pater_tenebrarum

Obama's Economic Failure

For people interested in the first part of the depression under Hoover, i have written a blog a while ago detailing the events (and comparing them to the policy-maker reaction to the financial crisis of 2008).
My major source for historical information has been Rothbard's 'America's Great Depression' (a book i highly recommend).

www.acting-man.com/200...


On Jul 09 03:55 PM WS1835 wrote:

>
> Excellent article Gerard!
>
> After searching through numerous analyses of the Great Depression
> and the government response under Hoover and Roosevelt, I have formed
> three general conclusions:
>
> 1) The primary element that turned a short crash/recession into
> a decade long depression was wage controls. Artificially high wages
> create high unemployment, reduce export competitiveness, and discourage
> expansion of the workforce at the beginning of a recovery. With
> Hoover and Roosefelt both advocating and/or mandating the maintenance
> of prevailing wage levels rather than allowing them to react to the
> economic conditions, recovery was made almost impossible.
>
> 2) Increases in government spending (even large ones) do not significant
> affect long term unemployment and do not produce viable economic
> growth. The effects of public stimulus is generally restricted to
> make-work employment (WPA, etc) and temporary projects, while it
> simultaneously displaces private investment and skews labor markets.
>
>
> 3) Decreases in government spending (the larger the better) have
> significant affects on long term economic growth and tend to greatly
> shorten the length of economic downturns. Your example of Truman
> in the late 40's is a good one. Also reference Harding's policy
> during the aftermath of WWI and Wilson's progressive policies. The
> post-WWI recession was sharp and sudden, but quickly evaporated in
> the face of Harding slashing spending/taxes, and adopting a business
> friendly stance. His policies set the stage for the roaring 20's
> just as Truman set the stage for the growth of the 50's.

The Fed is Deflating: 10 Reasons Why

sorry, the Fed is decidedly NOT deflating. the narrow money gauges such as M1 and the monetary base are not growing due to sweeps - which have made it unnecessary for banks to keep reserves at the Fed for all the credit they have been creating. meanwhile, the credit creation is now a non-M1 component of M2, and if we look at MZM, it's growing at a parabolic rate of change. the Fed has put out over 50% of its balance sheet in dubious 'short term financing' via new special facilities, and you really believe it is 'deflating'? come on, you can't be serious.