Pulling the chart from Ritholtz' blog Give it time, even with the make believe inflation numbers, the NBER won't end the recession before summer. Hell for many out there who have seen their real wages at best stagnate during the reign of Generalissimo Bush while the cost of everything else soared, the recession of '01 never really ended. The only thing more idiotic than spending taxpayer money on wasteful programs is fooling around with the money supply to "jump start" an economy. Cheap money in the 20's, late 90's, and earlier this decade have resulted in malinvestments that helped facilitate financial bubbles. A Fed led recovery will always lead to disaster.
The New Deal was a broad program, it contained major monetary policy measures. It took the US off the gold standard for godsake! If you look at M1 and CPI/Wholesale prices they both bottomed around the time of the new deal, after the dollar was devalued in terms of gold by FDR that created an incentive for people to get rid of paper dollars and spend as people got out of the deflationary mindset(they were waiting for prices to go down then got hit by a major devaluation) Bernanke in his book 'Essays on the Great Depression' shows a high amount of evidence that the countries that got off the gold standard early(UK, Japan)had a better economic performance and less deflation than the ones under the straightjacket of gold(US, France). This suggests that monetary policy instead of fiscal played a major role in differences in performance
My history is based on facts, not ideology. Between 1933 and the start of WW2, GDP significantly increased and unemployment significantly decreased. Don't take my word for it--do the research yourself. May I suggest the Statistical Abstract of the United States?
WWll got America out of the Depression not FDR's bullshit. Year Unemployment (% labor force) 1933 24.9 1934 21.7 1935 20.1 1936 16.9 1937 14.3 1938 19.0 1939 17.2 1940 14.6 1941 9.9 1942 4.7 1943 1.9 1944 1.2
Good point pabst. The "Newest Deal" by Obama will not jump start the economy in the way everyone thinks it will. However, as long as tax breaks come through, I rather have my tax money go to "Infastructure" than Gold Teeth, New SUVs and 18inch rims. This is all a Smoke Screen to make people think that OBAMA NATION is working. However, if you can see through the smoke, there will be plenty of money to be made.
You know I was going to answer to your other thread EMRGLOBAL but I'll do it here. You talk of redistriibution of wealth of being Marxist and so forth, that's exactly what you have in the US! The tax cuts for the most part only affect the rich, only affect dividends, or capital gains, or no more death taxes. That right there is a redistribution of wealth, if you're going to use your argument you must use it both ways, don't pull the Marx card only when your taxes are going up but keeping quiet when they're going down. And tell me how capitalist it really is to protect your old industries through lobbying, isn't capitalism to have fresh new companies take over? I mean why has there not been an american car company been created in the last 80 years that lasted? These days "green" energy is favoring Big Nuclear over Big oil or Big coal, where's the small players? All it is is a battle of the private interests, that is NOT capitalism. Capitalism is letting the markets decide. As for the New Deal, as Angrycat put it, a lot of it was dismantled in the 1940s, but tell me how it miraculously reappeared in the 1970s? The inflation in the 1970s was blamed on big labour and unions, it's a convenient theory because it ignores the Vietnam war or the budget deficits that were happening since the 1960s. While everyone gangs up on the key events that didn't completely solve the great depression, why not talk instead of causes of the great depression? Let's start with the big guns, taxes were reduced in HALF from the beginning of the decade to the end. Budgets were in surplus, spending low. Monetary policy was lax, (and no one ever blames the Fed for the 70s inflation?) The use of credit purchases first appeared in the 1920s, as a result it was possible to have expansion and higher profits while you were really making future sales, you had terrible over expansion of industry. The employment figures of the late 1920s were UNSUSTAINABLE, get that. People's wages didn't keep up either. Or what about the use of leverage on Wall Street? Didn't anyone think that with too much leverage banks could be in trouble and with their weak banks as it was, it would spell doom? What about a lack of SEC, that allowed Bank CEOs to short their own companies? Or what about the over concentration of a few industries? Who knows what's to blame for that one, maybe lack of capitalism and technological growth prevented a diversified economy. When you look at economics you can't look at 5 years and say you got it. Today's problems as most know go all the way back to the 1980s, even further in some areas. What's hard to understand that for general business to thrive and sell more every year it must pay more to its consumers? Take a look at the 19th century if that's what you want. The only industries that existed were industries of the bare necessities. You bought clothe, food, shelter, furniture and that's it. That went on for over 100 years, you call that capitalism? Only when people's incomes went higher could they spend on discretionary items, and those created whole industries. Don't give bullshit like "high wages forced small businesses to close." That's almost propaganda. Small business close for a number of reasons, take a look in Canada where junior exploration and drilling companies are closing because of LACK OF CREDIT and lower commodity prices. I bet a large number of the small businesses were suppliers to unsustainable over expanded industries or failed because the banking system failed. What the New Deal did is raise wages, it was not a silver bullet but it did its part. Why did you have prosperity in the 1950s? Everyone agrees that the full employment just after the war gave a lot of spending power. No spending power no growth.
Regn your logic is flawed. Tax cuts and hikes effect everyone. Now to what degree depends on how much you make. So, because I make more than say most in America, I benefit more because I pay less in Tax's ? WHAT? First, it is simple math. Lets use 10% tax. 10% tax on 500k is more than 10% tax on 100k. So where is the benefit you speak of? Sure, I make more than say those at a 100k, even after taxes. But my 10% I pay is more as well. If the Gov. increases tax by 20%, then I pay more than the person making less. PERIOD! Those who make a higher income than most, are less likely to sit on cash, regardless of the economic conditions. They put their money to work far more than your average Joe. So, they tend to pay far more in Taxes at a higher rate, from Capital Gains, Realestate Tax, Tax this tax that. Now, if you are saying that the Average Joe, who is taxed at 10%, the tax takes away from their net worth then yes that is correct. Thus, so be it. It is their choice to stay in that position, not take risk, not start a business, etc. No one forces their "lifestyle" on them. I feel no, NONE, ZERO simpathy for anyone in that situation. I have a huge problem with your thinking and most people, if not all, who think the way you do, will never become wealthy. Soros does not count, as he decided to join the Socialist after he created his wealth. Robbon Hood is not cool. Robbon Hood stole. Regardless of his reasons, he stole. Redistribution of Wealth is nothing more than stealing. PERIOD! I agree with you on the point of Private Business vrs Public Corporations. Your are correct about small companies growing and thriving to continue the spirit of captialism. That is not the case today. Thus, why do you think we have OBAMA in office? Why do you think that ET is full of socialist, much like you? Because we do not nurture small businesses and we glorify Listed Companies. The Gov. backs the socialistnetwork of Major Corporations. Wallstreet of today is not Capitalism. The companies listed are more like socialist who suck dry the rest of Society. Private Industry is the only thing that keeps Capitalism alive. Once that industry is gone, then Socialism will rule in America.
Obviously, most of you have not read the newspapers from 1928-1940s. See it yourself what people or media were saying at the time. Read it yourself at the library. I did that when I was a kid doing research on the GD time. Then form your opinions ...
Why people wish to compare this mess with the mess starting 1929, I do not know. Why not leave the '29 mes as The Great Depression and call this mess The Great Recession. By doing this, nobody can be disappointed and indeed it allows people to focus on what is important; which is what is happening right now. regards f9
You sure about this? Someone living a hand-to-mouth existence one would think has a greater tendency to spend their earnings than a multi-millionaire who would either invest their money or bank it. In the current environment lots of investors aren't taking risks but instead are putting money in treasuries. What is needed is people spending money. By the way your values and what you call right or wrong or what is defined as stealing eventually is agreed upon by the people around you. The kings of the past defended and justified their power and wealth by saying they were anointed by God to be kings. In return they had to fulfill certain responsibilities. On what do you base your claim and what are your responsibilities?