Monday, February 27, 2012

On the Relationship Between the Stock-Market Crash and the Great Depression

After the Stock Market crashed in October of '29, the unemployment rate never once reached 10% in ANY of the twelve ensuing months. It peaked at 9% in December of that year and then actually started coming DOWN (to as low as 6.3% in June of 1930). It wasn't until the idiotic interventions of Hoover (trade restrictions, massive deficit spending, a draconian tax increase, etc.) and FDR (the NRA, the AAA, new unit banking laws, massive increases in excise taxes, etc.) that did the unemployment rate truly start to skyrocket (and, yes, maintain at such a scary level until the war). Now, granted, one could always say that it could have been worse....

12 comments:

Rusty Shackelford said...

Hitler was responsible for bringing down the unemployment rate.FDR was just along for the ride.And no WD,that was'nt a wheelchair joke.

w-dervish said...

FDR = Saved capitalism

Will "take no prisoners" Hart said...

FDR was a great man in many regards (maybe our all-time greatest war-time President - him or Lincoln). He wasn't a great economic President, though.......I mean, my God, John Maynard Keynes didn't even buy what the dude was doing.

dmarks said...

Obama should be commended for not doing the Hooverish thing and pushing to restrict trade. In fact, he has pushed to increase free trade. One reason why the economy isn't as bad as it could be.

dmarks said...

And yes it can be argued that FDR ruined capitalism by giving the elites who rule over us a much greater control over economic matters that really should belong to the people by default. This opened the door for crony capitalism and much more meddling.

Will "take no prisoners" Hart said...

dmarks, I've heard it argued that a large number of the bank failures resulted from the unit banking laws that Hoover and FDR both pushed forward (laws that prevented small banks from diversifying through branches). Compare this to Canada, which had very few bank failures and which was free from branching restrictions.............The most despicable aspect of FDR's policy, though, was the way that he funneled all that New Deal money, not to the poorer states who needed it but to the swing states that he needed to carry in an election. I mean, I don't know about how you feel about it but that doesn't sound all that "progressive" to me.

w-dervish said...

FDR = Saved capitalism

Will "take no prisoners" Hart said...

His actions (some of which were criticized by John Maynard Keynes in an open letter to the New York Times) more than likely extended the Depression by years.

Will "take no prisoners" Hart said...

But as long as he was having fun (tweeking businessmen, etc.).

w-dervish said...

I seriously doubt it.

Will "take no prisoners" Hart said...

So, you're siding with FDR over Keynes on this one (just like you sided with Chomsky over Mr. Obama - I'm not a humongous Obama fan but I will take him over Chomsky any day and twice on Sunday)?

w-dervish said...

I can't side with FDR over Keynes because I don't know what criticisms Keynes made of FDR. What I seriously doubt is that FDR's actions "more than likely extended the Depression by years". I'd say that statement was utter bullpucky, but I don't know what specific actions you're referring to. In aggregate, I'd say FDR's actions pulled us out of the depression; they didn't extend it.