- May 20, 2009
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Because slashing spending during a recession causes the economy to shrink.
1921 called, they said you can't be any wronger
The 1921 recession was caused in the first place by shrinking government spending as war spending declined.
The recession was over half way through 1921! You should take a look at what actually happened.
Mellon advised that assets, liabilities and labor needed to reprice so the government did virtually nothing and the deep recession was over in 18 months!