Saturday, April 19, 2014

Powerful Circumstantial Evidence

There were numerous economic downturns, recessions, and depressions prior to the Great Depression of 1929, and each of these episodes not only self-corrected but they did so in a relatively short period of time. It was only during the depression of 1929, when the government significantly interfered (Hoover with the Reconstruction Finance Corporation, Smoot-Hawley, wage supports, Davis-Bacon, etc. and FDR with the AAA, the NRA, unit baking laws, etc.) that a downturn lasted as long as it did - 16 years (yes, I include the war years because if you disaggregate the GDP you'll quickly see that the public sector was still extremely poor off; shortages, etc.).......................................................................................Look, I'm not necessarily saying that we can draw anything definitive here (we are, after all, talking about correlations). But you have to know that if the results were the exact opposite, that if every economic downturn prior to 1929 was a long and protracted one and that in 1929 we bounced back rapidly due to the wondrous actions of Hoover and FDR, YOU KNOW, all of those hard-core Keynesians, economically illiterate progressives, etc. would be strutting and reminding us CONSTANTLY....................................................................................My personal view here is that the economy has extraordinary recuperative power of its own and that if the government does want to intervene, the best and least harmful way to do it would be to deal with the citizens directly (a negative income tax, health savings accounts, etc.) and steer clear of the damned market.

3 comments:

Rational Nation USA said...

Oh, but we need big brother to make all things better. Just ask BBG, its been trying to do it for 85 years.

Will "take no prisoners" Hart said...

I might even go back another 16 years to the beginning of the FED and the income tax.

Rusty Shackelford said...



I'm afraid we are in a new economic reality....in todays America there are more takers then makers causing the economy to seek a new normal....and that normal may very well be a constant 6% unemployment level....a 20 trillion debt level and higher taxes for those who actually pay taxes.