Did FDR's policies help us get out of the Great Depression?

[mash107]

Without banking regulation, the SEC, the TVA and other reforms the country probaly couldn't have gotten out of the Depression. But most people know the New Deal only helped us survive the depression, not to end it. The New Deal just wasn't big enough to jump statrt the economy, that took WW2 to do.

Absolutely false. It's what caused the Depression to be more than just a Recession. Hoover started it with his policies, and FDR finished it. WW2 wasn't even the catalyst as many see it to be. Spending by the government does not create prosperity, period; rather it results into despair, as seen 1930-1945.

In fact, using your logic, we should've seen the greatest depression in the history of mankind in 1946 when the war ended and when government spending shrunk dramatically. That absolutely wasn't the case. Prosperity ensued in 1946.

 

[Toro]

The problem was caused -by- government intervention in the markets. The Federal Reserve was created in 1913, and since then, our banks have been given a free ride. They can give loans to whomever they want, whenever they want, without worrying about the consequences of those loans.

4000 banks failed during the Depression. About 1000 failed after the the S&L debacle. About 100 or so have failed over the past year as well as something like 300 mortgage companies since 2006, not to mention that Wall Street as we know it has been wiped out. So banks are very much aware of and are exposed to the consequences of risk.

 

[Toro]

Absolutely false. It's what caused the Depression to be more than just a Recession. Hoover started it with his policies, and FDR finished it. WW2 wasn't even the catalyst as many see it to be. Spending by the government does not create prosperity, period; rather it results into despair, as seen 1930-1945.

In fact, using your logic, we should've seen the greatest depression in the history of mankind in 1946 when the war ended and when government spending shrunk dramatically. That absolutely wasn't the case. Prosperity ensued in 1946.

This is ideological opinion and is not based in empiricism.

If you go to the St Louis Fed site, they have estimated per capita real GDP growth for the US since 1790. From 1790 to 1900, the average per capita growth in GDP after inflation was 1.1%. From 1900 to 2000, it was 2.1%. And after 1950, the average real growth per capita was slightly higher than during the first half of the century.

And during that time, government spending has been the highest in the history of the nation.

taxes+as+percent+of+gdp.gif (image)

 

[Toro]

Total bull sh--. FDR got the banks working again, cut down unemployment etc. When the Conservatives were able to cut federal spending, as in 1937, we saw the depression return with a furry. That's just a fact, unlike the garbage you just made up

The government took what would have been a nasty recession and turned it into The Great Depression.

This was primarily because of the Fed, which raised interest rates and kept them far too high. The Fed was the biggest problem with the banking system. From 1929 through 1932, banking reserves fell by a third. Instead of increasing confidence in the system, they induced panic. A study published a few years back on the financial system during the Depression found that those banks that failed generally were stronger than those that were weaker, meaning that panic and bank runs caused the institutions to fail.

However, the government also raised taxes during the early 30s and initiated a disastrous trade war by slapping tariffs on imports. The government's pro-cyclical policies made a bad recession into a catastrophe.

The depression of 1937-38 was caused by the government raising taxes and cutting spending during a weak economy.

 

[garyd]

I submit to you sir that absent substantial other info the Fred site is almost certainly wrong. If one looks at the extraordinary increase in the amount of rail road track laid and and shippin in general the notion of a 1.5% per annum increase in GDP is absolutely ludicrous.

 

[Kenny]

I believe that his policies gave poor citizens some relief from the depression. Its amusing how some people criticize his policies, however, if he would not have implemented them, those same people would be criticizing him and accusing him of being a dead beat president. What is even more amusing is that some people put so much trust in greed. They think that greed, the same thing that led us into depression every few years, will bring us out.

 

[mash107]

This is ideological opinion and is not based in empiricism.

If you go to the St Louis Fed site, they have estimated per capita real GDP growth for the US since 1790. From 1790 to 1900, the average per capita growth in GDP after inflation was 1.1%. From 1900 to 2000, it was 2.1%. And after 1950, the average real growth per capita was slightly higher than during the first half of the century.

And during that time, government spending has been the highest in the history of the nation.

No, it's very much based on fact:

qjae.org/journals/rae/pdf/R52_1.pdf

In 1946, GNP fell by atleast 19%, and yet we didn't see the widespread devastation as was the case during the depression. GNP or GDP is hardly an empirical measurement of prosperity, as it includes the amount the government spent.

Also, the government is not exactly truthful with the rate of inflation. Do you honestly believe that the rate of inflation was just a few % when gas was nearing $5/gallon?

 

[garyd]

Yes kenney being maintained by the government at bare subsistence is an improvement over having an actual job .... not

 

[Toro]

No, it's very much based on fact:

qjae.org/journals/rae/pdf/R52_1.pdf

In 1946, GNP fell by atleast 19%, and yet we didn't see the widespread devastation as was the case during the depression. GNP or GDP is hardly an empirical measurement of prosperity, as it includes the amount the government spent.

Also, the government is not exactly truthful with the rate of inflation. Do you honestly believe that the rate of inflation was just a few % when gas was nearing $5/gallon?

That's interesting. My thesis for my economics history class back in the day was on the post-WWII economy, and why the economy did not experience a sharp recession as it did in 1919-1921. I skimmed that file and may read it later.

Inflation-adjusted GDP for the following years are, in billions $

1943 - 180
1944 - 209
1945 - 221
1946 - 223
1947 - 233
1948 - 256
1949 - 271
1950 - 273
1964 - 640

http://rds.yahoo.com/_ylt=A0geu7hk1...whitehouse.gov/omb/budget/fy2006/pdf/hist.pdf

So there was no depression after WWII.

 

[Toro]

I submit to you sir that absent substantial other info the Fred site is almost certainly wrong. If one looks at the extraordinary increase in the amount of rail road track laid and and shippin in general the notion of a 1.5% per annum increase in GDP is absolutely ludicrous.

Well, there was an extraordinary amount of industrialization and building of transportation infrastructure in the 20th century as well, not to mention enormous advances in communications and computing technology.

It was not a 1.5% p.a. increase in GDP, it was a 1.1% p.a per capita increase in GDP. Frankly, I was surprised it was so high for the 20th century.

This from Greg DeLong

Economic Growth in the 1990s

 

[garyd]

Oh per capita that explains a lot. Given the vast amount of new arrivals in this country through out the 19th and early 20th century and now again at the end of the 20th and start of the 21st per capita is probably not the best way to measure economic growth.

 

[Orange_Juice]

Absolutely false. It's what caused the Depression to be more than just a Recession. Hoover started it with his policies, and FDR finished it. WW2 wasn't even the catalyst as many see it to be. Spending by the government does not create prosperity, period; rather it results into despair, as seen 1930-1945.

In fact, using your logic, we should've seen the greatest depression in the history of mankind in 1946 when the war ended and when government spending shrunk dramatically. That absolutely wasn't the case. Prosperity ensued in 1946.

You are an idiot. After the war people had a ton of savings in the bank that they spent--money they got from the government--because during the war they couldn't buy many consumer goods.

People as ignorant as you shouldn't be allowed to vote

 

[Orange_Juice]

The government took what would have been a nasty recession and turned it into The Great Depression.

This was primarily because of the Fed, which raised interest rates and kept them far too high. The Fed was the biggest problem with the banking system. From 1929 through 1932, banking reserves fell by a third. Instead of increasing confidence in the system, they induced panic. A study published a few years back on the financial system during the Depression found that those banks that failed generally were stronger than those that were weaker, meaning that panic and bank runs caused the institutions to fail.

However, the government also raised taxes during the early 30s and initiated a disastrous trade war by slapping tariffs on imports. The government's pro-cyclical policies made a bad recession into a catastrophe.

The depression of 1937-38 was caused by the government raising taxes and cutting spending during a weak economy.

I have a few problems with this argument. First off, the New Deal has nothing to do with your argument saying the Fed made matters worse, or the Smoot Hawley Tariff. Not saying you were implying that, but just adding that. I don't deny tariffs were a mistake, they were. And a loose money policy probably would have helped, especially with a free trade policy which would have kept Europe moving forward instead of back.

Still, how bad would things have been anyway? The spiraling problems of underconsumption and overproduction that plagued the economy were systemic. People had to buy things or the economy wasn't going to move. Free trade would have helped, but at the heart of the problem was a farm belt that had too many farmers. Remember, something like 45% of Americans lived on the farm in 1930, and they were broke for the most part. They needed new jobs and until the war factories opened they were not getting jobs to help the economy.

As to the bank failures, we can safely say the FDIC solved a lot of problems about panics and bank runs.

 

[Orange_Juice]

4000 banks failed during the Depression. About 1000 failed after the the S&L debacle. About 100 or so have failed over the past year as well as something like 300 mortgage companies since 2006, not to mention that Wall Street as we know it has been wiped out. So banks are very much aware of and are exposed to the consequences of risk.

But are their managers effected by risk? Or do they just play for the short term and bail out early with golden parachutes?

 

[Modbert]

We hardly have pure capitalism... and that's exactly the problem. If you think this mess of an interventionist mixed economy is pure capitalism, then you should follow your own advice. No bank or company should be bailed out in laissez-faire capitalism.... you're just contradicting yourself all over the place. Bailouts, or the promise of one, rather, are precisely why this crisis came about.

The problem was caused -by- government intervention in the markets. The Federal Reserve was created in 1913, and since then, our banks have been given a free ride. They can give loans to whomever they want, whenever they want, without worrying about the consequences of those loans. After all, the Fed is "the lender of last resort". That's hardly pure capitalism. Our situation came about precisely because government had promised bailouts to those banks that might misbehave, and the due diligence that otherwise would've existed had been discarded. Do you think it's just coincidence that we've had two huge banking failures in just 20 years? There's systemic problem with that industry, and it's called governmental regulations and the Federal Reserve.

Regulations only come from within and the marketplace. When government tries to make laws, they usually get them wrong, and lot's of unintended consequences ensue. Since you brought up Enron, which is precisely was a mess because people think the government regulations, through the SEC, is worth a shit, the law that resulted was the Sarbanes-Oxley Act has absolutely stifled companies from going public:

youtube.com/watch?v=I-giZ_yBjEM

We do have pure capitalism (ultimate kind) when we have no regulation. The only way to save the economy at the point it was at was to have some socialist tendencies.

I'm not contradicting myself all over the place because if you believe bailouts or the promise of one is the reason for this current financial crisis then you are looking at it wrong.

Do look at this from a economic view and not a political view. Which so many when they hear the word Socialism or Socialist because they want pure capitalism which is the worse thing for any country.

The Federal Reserve is also one of the reasons we are in the mess we're currently in. Our money isn't backed up by a gold standard anymore or anything really. Rather, it's backed up by the confidence of the people in the market.

The creation of the Federal Reserve wasn't pure capitalism, however letting it run it's course since was. It's the whole idea of the Conservative movement as well, keep the government intervention to a miminal. Slight problem with that though, pure capitalism is where we end up with the rich having outrageous amounts more of money then the poor and middle class (A CEO currently makes about 365 times more then an average worker).

It's been proven by the actions of the people on Wall Street since the beginning that they cannot be trusted. The #1 rule of any company on Wall Street by law is to make money for it's stockholders. That's when we have companies comparing how much a human life is worth if it came down to a lawsuit because of their faulty products.

I never said Government was perfect either. The government needs to be fixed as well, because of the people on Wall Street always have had a certain amount of influence over the people in the White House. So obviously many laws will have certain loopholes that companies can get around and such.

And yes, I understand the Sarbanes-Oxley Act has made many companies rethink from going public because of the costs and everything.

All I'm saying is that pure capitalism is wrong because it is one of the main reasons we've gotten where we are now. No bailout was promised to any company before the financial meltdown, why do you think some of these companies actually went down? I think if a bailout is done correctly then it should be done, however I don't believe a bailout like the $700 billion dollar one without any regulation should of happened.

One like the Big 3 Bailout who have a plan, and when you compare the costs if they went under/getting a bailout plus several other variables is one I support.

 

[Modbert]

One thing that has to be understood about WWII and the Depression:

Millions of young men and many women (in non-combat roles) went overseas to fight for the U.S which created a vacuum of jobs for women, miniorities, and others. Plus, supplies and weapons were in factories across the U.S which created even more jobs for people.

Two problems when applied today:

1.) There really are no new jobs being created for people to make supplies/weapons for war like WWII.

2.) The growing elephant in the room: Overpopulation

 

[mash107]

You are an idiot. After the war people had a ton of savings in the bank that they spent--money they got from the government--because during the war they couldn't buy many consumer goods.

People as ignorant as you shouldn't be allowed to vote

People like you are why we've seen failed economic policies for generations, because you fail to study the issue in depth and you believe whatever you're told. Savings did go up during the war years, because yes, government forced production to satisfy the military's needs rather than the consumer's. This was not good for the economy. The whole Keynesian argument is that war in of itself is stimulative is absolutely the same sort of horseshit that you have between your ears. Spending hundreds of billions of dollars on a missile defense system or a dam in the middle of Tennessee does absolutely jack shit to stimulate the economy, when taking that money of out the economy destroys more jobs than it can ever hope to create. That's what made the depression last 15 years instead of just one!

 

[PubliusInfinitum]

indeed. just like capitalism is causing the shit we are trodding through these days. Call me a revisionist if you need to avoid the very reasons you lost this latest election.

Now purely from an academic perspective this response is a CLASSIC case study in the intellectual limitations of the ideological left.

Notice how the self-declared in-house pedophile has concluded that the reason the GOP lost the last election is a result of the failure of capitalism...

Yet no where in the argument did she set a foundation for such a conslusion, she merely takes the unsubstantiated logical leap that 'capitalism failed' thus the GOP lost...

First, there is no failure of capitalism.. as it is an absolute imposibility for capitalism TO FAIL. Government interference in the mortgage markets resulted in the martket setting policy in response to that interference... time annd time again, warning signns were rejected BY THE IDEOLOGICAL LEFT who gave chronic but empty promises that the gov't could gaurantee any potential losses; even when the sum of those losses were well beyond the means of the sum of the world's gov'ts to cover... they continued to demand that there was no problem...

Naturally once the system failed the left begins to continue the delusion and just as they've denied their role in supporting the catastropes of fascism and communism... BLAMING THOSE DISASTERS in capitalism... (See my sig...) they simply reject any responsibility on their part and blame 'the free exchange of goods and services, to the mutual benefit of both parties' on the failures which THEY CREATED...


Secondly, the GOP losing the election would be at BEST a result of a popularly held opinion... one which would in no way be associated to a valid opinion, let alone an opinion which rests within sound intellectual reasoning... thus has no potential means to stand as a foundation for any of the conclusions offered by the self-declared, in-house advocate of adult/child sex...


So what we have in this insanity from our in-house, self-declared pedophile is a ad hoc argument, presented as the purest essence of reason and it stands in example of the insurmountable intellectual limitations of the whole of the ideological left, proving once again that where leftist are allowed a vote... only chaos, calamity and catastrophe can follow.

 

[Modbert]

Capitalism fails when the entire Financial Industry collapses and causes just about every other industry to either collapse as well or take massive losses.

 

[mash107]

Secondly, the GOP losing the election would be at BEST a result of a popularly held opinion... one which would in no way be associated to a valid opinion, let alone an opinion which rests within sound intellectual reasoning... thus has no potential means to stand as a foundation for any of the conclusions offered by the self-declared, in-house advocate of adult/child sex...


So what we have in this insanity from our in-house, self-declared pedophile is a ad hoc argument, presented as the purest essence of reason and it stands in example of the insurmountable intellectual limitations of the whole of the ideological left, proving once again that where leftist are allowed a vote... only chaos, calamity and catastrophe can follow.

I don't know about that. GOP has long been associated with laissez-faire capitalism, but they wouldn't know it if it hit them upside the head, save Ron Paul. Many voters also fail to distinguish crony, interventionist capitalism that fails time and time again with that of an inherently stable laissez-faire capitalism, and there's quite a few here on these forums.