleplus bad, where does that leave a reduction in the EITC or the Child Tax Credit or something like the Bush-Pelosi "tax refund" stimulus? Both American political debates and IMF reports seem to me to put undue metaphysical weight on things like the aggregate revenue share of GDP."
  6. Lucrum


    I stopped reading right there.
  7. Max E.

    Max E.

    Oh yeah, that hardcore austerity in the united kingdom, which to them means spending more every year and raising taxes on the rich, LOL.

    If they dont slow down these deep spending cuts, they run the risk of the government disappearing altogether.

  8. +1 thread killer.
  9. Lucrum


    Oooh that's gonna be a buzz kill for lil' Ricky. :D
  10. Ricter


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    #10     Oct 25, 2012