And net investment was negative EVERY single year. I don't consider 25% unemployment going to 18% a "significant decrease" because 18% unemployment is exceptionally high by any measure. GDP includes government spending, so of course it increased - especially if you're counting, as you are, from the low point. In the 30's, the Soviet Union's GDP growth skyrocketed. They inefficiently produced things nobody wanted, but GDP doesn't directly measure consumption and since government can order any amount of production it wants, it did. Would you say that a rising GDP in the Soviet Union led to more wealth? Because, as a Soviet immigrant to America, I would say it didn't. Incidentally, "central planning does not work" is not an ideological statement. There are plenty of central planning failures - including in this country. Note the outcome of the fabulous plan to increase home "ownership" beyond a level the market would naturally bear. Note the effects of the Fed controlling interest rates.
Catscat did someone forget to change your litter box? Cutting interest rates to 1% back in 2003 and leaving them there for a year proved to be good for the economy.
You have stated, more or less, the obvious. The US will likely never extract itself from the debt death-spiral it has fallen into, simply because to do so, given religion's strangle hold over rational thinking and the nature of the world's competitive markets, would require both a halt to the US penchant for wasting its assets on wars and a nearly impossible increase in productivity. But some of us can at least be cheered in the knowledge that by the 50-plus years it will take for the US to fully transform itself into Argentina, we will be dead.
It didn't miraculously reappear in the 1970's. While a lot of the New Deal was dismantled, there was still plenty New Deal regulation left by the 1970's. I didn't mean to ignore price and wage controls Nixon wrote into law, the cost of the "Great Society" disaster or the Vietnam war. However, there were plenty price controls and other regulations dating to the New Deal that had yet to be dismantled by the 1970's. These legacy New Deal policies made the economy more rigid (as they did during the Depression), stagnating production. The Fed's response was to loosen money supply, the combination of which caused hyperinflation. Tax rates were not halved in the 70's. Until Kennedy lobbied for and got a reduction in tax rates, the top marginal tax rate was 90%. Through the 70's it was 78%. Tax rates were significantly reduced in the 80's. Credit has always been around. It didn't begin in the 1920's. You seem to imply that the stock market crash caused the depression. It didn't. The stock market crash of 1929 wasn't even the low of the stock market for the Depression. Leverage also isn't a problem in and of itself. Poor investment policy coupled with leverage is what's dangerous. Well, since the SEC did such a great job stopping Madoff, Enron, WorldCom and Qwest - to name but a few - I'm inclined to think were were better off without the expense of paying incompetent regulators to twiddle their thumbs. The rest of your quote is just disjointed drivel. Well, we can go back to the Depression for Fannie Mae, for example. But most of the housing crisis was caused by more recent government policy. It was only in this decade that Fan & Fred were allowed to buy Alt-A and subprime loans. In the 1990's the CRA was strengthened and in 2001, the Fed stepped on rates and kept them too long for far too long. Complete non sequitur 80% of startups fail in the first 5 years. However, wage controls put manufactured pressure on small businesses. They kept wages artificially high. A business has only a certain amount it can spend on wages. The higher the wage, the fewer people can be hired. So if by "doing its part" you mean New Deal wage controls prolonged excessive unemployment, you're correct. We had prosperity (for anyone not black, jewish or female) in the 1950's because many of the dumbass New Deal programs were dismantled after the war. Who is this "everybody" that agrees that full employment "gave a lot of spending power"? Beyond the sentence not making sense, the concept doesn't either. I can employ you to dig a ditch and fill it in again. If we employed everyone in this pursuit, will we be prosperous? No. Increased production of things of value is why the 50's was prosperous. What is important is what you produce because it is an economic fact that you can only spend (consume) what you produce over the long run. If you are not productive, you will not be able to consume above your production for long. And that is exactly the root of the current crisis. We've already consumed more than we can reasonably produce in a relevant period of time. Government encouraging more consumption against an already overtaxed future production is just a recipe for an Iceland-like economic collapse.
Yep, awesome. It contributed heavily to inflating RE prices because money was so cheap, why wouldn't you lever your single largest and most illiquid asset to infinity? How'd that work out?
Unemployment went lower than 18%. Again, check your facts. The Soviet Union was a great economic success throughout the end of WW2. Compared Russia in 1905--a backward laughingstock of a country that lost to Japan--to the USSR in 1939, and the change is significant. Russia became a world power in a matter of decades--at great human cost, unfortunately. Nevertheless, the USSR was a morally bankrupt police state that never really recovered from the widespread devastation of WW2 (that the US did not suffer such devastation partially explains the US post-war dominance). Central planning worked for a while, but in the end failed, for many complex reasons (failure to produce consumer goods, rampant alcoholism, inefficiencies from state planning, general incompetence from the old guard, lack of new blood/new ideas, pollution from nuclear testing, communist party corruption, rampant inflation). No doubt, China has learned some of the lessons from the Soviet collapse. Nevertheless, it is still a police state, and freedom is always the better alternative. The statement "Central planning does not work" is ideological, for sometimes it does improve conditions, and not just for a short time. Even so, I would prefer a mixed economy. Too much government regulation/involvement is bad, as is too little. In the 70's, the US because too regulated; in recent years it swung the other way.
It worked out very well as evidenced by the strong GDP gains between 2002-2008, and is proof you can inflate your way to prosperity and still end up ahead even if a so called 'bubble' forms.
I stand corrected. It was a little lower but still incredibly high - by all measures. And the first depression in which government significantly intervened was also the longest lasting. Does this not give you pause? Only someone who has never been to the Soviet Union or studied Soviet economics could make that claim. The Soviets enslaved the population to produce utter crap. You aren't seriously calling a robust slave labour program an "economic success" are you? I mean, even Soviet economists (and I mean in the Soviet Union, not the apologists over here in the States) argued that the Soviet Union depended very heavily on the slave labour of the Gulags. Holy crap, you didn't just say Central Planning worked, did you? It didn't work from the very beginning. In fact, it worked so poorly that all the workers and farmers went on strike the minute Lenin implemented his economic policies and he conscripted them to go back to work on pain of death - i.e. he enslaved them. But the most curious part of your post is where you contradict yourself - central planning worked but the economy failed because of inefficiencies of central planning? Incidentally, the Soviet Union did make lots of consumer goods - mostly stuff consumers didn't want, though. Our central planners wore brilliant, btw. But, you can't plan for the preferences, needs and wants of 150 million people. It is an impossible task even without corruption. I might disagree. It depends on what you mean by "freedom". You can actually have a great deal of economic freedom and still be pretty much a police state. Singapore is a pretty good example. Claiming that central planning works better than the market is ideological - unless you can provide proof. Until you back up your statement with examples (I can't think of any), your statement is ideological, not mine, because there is plenty of proof that it doesn't. Fannie & Freddie, government regulation to increase home buying, the Fed, all centrally planned economies. The economy was no more regulated in the 70's than it was in the 60's (by and large). It's just that the combination of regulation and high tax rates took a while to stifle all growth - especially since it took a while to soak up the pent-up demand from WWII. Carter began deregulating int he 70's and Reagan continued deregulation. However, beginning with George Bush I, regulation has been on the rise again. Both Clinto and the evil spawn of Bush I have increased regulation. Notice the lovely impact it has had on the economy? Just take a look at the new regulations in the housing industry since 1998. It doesn't matter what you and I prefer - mixed economy or not. What matters is what works best. What creates more wealth and natural consequences for bad behaviour is weak government, strong Rule of Law (which people often and erroneously confuse with strong regulation), and free markets.
I always find it amusing to hear Naomi Klein asking for a more mixed economy. I bet thats what will happen in the US but it problably shouldn't Remember the SEC rule allowing 30-1 investment banks?Well the market already passed a new regulation, try run an investment bank borrowing short and levering 30-1, no one will finance you Without passing a law the market has regulated a lot of the mistakes the market itself had made in the past One could argue one day the market will think 'its different' and they will close their eyes about what they learned in the past and therefore we ought to remove that choice by regulating, of course thats true but the evidence is clear, when you put underpaid morons to run the government on avg their regulation will be bad and political(barney frank:'lets roll the dice on fannie mae'). Without even mention that they cant forecast effectively for long periods of time, if they could they wouldn't be working for the government Pimco is day in and day out 'suggesting' policy(usually very good) ideas, now how many of them are willing to give up their million dollar checks to became a bank regulator?