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 Austrians Are Right: Consumer Demand Does Not Drive the Economy

Mr. Jackson, thank you for your effort of setting right one of the gravest errors of modern mainstream economics.
As some of the comments to your blog reveal, economic ignorance is truly widespread after decades of statist and Keynesian propaganda. It is important that voices like yours, that cut so decisively through the fog of ignorance, be heard.
For anyone doubting the importance of the manufacturing sector to the economy, i would recommend looking at the BEA's gross output per industry accounts (link below). These show what fails to be counted in 'GDP', which as Mr. Jackson correctly remarks, should be called a 'Net Domesitc Product' rather then 'Gross'.

www.bea.gov/industry/g...

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.