Great Depression Myths

[Burke]

The leftie college professor myth: Hoover's free market approach failed and FDR saved us with his New Deal.

Even if you disagree with her, she's nice to look at.

http://www.cato.org/blog/new-video-punctures-myths-about-great-depression-exposes-damaging-impact-statist-policies

[bluelang]

And you have a link to someone claiming that Hoover took a free-market approach?

[Dreamliner]

Well, we do know that FDR pretty much continued in Hoover's policies.

But here's the important point: he wasn't Hoover while doing it!

[bluelang]

I think we can all agree that the chick's constant use of upward inflection and the recording's horrid background noise make that a video best watched without sound.

[CalSFGator]

First time I have ever agreed with Burke, but only about the nice to look at part.

[dangolegators]

I think we can all agree that the chick's constant use of upward inflection and the recording's horrid background noise make that a video best watched without sound.

Yeah, it's pretty brutal to listen to. She sounds like a 16-year-old valley girl.

[Burke]

Yeah, but she was right.

Which is what you really don't like about her.

[Itssaul]

The leftie college professor myth: Hoover's free market approach failed and FDR saved us with his New Deal.

Even if you disagree with her, she's nice to look at.

http://www.cato.org/blog/new-video-punctures-myths-about-great-depression-exposes-damaging-impact-statist-policies

Growing up in south Florida, going through public education, never have I heard that the new deal was the saving grace.. All I have ever heard is people complaining about how teachers teach it so.

[Burke]

My history prof at UF made a point of telling us that the New Deal did not get us out of the Depression.

Along with telling us that all the others saying it did were FOS.

I've had raging debates here with posters who claimed it did.

But maybe I'm winning the debate.

Five years ago, people were telling me that I was a crazy conspiracy theorist for writing that banks create most of the money they lend .

[dangolegators]

Yeah, but she was right.

Which is what you really don't like about her.

No, she's not right. It's funny that she talks about the drop in GDP after WW1. That drop was caused by a decrease in government spending by about two thirds. That is, federal government cut 2 out of every 3 dollars from the budget with the war over. Ya think that might cause a temporary drop in GDP? The causes of the recession after WW1 and the Great Depression are two very different things.

[Burke]

Actually, I think getting out of a war and reducing the spending caused by it will help an economy.

Just like Obama is claiming.

[Gatorrick22]

The leftie college professor myth: Hoover's free market approach failed and FDR saved us with his New Deal.

Even if you disagree with her, she's nice to look at.

http://www.cato.org/blog/new-video-punctures-myths-about-great-depression-exposes-damaging-impact-statist-policies

I wonder how much money she wasted just to get brainwashed by that University?


Another attempt at revising history by the ever growing self-loathing Leftists.

[VAg8r1]

The New Deal didn't work. The New Deal policies were put in place in 1933 and largely abandoned in 1937. A picture being worth a thousand words. GDP during the Great Depression
http://rogercrump.pbworks.com/f/1265805071/depression%20gdp.png

[fredsanford]

The New Deal didn't work. The New Deal policies were put in place in 1933 and largely abandoned in 1937. A picture being worth a thousand words. GDP during the Great Depression


It did work until FDR caved to the deficit hawks.

[Burke]

When wealth redistribution is treated as an increase in the GDP, it's just plain fraud.

Which is what many govt spending programs really are.

Look at all the income employees of those failed enterprises got.

That's reported as part of the GDP, but its really just wealth redistribution.

[T3goalie]

"Free to Choose" by Milton Friedman is an interesting read on this subject. Much of such supports Burke's position. None of it supports fredsanford.

[Itssaul]

When wealth redistribution is treated as an increase in the GDP, it's just plain fraud.

Which is what many govt spending programs really are.

Look at all the income employees of those failed enterprises got.

That's reported as part of the GDP, but its really just wealth redistribution.

While most of this is somewhat true... Rich people tend to save more money than the poor. The poor can only spend it bc they are in fact poor.

So claiming G is going up because of food stamps, is not completely wrong because alot of that money would have gone to foreign imports and services (as the rich are more inclined to buy). Now it is going to food services. However I have not looked at if they differentiate between dollars, and stamps... I'd imagine they do.

[Minister_of_Information]

http://rogercrump.pbworks.com/f/1265805071/depression%20gdp.png

Thank God for Adolf Hitler.

[Burke]

Fredsanford = Paul Krugman

All you need for prosperity is to steal what productive people make and spread it around to unproductive people.

Tax and spend.

Print, print, print.

If only we had known.

[Itssaul]

Fredsanford = Paul Krugman

All you need for prosperity is to steal what productive people make and spread it around to unproductive people.

Tax and spend.

Print, print, print.

If only we had known.

A big reason there are more "unproductive" people is that middle class jobs have been shipped overseas. CEO's are maximizing profits (who can blame them?) and the people suffering are the ones who are without a job and must work pizza delivery to live below the poverty line. Then these people do not pay taxes.

Imagine instead if we keep the jobs here, then more poor people become middle class level, and pay taxes.

One can only dream.

Big business rules America, and the government is slave to it.

Both big government and big business can be evil.

But because of big business, government must become big to prevent the great American starvation, and depopulation.

[Burke]

Maybe individual states should act to prevent businesses from shipping jobs to other states.

How about individual counties and cities doing the same?

Get the idea?

When workers here lose jobs to foreigners, it opens up better jobs for them here if they are willing to retrain, etc.

You always deal in the way that is most productive for you, and in the long run everyone is better off.

The only justification for special trade barriers is national security.

[GatorFanCF]

But because of big business, government must become big to prevent the great American starvation, and depopulation.

Read more: http://www.gatorcountry.com/swampgas/showthread.php?t=257538#ixzz2LdAJSwGR

It would interest me to know how "big business" = starvation and depopulation. Please share. Thanks.

[orangeblueorangeblue]

Five years ago, people were telling me that I was a crazy conspiracy theorist for writing that banks create most of the money they lend .

There's no way this is true. This has been pretty common knowledge since ... well, since always.

[108]

Can someone explain to me how a reduction in any form of spending helps this consumer based economy?

That isn't to say the Gov shouldn't spend within it's limits, but I'm just curious

[Minister_of_Information]

Can someone explain to me how a reduction in any form of spending helps this consumer based economy?

That isn't to say the Gov shouldn't spend within it's limits, but I'm just curious

I can think of two reasons: compounding interest within government debt offsets the stimulative aspect of spending as debt reaches high levels, and the idea that excessive government spending leads to the long-term misallocation of capital.

[HudsonGator]

The leftie college professor myth: Hoover's free market approach failed and FDR saved us with his New Deal.

Even if you disagree with her, she's nice to look at.

http://www.cato.org/blog/new-video-punctures-myths-about-great-depression-exposes-damaging-impact-statist-policies

So, do you think she has a PhD in economics from MIT or Stanford?

[Burke]

For govt to spend, it must steal from someone who produces wealth or promise to do so later.

Pretty good reason for not doing it, I would say.

And, of course, if the govt didn't do that all those who produced the wealth they stole would be spending or investing it anyway. Making the world a better place.

People deal by trade or by force.

Capitalism is trade.

All that other stuff is . . . well, the whole leftie agenda.

That's why leftists are called parasites.

[HudsonGator]

For govt to spend, it must steal from someone who produces wealth or promise to do so later.

Pretty good reason for not doing it, I would say.

And, of course, if the govt didn't do that all those who produced the wealth they stole would be spending or investing it anyway. Making the world a better place.

People deal by trade or by force.

Capitalism is trade.

All that other stuff is . . . well, the whole leftie agenda.

That's why leftists are called parasites.


So tell me something, who built those roads you drive on? Who built those schools in your city? Who built the airports you fly in and out of? Who pays for the policeman and fireman who will risk their lives for you when you call 911? Who pays for the soldiers who guard our Nation? Heck, we are on GatorCountry.com, who the heck built the University of Florida?

Still don't know...?

Answer: The government, you know, that thing for which you apparently have some irrational hate.

[T3goalie]

I can think of two reasons: compounding interest within government debt offsets the stimulative aspect of spending as debt reaches high levels, and the idea that excessive government spending leads to the long-term misallocation of capital.

Sad but true. And it is massive. What is sadder is that once the infrastructure is gone, its gone. Most have absolutely no clue or idea what you are saying. Current fiscal and monetary policies are Destroyers, plain and simple.

[Burke]

Omit

[Burke]

Orange,

I was the one on the receiving end.

In fact, some guy was still saying I was crazy for writing about here it less than a year ago.

I was on Scout about 4-5 years ago, and not a single poster there would believe banks create money. I may as well have been claiming to be from Mars.

It's something that has led me to believe that people are being educated on the Internet at incredible speed.

[Burke]

"So tell me something, who built those roads you drive on? Who built those schools in your city? Who built the airports you fly in and out of? Who pays for the policeman and fireman who will risk their lives for you when you call 911? Who pays for the soldiers who guard our Nation? Heck, we are on GatorCountry.com, who the heck built the University of Florida?

"Still don't know...?

"Answer: The government, you know, that thing for which you apparently have some irrational hate."

I could get banned if I wrote what I honestly think of anyone who believes this.

But I'll just ask:

Where does the govt get the money to pay for all this?

[MichaelJoeWilliamson]

I can think of two reasons: compounding interest within government debt offsets the stimulative aspect of spending as debt reaches high levels, and the idea that excessive government spending leads to the long-term misallocation of capital.

Indeed

Plus, it has become increasingly clear that, unlike with tax cuts, there are few multiplier impacts to government spending.

Oh sure, if we create brand new infrastructure, then one can certainly make a case that government spending might have a multiplicative impact.

But the kind of crony capitalism that Obama has pursued has been little better than throwing money down the drain.

[Minister_of_Information]

I seem to recall many discussions of fractional reserve banking back then, Burke.

[HudsonGator]

I could get banned if I wrote what I honestly think of anyone who believes this.

But I'll just ask:

Where does the govt get the money to pay for all this?

You said quite clearly that government only spends what it steals or what it promises to steal in the future and thus it should not spend.

So obviously, you are asking the wrong question. The question is, if, as you say, government is so bad, how can it do all the things I listed?

Further, if your premise is correct, that government only exists because it steals, then ipso facto, government should not exist.

Do you really want to go back to the middle ages?

[Swampmaster]

A big reason there are more "unproductive" people is that middle class jobs have been shipped overseas. .

The CEO's only duty is to maximize the value of the firm. If that means using labor at 1/5 the cost overseas, that's what he/she should do. Stockholders are not buying stock and paying the CEO a big salary to act as a charity case for overpaid US workers.

[Burke]

Hudson,

The govt is stealing wealth from productive people and using it to pay for all those things "for everyone." Usually to buy their votes.

It's nothing but wealth redistribution. Productive people being forced to provide stuff for others who pay little or nothing.

[dangolegators]

Actually, I think getting out of a war and reducing the spending caused by it will help an economy.

Just like Obama is claiming.

I agree, it will help the economy in the long run. But the immediate effect of it is a huge decrease in government spending, which reduces GDP. The reduction in GDP after WW1 that the girl in the video speaks of was due to a reduction in government spending. In 1919, fed govt spending was 18 billion. By 1924, it had decreased to 3 billion. This is at a time when US GDP was less than 100 billion.

The Great Depression on the other hand was caused by a financial collapse. Only a simpleton like the girl in the video would attempt to compare the recessions that occurred after WW1 and WW2 (caused by reduced government spending) with the Great Depression (caused by a worldwide financial collapse).

[HudsonGator]

Hudson,

The govt is stealing wealth from productive people and using it to pay for all those things "for everyone." Usually to buy their votes.

It's nothing but wealth redistribution. Productive people being forced to provide stuff for others who pay little or nothing.

I couldn't disagree with you more. The taxes I gladly pay every year, pay for schools, roads, firemen, policemen, the courts, jails, a national defense, etc., in other words they pay for civilization. I actually like living in the 21st century and have no desire to go back to the Middle Ages.

I thank God that there are not many people that think as you do.

[Itssaul]

The CEO's only duty is to maximize the value of the firm. If that means using labor at 1/5 the cost overseas, that's what he/she should do. Stockholders are not buying stock and paying the CEO a big salary to act as a charity case for overpaid US workers.

Never said he/ she should not do just that... Just an observation.


Of course the loudest people on the ex middle classers not paying taxes are those CEO's and stockholders

[rpmGator]

The only year FDR did not have an increase in economic growth is the year he cut spending....

He kept us out of war despite Churchill and Stalin going nuts over it, and sold them war goods and got military bases we still use today. At least until the Japs screwed up.

He built the carrier fleet, and trained a million pilots

For some reason however, the new Republicans want to go back to Hoovers days and Bush almost delivered. By the way, it was Hoover who raised taxes that lasted until Reagan.

[orangeblueorangeblue]

Orange,

I was the one on the receiving end.

In fact, some guy was still saying I was crazy for writing about here it less than a year ago.

I was on Scout about 4-5 years ago, and not a single poster there would believe banks create money. I may as well have been claiming to be from Mars.

It's something that has led me to believe that people are being educated on the Internet at incredible speed.

I'm sorry, I think you just want this to be the case.

[chemgator]

A big reason there are more "unproductive" people is that middle class jobs have been shipped overseas. CEO's are maximizing profits (who can blame them?) and the people suffering are the ones who are without a job and must work pizza delivery to live below the poverty line. Then these people do not pay taxes.

Imagine instead if we keep the jobs here, then more poor people become middle class level, and pay taxes.

One can only dream.

Big business rules America, and the government is slave to it.

Both big government and big business can be evil.

But because of big business, government must become big to prevent the great American starvation, and depopulation.
So much misinformation in so few words. Actually, our gov't is very anti-corporate in many ways, certainly compared to Asia. China gets a lot of attention because they are an extreme example: their gov't supports their companies ten times more than ours does, and has almost no environmental or safety regulations. (When Apple wants to produce a new product, the Chinese show them a factory ready to move in, while the American gov't shows them several years of red tape.)

Ignoring China, other Asians nations have strong industrial sectors, including Singapore, Malaysia, and Korea, and their corporations get a lot more support from their gov't than most of our corporations do. Their environmental regulations are similar to ours, without all the reams of paperwork that have to be filled out, and the endless delays. The U.S. has a slightly stronger safety culture mainly because of the fear of lawsuits here. But there is no question that Asian countries support their own corporations. In the U.S., you could argue that some gov't employees actively hate our corporations (Carol Browner is a perfect example) and seek to undermine them. That doesn't make them heroes; it makes them foolish idiots destroying our future.

If anything, corporations are slaves to the endless demands of gov't. If you know anything about Sarbanes-Oxley, which is legislation that seeks to prevent accounting malfeasance on an epic scale (which should be caught by regulating agencies like the SEC), but does so by requiring an endless stream of paperwork to be filled out and signed (often by lower-level employees that are nowhere near the accountants, much less the money). Note that Congress almost never passes legislation to reduce the complexity of tax codes or regulations affecting corporations. Why is that? Because the corporations want complexity?

[Burke]

Orange,

Think you're the one who wants it to be otherwise.

[rpmGator]

If you want a bottom line on this. Count the Republicans between Hoover and Nixon who won, to find out what happens when you screw up as bad as Hoover.

You can take stats and bend a couple, you can talk all you want about how bad FDR was, but bottom line, Hoover killed the party for decades. If you want to do it again, think twice first.

Guys who wanted to cut Social Security just lost again. Moving us back, moves us out of office as well.

[orangeblueorangeblue]

Orange,

Think you're the one who wants it to be otherwise.

It's part of the Fed's charter. It's self-evident.

[Burke]

Self-evident?

That's a laugh.

The fact is that five years ago, not one person in a hundred (probably a thousand or more) knew that banks create the money they loaned. I know a guy with an economics degree that didn't know it. Some guy on the Scout board was telling me his sister worked at a bank and was saying I was crazy.

It wasn't a state secret, but only a small part of the population knew it.

But now that we have the Internet and the Fed is destroying our country, word has gotten around.

[Minister_of_Information]

"Creating" may be an overstatement, as the "creation" depends on debt rather than unassisted magic.

[dangolegators]

Self-evident?

That's a laugh.

The fact is that five years ago, not one person in a hundred (probably a thousand or more) knew that banks create the money they loaned. I know a guy with an economics degree that didn't know it. Some guy on the Scout board was telling me his sister worked at a bank and was saying I was crazy.

It wasn't a state secret, but only a small part of the population knew it.

But now that we have the Internet and the Fed is destroying our country, word has gotten around.

You ever take an economics class? Or ever seen It's a Wonderful Life? Anyone who has done either of these things knows that banks create money.

[Burke]

I know it. I've known it since 1965.

But read MOI's reply above. He barely has a clue, and he's an intelligent guy.

I would bet that at least half the population doesn't know it now, probably more.

[northgagator]

Can someone explain to me how a reduction in any form of spending helps this consumer based economy?

That isn't to say the Gov shouldn't spend within it's limits, but I'm just curious

Question: Does gov't actually produce a product or service that the average consumer can buy at the retail level?

Answer: No

Question: What good does gov't spending do for an economy?

Answer: The Benefit (the good) is when the the cost (taxes) of services or goods (protection, roads) provided by the government makes unto businesses and consumers makes it commerce and labor unprofitable.

Explanation: If the cost of air traffic control adds $300 to a ticket then the airlines will not sell enough tickets to remain profitable.

[Burke]

Govt spending is essentially just wealth redistribution. Govt takes wealth away from its producers and gives it to others or provides things for them.

We have to have the military, the cops, etc. But most all the other stuff is just exploitation of producers. Private enterprise could do everything else the govt does more efficiently, and the bums who are getting so much free would have to pay for what they get.

Politicians steal a trillion bucks, give it to their constituents one way or another, and say, "look at all this prosperity. The GDP is going up, etc."

Like robbers throwing a victory party.

[Minister_of_Information]

I know it. I've known it since 1965.

But read MOI's reply above. He barely has a clue, and he's an intelligent guy.

I would bet that at least half the population doesn't know it now, probably more.

The "creation" of money just means that some percentage of deposits can be loaned to other people for interest. The person taking the loan assumes the obligation to repay. And the bank itself is required to limit its exposure by securing so much of its loans with collateral. Normally simply depositing those funds will not be viable if the person taking the loan is trying to make money. That loan will be spent as capital and the currency circulated. Then that remainder that is deposited can be loaned at the earlier rate in succession. All in all it doesn't total up to the massive amount of currency inflation that the Ron Paulites imagine.

[Burke]

You put a grand in the bank. It can lend 90% of it.

BUT, you still have a grand in your acct, which you can spend any time you want.

How can that be?

Meanwhile, the $900 the bank has loaned out is being used by the banks it is deposited in the same way, and on and on into other banks.

The supply of money is increased to $10 K.

It's the magic of fractional reserve banking and is known as the multiplier effect.

Econ 101

Google "fractional reserve banking,"

Just like I've been telling you for years.

[Minister_of_Information]

Burke, everyone is aware of fractional reserve banking. What you are ignoring is the repayment of loans, and the inherent limitations of credit in creating new loans. That which is borrowed is repaid or settled against the balance sheet.

[Burke]

And when you figure it out, think for a moment that the monetary base was $800 billion 4 yrs ago, and it is 4 times that.

The monetary base is cash and something called central bank money that can be used as reserves and multiplied many times the same way.

Do the math and see what the money supply will be if the economy recovers and banks start lending again.

[Burke]

MOI,

Your post above indicates that you do not understand fractional reserve banking.

"The "creation" of money just means that some percentage of deposits can be loaned to other people for interest."

Flat wrong.

[Minister_of_Information]

Burke, now you are conflating central banking with commercial and retail banking. Obviously the Fed creates the reserves it feels are necessary to ensure liquidity and meet its other goals, although there again those reserves are also issued against bonds. But you already know that, I hope.

[Minister_of_Information]

MOI,

Your post above indicates that you do not understand fractional reserve banking.

"The "creation" of money just means that some percentage of deposits can be loaned to other people for interest."

Flat wrong.

Sorry Burke, but you are the one that is wrong. The money supply is expanded via debt. And debt is repaid in the future.

[Burke]

Banks get their reserves by raising capital and taking in deposits (although this changes at times).

They can borrow from other banks or the Fed at the current federal funds rate.

And the Fed buys bonds from them with their open market operations (QE today).

The very short version is this:

If I give you a check and you deposit it in your acct, my numbers go down and yours go up. This is known as checkbook money. And banks are required to keep enough cash around to supply the demand for it.

Essentially, the numbers are the money.

And a bank today creates money by just typing some numbers into a computer account. It's limited in how much it can do this by its cash reserves. The reserve requirements are set by the Fed.

[Burke]

You are right about the money supply being expanded by debt and contracted when that debt is repaid, but

So what?

[Minister_of_Information]

Look, Burke, I agree that the money supply is expanded by fractional reserve banking, but I see it more like dollars being borrowed from the future rather than being conjured in the present and vanishing in the future (when debt is repaid). Maybe it's a fine distinction, but when you say banks "create" money it can give people a false impression that the process is asymmetric or unbounded.

[Burke]

MOI,

Virtually everyone who knows anything about this calls it money creation. It's not even my idea. Google "money creation."

When you put $1000 bucks into a bank and it is transformed into $10K, it's money creation.

[orangeblueorangeblue]

The fact is that five years ago, not one person in a hundred (probably a thousand or more) knew that banks create the money they loaned.

This is nonsensical.

This was taught when I was doing my master's econ stuff in the early 00s. Hell, it was taught when I was in high school. This isn't some secret data that only the few were privy to.

[T3goalie]

This is nonsensical.

This was taught when I was doing my master's econ stuff in the early 00s. Hell, it was taught when I was in high school. This isn't some secret data that only the few were privy to.

:huh: A masters in econ puts you close to the top of the food chain (my son studied at LSE and loved it). Information is not secret by any stretch. But after seeing some of the man on the street interviews my guess is that rampant ignorance has the % it closer to 1/10,000.

[orangeblueorangeblue]

:huh: A masters in econ puts you close to the top of the food chain (my son studied at LSE and loved it). Information is not secret by any stretch. But after seeing some of the man on the street interviews my guess is that rampant ignorance has the % it closer to 1/10,000.

If you'll note two things:

1. It was also taught in high school, as I noted

2. He said an "economist" argued this wasn't the case. No "economist" that has taken more than one economics course in college would believe this.

[Burke]

I wrote that someone with an economics degree didn't know.

He was a lawyer about 60 years out of school.