The Imaginary Greatness of FDR

[Toro]

FDR supposedly is a Great President for "Getting us out of the Great Depression."

Here's the data set.

I see no greatness. I see 8 consecutive years of failure.

FDR US Unemployment 1932: 24.1%, 1933: 24.9, 1934: 21.7%, 1935: 20.1%, 1936: 16.9%, 1937: 14.3%, 1938: 19.0%, 1939: 17.2%. 8 year Average = 19.8%

What's so great about averaging 20% unemployment for 8 consecutive years?

Frankie you are an idiot. FDR mobilized the most highly motivated and effective military force in human history from next to nothing. His social endeavors are just mere afterthoughts compared to saving the world. Give credit where it is due...oh ya...and pull your head out of your ass...I think you have some shit on your blinders.

So we're comparing unemployment rates, are we? It would be interesting to know if the conservative cheerleaders would apply the same standard to their heroes. After all, Reagan had the highest rate of unemployment of any President since the war.

 

[Londoner]

The Truth The Great Depression was created by the irrational stock-market speculation that ultimately led to the Crash of October 1929. The crash and subsequent depression were due to factors innate to the capitalist system, unchecked under the laissez-faire policies of Herbert Hoover. [Predictably, the Right has denied the wild & destructive boom-&- bust nature of the free market, and scrubbed the causes of the 1929 crash from history, focusing only on the man who tried to clean up the mess. Where have we seen this before?]

 

[Londoner]

The Good: FDR's self-stated goal was to save capitalism from itself -- so that private enterprise could survive the ravages of it's own risk mismanagement. He created the great regulatory model which gave the nation 40 years of financial stability, until Reagan and the Chicago School decided to ignore it, giving the S&L industry expanded freedom to make insanely risky investments in commercial real estate. The deregulation of the S&L industry was part of a broader movement to deregulate the entire financial industry - which culminated under Clinton with the removal of FDR's Glass-Stegall Act, and then Bush, with The Commodity Futures Modernization Act of 2000 -- leading to a repeat of 1929 bubble (this time in housing and derivatives): the 2008 meltdown.

 

[Londoner]

The Bad Frank completely misses FDR's real mistake. FDR and his Treasury Secretary, Henry Morgenthau, were major deficit hawks. [This is why FDR favored such high taxes: because he insisted on paying for government, rather than borrowing from, say, China. He was the opposite of "guns and butter" Bush 43, who borrowed to pay for his wars and tax cuts]. Anyway, in 1937 after only marginal economic improvements (and still dismal employment), FDR, worried about debt and inflation, decided to pull back, i.e., lower spending > balance the budget. Correspondingly, the Fed tightened the money supply, refusing to soak up bad debt or pump money into a stalled economy, forcing more banks to fail -- leading to even greater catastrophe. (See Milton Friedman's excellent description of what happens when the Fed tightens the monetary supply at the wrong time)

But…FDR's goal was achieved: the deficit fell from 5.5% of GDP in '36 to 2.5% in '37.

The 1937 budget, aka austerity, suffocated fledgeling demand and prolonged the depression.

It took the greatest government spending program of all time to end the Depression: WWII. Had the government merely dumped the bombs and other war materials into the ocean, the result would have been the same: military Keynesianism, i.e., government pumps money into manufacturing, leading to and explosion of jobs and innovation. More importantly, people with jobs spend money. And what happens when people spend money? The capitalist must innovate and add even more jobs[/] to capture that money.

Again: Government stimulated demand, and the capitalist engine jump-started to capture that demand. When there is no demand -- because the middle class doesn't get paid enough to consume, and they've run out of credit -- there is no reason to invest or add jobs. Giving tax cuts to millionaires will not lead to investment and job creation if there is no middle class demand.

Here is the lesson of WWII

Granted, the government spending necessary to boost war time manufacturing resulted in a deficit over 100% of GDP -- but it was sufficient to prime the pump and jump start the economy. Once the economy started, it resulted in the most sustained economic boom of modern times. Make no mistake, though: America needed an existential threat to prompt FDR and the budget hawks to finally start pumping really money into the economy.

Sadly, because of the noise machine, we still have not learned the correct lessons from the Great Depression.

 

[Londoner]

You don't get American greatness without BIG GOVERNMENT war spending

The computer and consumer electronics boom that exploded in the 80s came out of the Cold War Pentagon, i.e.,government spending on war technology. The major advances in airplane technology that fueled business and tourism for the last 1/2 century came out of the Cold War Pentagon and NASA, i.e., government spending AND government-directed research.

[Do you idiots understand what kind of technology came out of the GOVERNMENT space program?]

Does anybody remember the great postwar suburban expansion? -leading to one of the greatest economic explosions in modern times -- malls, highways, phone lines, water plants, damns, and homes popping up everywhere. Microwaves, televisions, radios, air conditioning, etc., etc. Where do you think the highways and communication systems and electronics came from? Where do you think the technology came from? Who do you think lead the research and subsidized the infrastructure projects during America's great Cold War period?

[Do you know where the Hoover Damn came from? Do you know why we have an American Southwest with water and energy?]

Silly morons. Military Keynesianism -- AKA big government spending on war -- has propped-up the American economy since before all of you were born.

Great capitalists like Bill Gates and Steve Jobs are standing on the shoulders of the Cold War Pentagon and the Space Program. Where do you think the computer came from? It came from government spending. It came from government research.

Morons.

(please turn off talk radio. you are being lied to)

 

[Toro]

The Truth The Great Depression was created by the irrational stock-market speculation that ultimately led to the Crash of October 1929. The crash and subsequent depression were due to factors innate to the capitalist system, unchecked under the laissez-faire policies of Herbert Hoover. [Predictably, the Right has denied the wild & destructive boom-&- bust nature of the free market, and scrubbed the causes of the 1929 crash from history, focusing only on the man who tried to clean up the mess. Where have we seen this before?]

That's not the truth. Its more complicated than that. The stock market was a trigger for a recession, but its not what caused the Depression. If anything, the Depression was caused by a shrinking money supply and tightening monetary policy, which was heavily dependent upon actions of the Federal Reserve, i.e. the government.

 

[Londoner]

If anything, the Depression was caused by a shrinking money supply and tightening monetary policy, which was heavily dependent upon actions of the Federal Reserve, i.e. the government.

I noted this in a prior post, end of first paragraph.

The Bad Frank completely misses FDR's real mistake. FDR and his Treasury Secretary, Henry Morgenthau, were major deficit hawks. [This is why FDR favored such high taxes: because he insisted on paying for government, rather than borrowing from, say, China. He was the opposite of "guns and butter" Bush 43, who borrowed to pay for his wars and tax cuts]. Anyway, in 1937 after only marginal economic improvements (and still dismal employment), FDR, worried about debt and inflation, decided to pull back, i.e., lower spending > balance the budget. Prior to this, the Fed tightened the money supply, refusing to soak up bad debt or pump money into a stalled economy, forcing more banks to fail -- leading to even greater catastrophe. (See Milton Friedman's excellent description of what happens when the Fed tightens the monetary supply at the wrong time)

But…FDR's goal was achieved: the deficit fell from 5.5% of GDP in '36 to 2.5% in '37.

The 1937 budget, aka austerity, suffocated fledgeling demand and prolonged the depression.

It took the greatest government spending program of all time to end the Depression: WWII. Had the government merely dumped the bombs and other war materials into the ocean, the result would have been the same: military Keynesianism, i.e., government pumps money into manufacturing, leading to and explosion of jobs and innovation. More importantly, people with jobs spend money. And what happens when people spend money? The capitalist must innovate and add even more jobs to capture that money.

Again: Government stimulated demand, and the capitalist engine jump-started to capture that demand. When there is no demand -- because the middle class doesn't get paid enough to consume, and they've run out of credit -- there is no reason to invest or add jobs. Giving tax cuts to millionaires will not lead to investment and job creation if there is no middle class demand.

Here is the lesson of WWII

Granted, the government spending necessary to boost war manufacturing resulted in a deficit over 100% of GDP -- but it was sufficient to prime the pump and jump start the economy. Once the economy started, we experienced the most sustained economic boom of modern times. Make no mistake, though: America needed an existential threat to prompt FDR and the budget hawks to finally start pumping real money into the economy.

Sadly, because of the noise machine, we still have not learned the correct lessons from the Great Depression.

 

[CrusaderFrank]

Frankie you are an idiot. FDR mobilized the most highly motivated and effective military force in human history from next to nothing. His social endeavors are just mere afterthoughts compared to saving the world. Give credit where it is due...oh ya...and pull your head out of your ass...I think you have some shit on your blinders.

Thanks for you thoughtful contribution you pooh-flinging monkey.

You got my name right and FDR did mobilize the military which got us out of his Great Depression. The issue is those 8 years before Pearl Harbor rescued the US Economy.

You guys that cry about how someone goes about "fixing" a problem they did not create astounds me. You always demand perfect repairs and zero accountability to those that caused the problems. I liked you "pooh flinging monkey" You stole that from oddball. THIEF!!!

I called you that when you started the first List, remember?

And this is yet another topic where you're flying on auto-pilot from a 65 year old out of date handbook.

Where's FDR's Greatness? Where? Show me in the data set when the Greatness kicked in.

 

[CrusaderFrank]

Monday morning QBing is the fad of the year.
No matter what anyone did 70 years ago there are books being sold and written as we post to dispute it.
And gullible and naive buyers to buy.

We all know you hate reading and refuse to acknowledge facts that controvert your pet theories and understanding, limited though it is.

The Great Depression lasted so long because Hoover was our first Stalin-inspired Central Planner and then FDR came in and double down on all of the worst of Hoover-Stalin Bad Economic ideas.

 

[CrusaderFrank]

FDR supposedly is a Great President for "Getting us out of the Great Depression."

Here's the data set.

I see no greatness. I see 8 consecutive years of failure.

FDR US Unemployment 1932: 24.1%, 1933: 24.9, 1934: 21.7%, 1935: 20.1%, 1936: 16.9%, 1937: 14.3%, 1938: 19.0%, 1939: 17.2%. 8 year Average = 19.8%

What's so great about averaging 20% unemployment for 8 consecutive years?

Frankie you are an idiot. FDR mobilized the most highly motivated and effective military force in human history from next to nothing. His social endeavors are just mere afterthoughts compared to saving the world. Give credit where it is due...oh ya...and pull your head out of your ass...I think you have some shit on your blinders.

So we're comparing unemployment rates, are we? It would be interesting to know if the conservative cheerleaders would apply the same standard to their heroes. After all, Reagan had the highest rate of unemployment of any President since the war.

I had no idea you were such a hateful little pencil jockey.

Look at where GDP, tax revenues, unemployment, inflation, interest rates and tax rates were when Reagan took office as opposed to when he left.

Also, as bad as 7.5% UE was, even after 7 years of New Deal we were double that!

Again, please tell me what's so great about that and why you continue to defend the worst economic record since the 7 Biblical Lean Years

 

[Toro]

Frankie you are an idiot. FDR mobilized the most highly motivated and effective military force in human history from next to nothing. His social endeavors are just mere afterthoughts compared to saving the world. Give credit where it is due...oh ya...and pull your head out of your ass...I think you have some shit on your blinders.

So we're comparing unemployment rates, are we? It would be interesting to know if the conservative cheerleaders would apply the same standard to their heroes. After all, Reagan had the highest rate of unemployment of any President since the war.

I had no idea you were such a hateful little pencil jockey.

Look at where GDP, tax revenues, unemployment, inflation, interest rates and tax rates were when Reagan took office as opposed to when he left.

Also, as bad as 7.5% UE was, even after 7 years of New Deal we were double that!

Again, please tell me what's so great about that and why you continue to defend the worst economic record since the 7 Biblical Lean Years

In other words, you will manipulate context to rationalize your deeply held political biases, and you will apply double standards to those with whom you disagree. Got it.

Its not me who is the hateful one, Frank. I just enjoy exposing hypocrisy.

 

[Toro]

GDP growth, FDR

GDP growth, Reagan

The economy rose by 90% in real terms under FDR and 32% under Reagan.

 

[Gadawg73]

Monday morning QBing is the fad of the year.
No matter what anyone did 70 years ago there are books being sold and written as we post to dispute it.
And gullible and naive buyers to buy.

We all know you hate reading and refuse to acknowledge facts that controvert your pet theories and understanding, limited though it is.

The Great Depression lasted so long because Hoover was our first Stalin-inspired Central Planner and then FDR came in and double down on all of the worst of Hoover-Stalin Bad Economic ideas.

Yeah, my dumb ass hates reading. I never read anything on the way to a BBA and a graduate degree. I am blind and felt it all with braille. Played football for the blind school.
My pet theories?
Keep it coming Frank. I love it!

 

[Toro]

Its important to understand how the data was collected in the 1930s when comparing unemployment rates. As Amity Shales herself notes

During the Depression the federal government did not survey unemployment routinely as it does today. But a young economist named Stanley Lebergott helped the Bureau of Labor Statistics in Washington compile systematic unemployment data for that key period. He counted up what he called "regular work" such as a job as a school teacher or a job in the private sector. He intentionally did not include temporary jobs in emergency programs -- because to count a short-term, make-work project as a real job was to mask the anxiety of one who really didn't have regular work with long-term prospects.

The Krugman Recipe for Depression - WSJ.com

But today, economists now count those jobs as real jobs because economists aren't making judgments about which jobs are "real" and which are not. They are just counting jobs. Thus, the data set over-estimates the level of unemployment and are inconsistent with how unemployment has been calculated since 1947.

 

[Toro]

Employment performance was about the same under Reagan as it was under FDR, which would bring howls of consternation from partisan ideologues on both sides of the political spectrum.

It has become very common to see right wing analysis that is based on trends from 1933 to 1938, or a trough to trough comparison. When I see this comparison in an article my first reaction is that the author is either very ignorant and does not know what they are talking about, or two, they are deliberately cherry picking the worse comparison they can make to support their point of view. But, using trough to trough data series is a very biased approach and it immediately makes me very suspicious of the author's objectivity.

The second point I would address is that a lot of data is presented in isolation. For example, take the unemployment rate. If you say the unemployment rate in 1938 was 17.2% it obviously going to sound terrible. But that is not the issue. Rather, the issue is what does the drop in the unemployment rate from the 25.2% peak in 1933 imply about the success or failure of policy. The issue should be how does the drop in the unemployment rate under FDR and the New Deal compare to normal. In other words, what standard should you use to evaluate whether economic growth between 1933 and WW II was weak, strong or average.

I would suggest that the correct time frame to use is from 1933 to 1940. This is FDR's first two terms and in 1940 the build-up for WW-II was just starting and did not yet have a significant impact. It is not a trough to trough comparison. Rather it is a trough to mid-cycle comparison. From 1933 to 1940 the unemployment rate fell from 25.2%to 14.6%, a 42.1% decline. So is this good or bad? The peak post WW II unemployment rate was in 1982 when it peaked at 10.8% and averaged 9.7% for the year. Over the next seven years the unemployment rate fell to 5.3% in 1989. This is a 45.8% drop as compared to the 42.1% drop under FDR. Under Kennedy-LBJ the unemployment rate fell from 6.7 to 3.6%, a 46.8% drop. Under Clinton it fell from 7.5% to 4.2%, a 43.75%. Considering that FDR experienced the 1937-38 recession while the other three periods were not interrupted by a recession, the difference between a 42.1% fall and the other 45.8%, 46.8% and 43.75% declines does not seem to be a significant difference. ...

The Unemployment Rate Under Reagan VS FDR | Angry Bear

And of course, this includes data that overstated the unemployment rate under FDR.

 

[Toro]

And by how much is unemployment over-stated? By about a third.

If you want to know how the New Deal treated ordinary Americans, this choice really matters. Let's look at a figure Shlaes gives twice in her book and again in her Wall Street Journal editorial: She has unemployment at 20 percent in the 1937-38 recession. That's appalling—almost as bad as 23 percent in 1932. Based on such a statistic, you could think the New Deal wasn't alleviating the Great Depression. But that number hides something: A third of the people Shlaes counts as unemployed had a job that the New Deal gave them through its relief programs.

Now, you may say, wait: Those people really shouldn't count as employed—we're not interested in government make-work, we're interested in the real economy. Fair enough—and if you look again at Historical Statistics of the United States, you'll see another measure of unemployment—private, nonfarm unemployment—measuring the real, industrial economy. And on that measure, unemployment again runs markedly lower under Roosevelt than under Hoover. John Maynard Keynes might have explained that the New Deal wasn't just offering make-work, it was stimulating the economy—and Shlaes in fact at one point says the same: "t functioned as Keynes ... hoped it would." Yet of all the possible ways to measure unemployment, Shlaes chooses the only way that hides the effect of New Deal relief programs and makes it look as though the economy performed as poorly under Roosevelt as under Hoover.

The Forgotten Man: A New History of the Great Depression by Amity Shlaes - By Eric Rauchway - Slate Magazine

 

[CrusaderFrank]

Did they use the same "Flawed" accounting standard for US unemployed under Coolidge was less than 0%, or did they switch during FDR? Using your metrics Coolidge must have had more than full employment.

Also, as far as I'm concerned its no longer the "Great" Depression, its the FDR Depression.

The only reason it was labeled Great was the Progressive Jihad against Free Enterprise made great gains.

 

[Toro]

Did they use the same "Flawed" accounting standard for US unemployed under Coolidge was less than 0%, or did they switch during FDR? Using your metrics Coolidge must have had more than full employment.

You would be wrong.

Also, as far as I'm concerned its no longer the "Great" Depression, its the FDR Depression.

I'm sure to you, it is.

 

[CrusaderFrank]

The Truth The Great Depression was created by the irrational stock-market speculation that ultimately led to the Crash of October 1929. The crash and subsequent depression were due to factors innate to the capitalist system, unchecked under the laissez-faire policies of Herbert Hoover. [Predictably, the Right has denied the wild & destructive boom-&- bust nature of the free market, and scrubbed the causes of the 1929 crash from history, focusing only on the man who tried to clean up the mess. Where have we seen this before?]

That's not the truth. Its more complicated than that. The stock market was a trigger for a recession, but its not what caused the Depression. If anything, the Depression was caused by a shrinking money supply and tightening monetary policy, which was heavily dependent upon actions of the Federal Reserve, i.e. the government.

^ This is good.