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I think it's completely wrong. It's typical of an economist to be so myopic as to think that FDR somehow dragged out the depression. Maybe he did halt an economic recovery with the New Deal. But the reason why FDR is remembered as a great president is not because he simply got us out of the Great Depression but that he did it at the same time as he guided us to victory in World War II and produced an era of unprecedented growth and prosperity in this country. FDR didn't just end the Great Depression, he ended cyclical depressions altogether. Well, until Reagonomics came along, anyway.
I think it's completely wrong. It's typical of an economist to be so myopic as to think that FDR somehow dragged out the depression. Maybe he did halt an economic recovery with the New Deal. But the reason why FDR is remembered as a great president is not because he simply got us out of the Great Depression but that he did it at the same time as he guided us to victory in World War II and produced an era of unprecedented growth and prosperity in this country. FDR didn't just end the Great Depression, he ended cyclical depressions altogether. Well, until Reagonomics came along, anyway.
I think it's completely wrong. It's typical of an economist to be so myopic as to think that FDR somehow dragged out the depression. Maybe he did halt an economic recovery with the New Deal. But the reason why FDR is remembered as a great president is not because he simply got us out of the Great Depression but that he did it at the same time as he guided us to victory in World War II and produced an era of unprecedented growth and prosperity in this country. FDR didn't just end the Great Depression, he ended cyclical depressions altogether. Well, until Reagonomics came along, anyway.
Dude, read a book. No one in their right mind, even the most heartened democrats, would argue that FDR got us out of the Great Depression. What is debatable is whether or not he kept our heads above water. This recent study indicates the exact opposite.
I think it's completely wrong. It's typical of an economist to be so myopic as to think that FDR somehow dragged out the depression. Maybe he did halt an economic recovery with the New Deal. But the reason why FDR is remembered as a great president is not because he simply got us out of the Great Depression but that he did it at the same time as he guided us to victory in World War II
and produced an era of unprecedented growth and prosperity in this country. FDR didn't just end the Great Depression, he ended cyclical depressions altogether. Well, until Reagonomics came along, anyway.
This report supposedly "proves" a long held attempt by the US right to rewrite history and discredit FDR. That makes me highly sceptical.
But again, it seems very selective.. for one it was right wing policies that started the Great Depression in the first place, so why should those same policies get the world out of that hole faster? Wonder if this report and similar even addresses this... doubt it.
This report supposedly "proves" a long held attempt by the US right to rewrite history and discredit FDR. That makes me highly sceptical.
But again, it seems very selective.. for one it was right wing policies that started the Great Depression in the first place, so why should those same policies get the world out of that hole faster? Wonder if this report and similar even addresses this... doubt it.
This report supposedly "proves" a long held attempt by the US right to rewrite history and discredit FDR. That makes me highly sceptical.
But again, it seems very selective.. for one it was right wing policies that started the Great Depression in the first place, so why should those same policies get the world out of that hole faster? Wonder if this report and similar even addresses this... doubt it.
The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.
Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Cole and Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression. By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt's policies not gone into effect.
The great depression last 4 and a half years. The recovery started in 1933. FDIC and the devaluation of the dollar both cleared the way for recovery.When central planners attempt to devalue the dollar based on what, themselves, think is appropriate, it always comes with unintended consequences.
The FDIC could be argued to have restored a certain amount of certainty back to the consumer. But how long will it last once the system runs bankrupt (the FDIC has billions in unfunded mandates)? Also, we can see by the recent bank crisis that the FDIC is not full-proof. The Great Depression lasted for roughly fifteen years, and the FDIC existed for twelve of those years. On the other hand, the bank-runs were relatively short-lived and were always self-corrected. Most of them in our history only lasted for a few short months, despite the nonexistance of FDIC.
I would argue that these elements were not the key ingredients for recovery. The following article has some useful points on the subject:
What Ended the Great Depression? | The Freeman | Ideas On Liberty
I'm no economist, but this part raised some red flags for me
They're using the obviously inflated numbers present just before the crash as a baseline? Seems to me that they're taking pre-Depression numbers, eliminating the depression, extending their trends, and blaming the difference on FDR rather than the Depression. Am I missing something or is this as stupid as it seems?
Perhaps a little more calc's involved than in mere extrapolation. Their method of 'adjusting for productivity' is the key to their results. Of course, we would have to read the entire paper in its original form to discern that methodology.
By adjusting for annual increases in productivity,
This part keeps those red flags up
Still sounds to me like they're ignoring the depression part of the Depression
The great depression last 4 and a half years. The recovery started in 1933. FDIC and the devaluation of the dollar both cleared the way for recovery.
The dollar had fixed exchange rate. It was obvious what needed to happen. Not only that, maintaining a gold standard hindered the ability of the central bank to expand the money supply. Not only did devaluing the dollar allow the central bank to become more expansionist, it also allowed a large amount of gold reserves to flow into the united states.
The bank runs did not subside until after the emergency banking act was passed, which essentially created a 100% deposit insurance. Later in 1933 this was formalized into FDIC in the banking act of 1933. The banks that were FDIC insured did not suffer from a large scale bank run in the recent crisis. Market institutions that used money markets for short-term funding rather than deposits faced a liquidity crisis in the recent recession. Once the fed gave such institutions access to the discount window, the crisis was essentially ended, for at least those that were solvent.
Lowering taxes in 1945 did not end the great depression, since the great depression had already ended 12 years earlier. During the war years, unemployment was already far below the natural rate.
Except for the "recession within the Depression." The horrid economic conditions did not end until just about when the war ended.
And it further undermined confidence in the dollar.
FDIC created problems that were sure to manifest in the future though as it allowed banks to become more irresponsible.
Standard of living did not really start to rise again until WWII ended and everything got back to normal.
Well, do you disagree that the economy began to recover after 1933? I'm sorry, it makes no sense to say, look FDIC was around for 12 years during the great depression, when all 12 of those years were during the recovery. The creation of federal deposit insurance and the move away from the gold standard both marked the beginning of recovery in the US.
BS. The US experienced significant gold inflow after 1933, drawing gold away from countries still on the gold standard. This was the norm of the era. Investors were more confident in already depreciated currencies.
Did it stop the financial turmoil present in the early 30's? It most certainly did, its not even argueable. The bank runs virtually came to an end after the banking holiday in 1933.
And this proves that a tax cut in 1945 got us out of the depression? Give me a break.
It did not recover, it merely stabilized at a very bad place.
Was the US the only country to get away from the gold standard at the time? Remember that Britain had been away from the gold standard for a while.
After years of heavy meddling in the economy by Hoover that itself contributed to bank runs. With the Harding approach it all would have ended much earlier.
I didn't claim that a tax cut got us out of the Depression. Lifting heavy regulations was more important.
Yes, I would say that Ben Bernanke said it best:
FDIC and leaving the gold standard "cleared the way for recovery."
Yep, and the UK also experienced large gold inflows after devaluation.
But obviously FDIC did stabilize the financial sector.
Ok, well the tax was what elajgalt was arguing with his link.
First of all, the article mentioned that the Great Depression was put on hold so that we could fight a war. We merely traded debt for unemployment. The cuts to almost all New Deal programs, coupled with the tax cuts, took us in the right direction. Technically, recovery began as you say, in 1936. But the start of the Depression is generally believed to be 1929. Also, the massive tax hikes in 1937 by the Roosevelt administration and the resulting heavy recession of 37-38 nearly brought us back to the Depression.
How can you say that the FDIC stabilized the financial sector, when hundreds of banks have become insolvent and taken over the FDIC? The largest one in our history (in terms of dollar value) took place when WaMu had a ten-day bank-run in September of 2008. You call that stable?
I think the government's attempt to spend and create jobs and to push people to buy homes and to get into debt all had a major role in this catastrophe, as it does in the recent financial sector. When politicians decide they're going to lend easy money to whoever wants it, and then they buy out the banks that give out these risky loans, we're left with a very unstable market. Our system promotes a lot of irresponsibility on the part of everyone.
Yes, I would say that Ben Bernanke said it best:
FDIC and leaving the gold standard "cleared the way for recovery."
Yep, and the UK also experienced large gold inflows after devaluation.
Robert Murphy said:For example, Germany and the United States both experienced a significant rebound in (the annual average of) industrial output from 1932 to 1933. Krugman wants to credit the abandonment of gold with this feat. Yet France also experienced just as significant a recovery from 1932 to 1933, even though it stayed tied to gold until 1936.
So, although the chart plausibly shows the benefits to Japan and Britain for going off gold in 1931, it certainly doesn't show the benefits to the United States and Germany. Of course, Krugman could say that it was the United States and German recovery that lifted France as well — but that causality doesn't jump out from the chart itself. And Krugman was citing the chart as independent evidence of the stupidity of the gold standard.
Finally, let's look a little more carefully at the case of the United States. A critic of the gold standard looks at the chart above and concludes, "Sticking with gold drove the economy into the toilet, but once FDR freed the dollar from the peg in March 1933, it was smooth sailing."
But no, that's not what the chart above shows.
. . .
So, with that historical information in hand, look again at Eichengreen's allegedly damning chart. Yes, the United States enjoyed a sharp recovery in 1933 relative to 1932 output. But it also enjoyed significant growth in 1935 and 1936, well after the dollar had been tied again to gold (at a lower parity). It's not obvious at all that it was the gold standard driving the movements of US industrial output during 1929–1937.
But obviously FDIC did stabilize the financial sector.
Ok, well the tax was what elajgalt was arguing with his link.