AA+

[Liberty1]

Good to see you consider a job in the military to be parasitic, just because it's more than temporary.

The military is parasitic. If it wasn't leftest like you wouldn't be wanting to cut the funding all the time.

The military produces no wealth, they kill people and break things

If the government spends money on salaries, that money goes right into the economy. If the government spends money purchasing equipment or paying its heating bills, that money goes into the economy. The bakery that sells a loaf of bread, the Best Buy that sells a computer, the oil company that sells its heating oil doesn't care whether the person buying their stuff works in government, or works for a company that got a government contract, or works for an interest that is completely private, they still sold a loaf of bread, a computer, and a tank of heating oil.

And sooner or later the government will run out of other peoples money.

Stimulus packages don’t add new money to the economy. The economic monetary base does not expand via stimulus packages. Governments must borrow or tax money out of the economy prior to injecting that money back into the economy. Taxing redistributes money from one part of the economy to another. Domestic borrowing from investors shifts investment from the private sector to the public sector. Removing water from one end of a swimming pool and pouring it into the other end will not raise the overall water level

University of Chicago economist John Cochrane

First, if money is not going to be printed, it has to come from somewhere. If the government borrows a dollar from you, that is a dollar that you do not spend, or that you do not lend to a company to spend on new investment. Every dollar of increased government spending must correspond to one less dollar of private spending. Jobs created by stimulus spending are offset by jobs lost from the decline in private spending. We can build roads instead of factories, but fiscal stimulus can't help us to build more of both. This form of "crowding out" is just accounting, and doesn't rest on any perceptions or behavioral assumptions.

Second, investment is "spending" every bit as much as is consumption. Keynesian fiscal stimulus advocates want money spent on consumption, not saved. They evaluate past stimulus programs by whether people who got stimulus money spent it on consumption goods rather than save it. But the economy overall does not care if you buy a car, or if you lend money to a company that buys a forklift.[

In other words government stimulus reduce long-term productivity by transferring resources from the more productive private sector to the less productive government. What does it do, it provides politicians with the political slush funds and justification to give tax dollars to favored constituencies and donors.

[Scooter]

Every dollar of increased government spending must correspond to one less dollar of private spending.

Anyone who would make such a statement is completely ignorant of economics, because it ignores the multiplier effect of money.

[Liberty1]

Yes, obviously you have much better economics credentials than him.

Cochrane earned a Bachelor’s degree in Physics at MIT, and earned his Ph.D. in Economics at the University of California at Berkeley. He was at the Economics Department of the University of Chicago before joining the Booth School in 1994, and visited UCLA Anderson School of Management in 2000-2001

[Scooter]

I could care less what his credentials are, if he makes a statement that ignores a basic principle of economics he's talking out of his ass. The fact that he has such credentials makes it worse, because he knows he is talking out of his ass, and yet is saying it in pursuit of his own political ideology.

It's like those economists who claim that the New Deal made the Great Depression worse, and that it was WWII that pulled us out of it. What they are saying is that some government intervention in the economy was bad, but that massive government intervention in the economy was good. IOW, they're idiots.

[Liberty1]

So you've got nothing

[Long Run]

It is not that hard to understand what happens when government tries to stimulate the economy. If it does so with tax dollars, it is taking money from taxpayers and either buying services and goods, or paying it out in some form of transfer payment. This may or may not stimulate the economy, at least in the short run, depending on whether the economy needs more demand or more investment at that point in time. One thing we know about economics is that it is unlikely that any economists actually know (in advance) which one of those is true.

If the government borrows money to stimulate the economy, then it is increasing demand without taking current dollars away from taxpayers. Again, this may or may not stimulate the economy depending on a host of factors, including whether the economy needs more demand (and what types of products and services will provide the greatest stimulation) or the amount of debt held by the government is sustainable. And again, it is almost impossible to know ahead of time if one policy or the other is going to work. About this time next year, though, there will be plenty of economists and politicians who will know what they would have done this year.

[Scooter]

So you've got nothing

I've certainly got more than a guy who parrots a quote without understanding it, or why it doesn't correspond to reality.

Particularly a guy who still believes that a North Vietnamese general wrote an autobiography in which he gave credit for his victory to American peace activists.

[Liberty1]

This from someone who believes FDR pulled the US out of the great depression.

[Scooter]

Well, since FDR presided over both the New Deal AND WWII, whether you believe one or the other to have ended the Great Depression, yes, he did.

What I do know is that by the end of FDR's first term the U.S. GDP had recovered to its pre-Depression level, and posted the highest growth rate of any major economy except Germany (whose economy was being artificially pumped by remilitarization).

[Liberty1]

He died before we actually pulled out of the depression.

What I do know is that by the end of FDR's first term the U.S. GDP had recovered to its pre-Depression level

So you agree that FDR made the depression worse. The only reason the GDP may of recovered at this point is because he hadn't had time to implement his idiot policies.

[Gob]

Interviewer: I’m not sure how much you know about Australia’s stimulus packages in response to the crisis, but to the extent that you do, how did the quality of Australia’s stimulus compare with that in the US and elsewhere, in terms of its effectiveness?

JOSEPH STIGLITZ: I did actually study quite a bit the Australian package, and my impression was that it was the best - one of the best-designed of all the advanced industrial countries. When the crisis struck, you have to understand no-one was sure how deep, how long it would be. There was that moment of panic. Rightfully so, because the whole financial system was on the verge of collapse. In that context, what you need to act is decisively. If you don’t act decisively, you could get the collapse. It’s a one-sided risk.

Interviewer: There’s been a lot of criticism of waste in the way some of Australia’s stimulus money was spent. Is it inevitable if you’re going to spend a great deal of government money quickly that there will be some waste and can you ever justify wasting taxpayers’ money?

JOSEPH STIGLITZ: If you hadn’t spent the money, there would have been waste. The waste would have been the fact that the economy would have been weak, there would have been a gap between what the economy could have produced and what it actually produced - that’s waste. You would have had high unemployment, you would have had capital assets not fully utilised - that’s waste. So your choice was one form of waste verses another form of waste. And so it’s a judgment of what is the way to minimise the waste. No perfection here. And what your government did was exactly right. So, Australia had the shortest and shallowest of the downturns of the advanced industrial countries. And, ah, your recovery actually preceded the - in some sense, China. So there was a sense in which you can’t just say Australia recovered because of China. Your preventive action, you might say pre-emptive action, prevented the downturn while things got turned around in Asia, and they still have not gotten turned around in Europe and America.

Stiglitz is 100% correct. When our critics begin to talk about “wasteful” government spending, it is worth reminding them that there is no greater waste than persistent unemployment. It dwarfs all other inefficiencies. About the bang for the buck, the fact that real GDP only went up by a dime when deficits reached a dollar is a meaningless calculation, yet one hears it all of the time. The right calculation, what amount of GDP reduction was avoided by the government deficit seems more interesting, but it is more difficult to compute and requires some empirical model.

Joseph Eugene Stiglitz, ForMemRS, FBA, (born February 9, 1943) is an American economist and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is also the former Senior Vice President and Chief Economist of the World Bank.

[Guinevere]

Unless we start creating jobs, the slide is going to continue. With the sorry condition of so much of our infrastructure, I'd like some sort of WPA created so that we can repair and build what needs to be repaired and built, creating good paying jobs in the process.

I'm open to creative ideas for creating some sort of public-private partnership so that the whole thing doesn't become nothing more than a long-term government project, and would consider any innovative ideas for funding. At a minimum, everyone wanting the work has to commit to fill 25% of the jobs created with people who have been out of work 90 days or longer if they are awarded the work.

[Gob]

Guin, this is what we did;

Planned building and construction projects

New 21st century facilities for primary schools. 10,521 projects $14,060 million

New science or language centres. 537 projects $822 million

School maintenance and refurbishments. 12,680 projects $1,289 million

New social housing dwellings. Over 19,300 dwellings $5,238 million

New houses for the Australian Defence Force. 829 houses $246 million

Urgent maintenance to social housing dwellings. Repairs to over 75,000 dwellings $400 million

Additional funding for road and rail safety projects. Around 600 black spot road projects $150 million

300 new boom gates at high risk rail crossings. $150 million

Funding boost for local community infrastructure. 3,351 projects $800 million

Advancing the allocation of funds for 14 major road projects. 14 projects $711 million

Investment in rail infrastructure. 17 projects $1,189 million

Strengthen facilities for training and higher education. 700 projects $1,688 million

http://www.economicstimulusplan.gov.au/pages/dash.aspx

[Scooter]

He died before we actually pulled out of the depression.

Um, FDR died in 1945. Anyone who claims the U.S. had not pulled out of the Depression well before then is clearly on drugs.

What I do know is that by the end of FDR's first term the U.S. GDP had recovered to its pre-Depression level

So you agree that FDR made the depression worse.

Sure, growing GDP by something like 80% in four years was clearly making the Depression worse

The only reason the GDP may of recovered at this point is because he hadn't had time to implement his idiot policies.

Um, the vast majority of New Deal programs were implemented in his first term. But you would have had to be awake in history class to know that...

[Liberty1]

Um, FDR died in 1945. Anyone who claims the U.S. had not pulled out of the Depression well before then is clearly on drugs.

So let's examine your claims. It appears from your previous statement that you would define the end of the depression as GDP returning to it's previous level. It appears there is no specific rule on recovery, just on what it is, greater than a 10% decline in GDP. A few stats.

The Economy During the Great Depression

US Gross Domestic Product (current dollars)
The Great Crash, 1929-1933
in 1929: $103.6 billion
in 1930: $91.2
in 1931: $76.5
in 1932: $58.7
in 1933: $56.4

New Deal Recovery and Recession, 1934-39
in 1934: $66.0 billion
in 1935: $73.3
in 1936: $83.8
in 1937: $91.9
in 1938: $86.1
in 1939: $92.2

Mobilization for WWII, 1940-1945
in 1940: $101.4 billion
in 1941: $126.7
in 1942: $161.9
in 1943: $198.6
in 1944: $219.8
in 1945: $223.1

I would argue that the employment rate returning to near normal is just as much of a factor.

Average rate of unemployment
in 1929: 3.2%
in 1930: 8.9%
in 1931: 16.3%
in 1932: 24.1%
in 1933: 24.9%
in 1934: 21.7%
in 1935: 20.1%
in 1936: 16.9%
in 1937: 14.3%
in 1938: 19.0%
in 1939: 17.2%
in 1940: 14.4%
in 1941: 9.9%

So it is clear that FDRs policies did nothing to help the US economy until WWII production began affecting the economy in 1940.

And let's take a look at some of those great FDR recovery ideas.

In their understanding of the Depression, Roosevelt and his economic advisers had cause and effect reversed. They did not recognize that prices had fallen because of the Depression. They believed that the Depression prevailed because prices had fallen. The obvious remedy, then, was to raise prices, which they decided to do by creating artificial shortages. Hence arose a collection of crackpot policies designed to cure the Depression by cutting back on production. The scheme was so patently self-defeating that it's hard to believe anyone seriously believed it would work.

The goofiest application of the theory had to do with the price of gold. Starting with the bank holiday and proceeding through a massive gold-buying program, Roosevelt abandoned the gold standard, the bedrock restraint on inflation and government growth. He nationalized the monetary gold stock, forbade the private ownership of gold (except for jewelry, scientific or industrial uses, and foreign payments), and nullified all contractual promises--whether public or private, past or future--to pay in gold.

Besides being theft, gold confiscation didn't work. The price of gold was increased from $20.67 to $35.00 per ounce, a 69% increase, but the domestic price level increased only 7% between 1933 and 1934, and over rest of the decade it hardly increased at all. FDR's devaluation provoked retaliation by other countries, further strangling international trade and throwing the world's economies further into depression.

Having hobbled the banking system and destroyed the gold standard, he turned next to agriculture. Working with the politically influential Farm Bureau and the Bernard Baruch gang, Roosevelt pushed through the Agricultural Adjustment Act of 1933. It provided for acreage and production controls, restrictive marketing agreements, and regulatory licensing of processors and dealers "to eliminate unfair practices and charges." It authorized new lending, taxed processors of agricultural commodities, and rewarded farmers who cut back production.

The objective was to raise farm commodity prices until they reached a much higher "parity" level. The millions who could hardly feed and clothe their families can be forgiven for questioning the nobility of a program designed to make food and fiber more expensive. Though this was called an "emergency" measure, no President since has seen fit to declare the emergency over.

Industry was virtually nationalized under Roosevelt's National Industrial Recovery Act of 1933. Like most New Deal legislation, this resulted from a compromise of special interests: businessmen seeking higher prices and barriers to competition, labor unionists seeking governmental sponsorship and protection, social workers wanting to control working conditions and forbid child labor, and the proponents of massive spending on public works.

The legislation allowed the President to license businesses or control imports to achieve the vaguely identified objectives of the act. Every industry had to have a code of fair competition. The codes contained provisions setting minimum wages, maximum hours, and "decent" working conditions. The policy rested on the dubious notion that what the country needed most was cartelized business, higher prices, less work, and steep labor costs.

To administer the act, Roosevelt established the National Recovery Administration and named General Hugh Johnson, a crony of Baruch's and a former draft administrator, as head. Johnson adopted the famous Blue Eagle emblem and forced businesses to display it and abide by NRA codes. There were parades, billboards, posters, buttons, and radio ads, all designed to silence those who questioned the policy. Not since the First World War had there been anything like the outpouring of hoopla and coercion. Cutting prices became "chiseling" and the equivalent of treason. The policy was enforced by a vast system of agents and informers.

Eventually the NRA approved 557 basic and 189 supplementary codes, covering about 95% of all industrial employees. Big businessmen dominated the writing and implementing of the documents. They generally aimed to suppress competition. Figuring prominently in this effort were minimum prices, open price schedules, standardization of products and services, and advance notice of intent to change prices. Having gained the government's commitment to stilling competition, the tycoons looked forward to profitable repose.

But the initial enthusiasm evaporated when the NRA did not deliver, and for obvious reasons. Even its corporate boosters began to object to the regimentation it required. By the time the Supreme Court invalidated the whole undertaking in early 1935, most of its former supporters had lost their taste for it.

Striking down the NRA, Chief Justice Charles Evans Hughes wrote that "extraordinary conditions do not create or enlarge constitutional power." Congress "cannot delegate legislative power to the President to exercise an unfettered discretion to make whatever laws he thinks may be needed."

Despite the decision, the NRA-approach did not disappear completely. Its economic logic reappeared in the National Labor Relations Act of 1935, reinstating union privileges, and the Fair Labor Standards Act of 1938, stipulating regulations for wages and working hours. The Bituminous Coal Act of 1937 reinstated an NRA-type code for the coal industry, including price-fixing. The Works Progress Administration made the government the employer of last resort. Using the Connally Act of 1935, Roosevelt cartelized the oil industry. Eventually, of course, the Supreme Court came around to Roosevelt's way of thinking.

Yet after all this, the grand promise of an end to the suffering was never fulfilled. As the state sector drained the private sector, controlling it in alarming detail, the economy continued to wallow in depression. The combined impact of Herbert Hoover's and Roosevelt's interventions meant that the market was never allowed to correct itself. Far from having gotten us out of the Depression, FDR prolonged and deepened it, and brought unnecessary suffering to millions.

[Liberty1]

More...........

"President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services," said Cole, also a UCLA professor of economics. "So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies."

Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Cole and Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression. By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt's policies not gone into effect. They then compared those figures with actual prices and wages as reflected in the Conference Board data.

In the three years following the implementation of Roosevelt's policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.

Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy. With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.

"High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns," Ohanian said. "As we've seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market's self-correcting forces."

The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.

Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.

Even after being deemed unconstitutional, Roosevelt's anti-competition policies persisted — albeit under a different guise, the scholars found. Ohanian and Cole painstakingly documented the extent to which the Roosevelt administration looked the other way as industries once protected by NIRA continued to engage in price-fixing practices for four more years.

The number of antitrust cases brought by the Department of Justice fell from an average of 12.5 cases per year during the 1920s to an average of 6.5 cases per year from 1935 to 1938, the scholars found. Collusion had become so widespread that one Department of Interior official complained of receiving identical bids from a protected industry (steel) on 257 different occasions between mid-1935 and mid-1936. The bids were not only identical but also 50 percent higher than foreign steel prices. Without competition, wholesale prices remained inflated, averaging 14 percent higher than they would have been without the troublesome practices, the UCLA economists calculate.

NIRA's labor provisions, meanwhile, were strengthened in the National Relations Act, signed into law in 1935. As union membership doubled, so did labor's bargaining power, rising from 14 million strike days in 1936 to about 28 million in 1937. By 1939 wages in protected industries remained 24 percent to 33 percent above where they should have been, based on 1929 figures, Cole and Ohanian calculate. Unemployment persisted. By 1939 the U.S. unemployment rate was 17.2 percent, down somewhat from its 1933 peak of 24.9 percent but still remarkably high. By comparison, in May 2003, the unemployment rate of 6.1 percent was the highest in nine years.

Recovery came only after the Department of Justice dramatically stepped enforcement of antitrust cases nearly four-fold and organized labor suffered a string of setbacks, the economists found.

"The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes," Cole said. "Ironically, our work shows that the recovery would have been very rapid had the government not intervened."

-UCLA-

LSMS368

Yes, like the great depression of 1920

[Scooter]

It appears from your previous statement that you would define the end of the depression as GDP returning to it's previous level.

I never said that. Clearly, the potential size of the economy would have also grown in the meantime, meaning that even returning to its previous level meant that it was still depressed. But cripes, just how fast did you expect the economy to grow. It almost doubled in the first four years of his presidency. When had that ever happened before, or since?

Average rate of unemployment
in 1929: 3.2%
in 1930: 8.9%
in 1931: 16.3%
in 1932: 24.1%
in 1933: 24.9%
in 1934: 21.7%
in 1935: 20.1%
in 1936: 16.9%
in 1937: 14.3%
in 1938: 19.0%
in 1939: 17.2%
in 1940: 14.4%
in 1941: 9.9%

So it is clear that FDRs policies did nothing to help the US economy until WWII production began affecting the economy in 1940.

Did nothing? Sure, if you consider chopping the unemployment rate by almost half in his first term "nothing". What other country had a better record? Only Germany, which as already stated, engaged in FAR greater state intervention in the economy than the U.S.

And let's take a look at some of those great FDR recovery ideas.

Not every idea was a great one, to be sure, but, and apparently it bears repeating, the size of the economy almost doubled in the first four years. How much better should it have done? To hear his critics tell it, they would have been able to grow the economy at a rate that no society has achieved at any time in the history of humankind. What evidence do they provide that they could have ended the Depression by 1936? Absolutely none, because that would have required an annual growth rate exceeding 30%. It's completely preposterous.

the year when they believe the slump actually ended: 1943

Thanks for admitting you were wrong by claiming the Depression hadn't ended before FDR's death. That's very big of you.

[Liberty1]

just how fast did you expect the economy to grow. It almost doubled in the first four years of his presidency.

I see 48%, must be that new math.

Sure, if you consider chopping the unemployment rate by almost half in his first term "nothing

47%, must be that new math again.

What other country had a better record?

How about the US in the Great Depression of 1920.

The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover — falsely characterized as a supporter of laissez-faire economics — urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored.

Instead of "fiscal stimulus," Harding cut the government's budget nearly in half between 1920 and 1922. The rest of Harding's approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.

The Federal Reserve's activity, moreover, was hardly noticeable. As one economic historian puts it, "Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction."[2] By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.

Not every idea was a great one, to be sure, but, and apparently it bears repeating, the size of the economy almost doubled in the first four years. How much better should it have done? To hear his critics tell it, they would have been able to grow the economy at a rate that no society has achieved at any time in the history of humankind. What evidence do they provide that they could have ended the Depression by 1936? Absolutely none, because that would have required an annual growth rate exceeding 30%. It's completely preposterous.

Any president and staff that not only doesn't understand, but acts, contrary to the most elementary of economic principles cannot be given credit for anything except inflicting enormous pain and suffering on the people of their own country. They don't get credit for intentions.

The depression of 1920-21 was such a non-event due to the way it was handled, that people fail to learn from it. In fact the government elite prefer to not learn from such events, they only use events that support their idealogical ends, thus QE1, and QE2, and the massive spending and borrowing we see today.

A primer on the depression of 1920-21

The conventional wisdom holds that in the absence of government countercyclical policy, whether fiscal or monetary (or both), we cannot expect economic recovery — at least, not without an intolerably long delay. Yet the very opposite policies were followed during the depression of 1920–1921, and recovery was in fact not long in coming.

The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover — falsely characterized as a supporter of laissez-faire economics — urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored.

Instead of "fiscal stimulus," Harding cut the government's budget nearly in half between 1920 and 1922. The rest of Harding's approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.

The Federal Reserve's activity, moreover, was hardly noticeable. As one economic historian puts it, "Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction."[2] By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.


It is instructive to compare the American response in this period to that of Japan. In 1920, the Japanese government introduced the fundamentals of a planned economy, with the aim of keeping prices artificially high. According to economist Benjamin Anderson,

The great banks, the concentrated industries, and the government got together, destroyed the freedom of the markets, arrested the decline in commodity prices, and held the Japanese price level high above the receding world level for seven years. During these years Japan endured chronic industrial stagnation and at the end, in 1927, she had a banking crisis of such severity that many great branch bank systems went down, as well as many industries. It was a stupid policy. In the effort to avert losses on inventory representing one year's production, Japan lost seven years.[3]

The United States, by contrast, allowed its economy to readjust. "In 1920–21," writes Anderson,

we took our losses, we readjusted our financial structure, we endured our depression, and in August 1921 we started up again.… The rally in business production and employment that started in August 1921 was soundly based on a drastic cleaning up of credit weakness, a drastic reduction in the costs of production, and on the free play of private enterprise. It was not based on governmental policy designed to make business good.

The federal government did not do what Keynesian economists ever since have urged it to do: run unbalanced budgets and prime the pump through increased expenditures. Rather, there prevailed the old-fashioned view that government should keep taxation and spending low and reduce the public debt.[4]

Those were the economic themes of Warren Harding's presidency. Few presidents have been subjected to the degree of outright ridicule that Warren Harding endured during his lifetime and continues to receive long after his death. But the conventional wisdom about Harding is wrong to the point of absurdity: even the alleged "corruption" of his administration was laughably minor compared to the presidential transgressions we have since come to take for granted.

In his 1920 speech accepting the Republican presidential nomination, Harding declared,

We will attempt intelligent and courageous deflation, and strike at government borrowing which enlarges the evil, and we will attack high cost of government with every energy and facility which attend Republican capacity. We promise that relief which will attend the halting of waste and extravagance, and the renewal of the practice of public economy, not alone because it will relieve tax burdens but because it will be an example to stimulate thrift and economy in private life.

Let us call to all the people for thrift and economy, for denial and sacrifice if need be, for a nationwide drive against extravagance and luxury, to a recommittal to simplicity of living, to that prudent and normal plan of life which is the health of the republic. There hasn't been a recovery from the waste and abnormalities of war since the story of mankind was first written, except through work and saving, through industry and denial, while needless spending and heedless extravagance have marked every decay in the history of nations.

It is hardly necessary to point out that Harding's counsel — delivered in the context of a speech to a political convention, no less — is the opposite of what the alleged experts urge upon us today. Inflation, increased government spending, and assaults on private savings combined with calls for consumer profligacy: such is the program for "recovery" in the 21st century.

Not surprisingly, many modern economists who have studied the depression of 1920–1921 have been unable to explain how the recovery could have been so swift and sweeping even though the federal government and the Federal Reserve refrained from employing any of the macroeconomic tools — public works spending, government deficits, and inflationary monetary policy — that conventional wisdom now recommends as the solution to economic slowdowns. The Keynesian economist Robert A. Gordon admitted that "government policy to moderate the depression and speed recovery was minimal. The Federal Reserve authorities were largely passive.… Despite the absence of a stimulative government policy, however, recovery was not long delayed."[5]

Can't see the obvious

[Scooter]

just how fast did you expect the economy to grow. It almost doubled in the first four years of his presidency.

I see 48%, must be that new math.

Must be you can't read.

Sure, if you consider chopping the unemployment rate by almost half in his first term "nothing

47%, must be that new math again.

A decrease of 47% isn't "almost half"?

What other country had a better record?

How about the US in the Great Depression of 1920.

In the so-called Depression of 1920, unemployment only reached 12%, and GNP only declined by 17%, as your source has pointed out. Today, that would barely qualify as a recession. In contrast, during the Great Depression, prior to FDR taking office, unemployment was twice as high at almost 25%, and GDP, as you have kindly referenced, declined by 45%. No comparison between the two whatsoever.

The so-called Depression of 1920 was the completely natural reaction of an economy adjusting from a wartime to a peacetime footing. The Great Depression was not like anything seen before, which is why measures which had worked in the past, which were tried by the Hoover administration for four years, did nothing to even stem the tide.

Can't see the obvious

Like the fact that there is no basis for comparison between a recession with unemployment of 12%, and a GDP decline of 17%, and a major depression with unemployment of 25% and a GDP decline of 45%.

[Scooter]

The question you need to ask yourself, if the comparison with the so-called Depression of 1920 is in any way valid, is why it only continued to get worse for the four years BEFORE FDR became president, when a Republican White House and Congress did next to nothing hoping it would go away, and why the economy took off like a lighting bolt after FDR began to implement his program.