Second Great Depression Looming?

Discussion in 'Politics' started by AquaAthena, Sep 5, 2010.

  1. AquaAthena
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    AquaAthena INTJ/ INFJ

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    9/3/2010

    Economist and New York Times columnist Paul Krugman, has this to say in The Times earlier this summer, declaring that those opposing more government spending were pointing us towards disaster: "It raises memories of 1937, when F.D.R.’s premature attempt to balance the budget helped plunge a recovering economy back into severe recession."

    Snip:

    Does the 1937-38 economic collapse, the so-called "depression within the Depression" offer any lessons on what we should do now? In 1937, it seemed that things were improving, some light was seen in the Great Depression, but unemployment suddenly jumped from 14.3 percent in June 1937 to 19 percent in June 1938. With the unemployment rate stuck at 9.6 percent, the Obama administration is planning to unveil what would be its third stimulus package. Supporters are pointing to the late 1930s to justify yet another increase government spending.

    Today Keynesians are out in full force defending the massive $1.3 plus trillion deficit that we have run since Obama became president, warning that cutting it would lead to a scenario similar to what we saw in the late 30s.

    Snip:

    A recent Wall Street Journal survey during August of 53 prominent, forecasting economists provides something of a guideline. The view of 63 percent of the economists who opposed any more fiscal or monetary stimulus is summarized well by Stephen Stanley of Pierpont Securities: "The economy needs government to get out of the way."

    And from economist John R. Lott:

    The real lesson from the 1937-38 is that government made the situation much worse by always trying to fix things. Unfortunately, this is precisely what we have seen under Mr. Obama's presidency with the failed stimulus spending and all the regulatory chaos they have created.

    More: FOXNews.com - Obama Is Repeating the Mistakes of the 1937 Economic Collapse
     
    Last edited: Sep 5, 2010
  2. Truthmatters
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    Truthmatters BANNED

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    Wrong, FDR backed of and tried to bring the budget into balance in 1937 due to public outcry.

    The economy tanked and he had to reup the new deal programs.

    then they economy began recovering again.

    Its history.

    Now where in history is an example of no government invention doing what you claim it will?
     
  3. AquaAthena
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    AquaAthena INTJ/ INFJ

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    Good morning, Truthmatters :) Have a great holiday and thanks for your post.

    Aqua*
     
  4. johnrocks
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    johnrocks Silver Member

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    Digg - 1921 Depression: How "Doing Nothing" Saved America


    FDR prolonged the depression;imho.
     
  5. code1211
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    code1211 Senior Member

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    Was there a debate within the FDR administation on whether to have a moderate Tax increase or go with th largest Tax Increase in History?

    There are some today who want to sun set all of the Bush Tax Cuts, some who only want to penalize the rich and some who want to extend all of the tax cuts for anywhere from one year to pemanent.

    "No government intervention" is not an option in this economy. It is only a matter of how big the intevention will be and form it will take.

    Since every decision he has made so far has made things worse, I'd be tempted to find out what the Big 0 wants to do and then do the opposite. Whatever that is, it couldnt be worse than than recent history.
     
  6. edthecynic
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    edthecynic Censored for Cynicism

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    Just CON$ervative wishful thinking!
     
  7. loosecannon
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    loosecannon Senior Member

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    That is essentially what roubini is saying, that all the stimulus and bailouts have done is kick the can further down the block.

    You can't fix insolvency with deficit spending.
     
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  8. Madeline
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    I realize it is popular now to posit that FDR's policies actually caused the Great Depression....but I dun think that most economists agree. I think that is still a radical POV, and personally it makes no sense to me.

    There are a few things that happened then which don't seem to be happening now.

    * The stock market collapsed. It was more than just plunging share prices. Lack of regulation led to a sudden loss in faith that intangible assets had value.

    * The Dust Bowl caused the collapse of American agriculture and the displacement of millions.

    * The entire world had a Great Depression, not just the US.

    Comparatively speaking:

    * We have a strong faith in our financial markets and so does the rest of the world.

    * There's no pandemic or other widepsread natural disaster afflicting America (despite BP's best efforts).

    * There's growing economic strength in other parts of the world, notably China.

    I'm not convinced that it is still possible for the US to suffer another Great Depression. Severe recessions, yes...but nothing like the 1930's.
     
  9. Annie
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    Annie Diamond Member

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    This in the 7th year of the FDR administration.
     
  10. Intense
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    Intense Senior Member

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    FDR, The Savior of Union and Government worker's .... which the rest of us paid dearly for.
     

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