Rhyming with History Looking at what made the Great Depression "great" shows how (not to) handle our $ crisis
by Perry Willis , Downsize DC
Reposted by the Coffee Coaster with DDC permission
Text of letter to Downsize DC subscribers 11/13/08:
Quote of the Day:
"History doesn't repeat itself, but it does rhyme." — Mark Twain
Subject: Educate the Powerful!
Mark Twain was right. History doesn't repeat itself, exactly, but often the present does rhyme with the past. Sadly, the evidence for this is now all around us. Too much of what the politicians are currently doing rhymes too well with what the politicians did during the Great Depression.
Then, as now, the politicians blamed the economic downturn on the free market. They were wrong then, and they are wrong now. The government caused the Great Depression. Even Ben Bernanke, the Chairman of the Federal Reserve, agrees. Here's what he said at the celebration of Milton Friedman's 90th birthday in 2002 . ."I would like to say to Milton (Friedman) and Anna (Schwarz): Regarding the Great Depression. You're right, we did it."
Predictably, government schools don't teach this view. Instead, they teach that...
The depression became Great because President Hoover was an advocate of laissez-faire economics who did nothing to intervene. In fact, Hoover was the first president to ever make major interventions in the economy. The economist Bryan Caplan lists 21 Hoover interventions.
Another economist, Murray Rothbard, has described how President Hoover was the true creator of the "New Deal" approach for which FDR later claimed dubious credit.
Caplan and Rothbard are not alone in this. Roosevelt aid Rexford Guy Tugwell was to say years later... "We didn't admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started." (Source: Paul Johnson, A History of the American People — New York: Harper Collins Publishers, 1997, p. 741)
Even FDR himself agreed that Hoover had intervened, he just disagreed with the interventions. During the 1932 presidential campaign Roosevelt repudiated Hoover's meddling, saying... "The doctrine of regulation and legislation by 'masterminds' ... has been too glaringly apparent at Washington during the [Republican administrations]."
And during the 1932 presidential campaign Roosevelt constantly criticized Hoover for his huge deficits, promising instead:
immediate and drastic reductions of all public expenditures
abolishing useless commissions and offices, consolidating bureaus and eliminating extravagances
reductions in bureaucracy
implied tax cuts
a sound currency to be maintained at all hazards
(The bullets are exact quotes.)
We aren't taught that Roosevelt promised these things. Instead, we're taught that FDR's heroic interventions saved the free market from itself.
But what did his interventions actually achieve?
The depression became GREAT under FDR's guidance.
It lasted more than a decade.
Prosperity never returned while he was President; the economy only recovered after Roosevelt was dead and buried.
"We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong... somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises... I say after eight years of this Administration we have just as much unemployment as when we started... And an enormous debt to boot!"
It's significant that Hoover and Roosevelt were the first to intervene in the economy. Previous downturns had always been allowed to run their course, lasting from a few months to a couple of years. But the first one the politicians tried to stop is the one that lasted more than a decade, and that really hit hard.
Why the "Great" Depression?
If government intervention worked, then why did the 1929 depression become Great, when none had before? It ought to make you angry. The injustice is so clear. The politicians caused the problem, blamed it on the free market, and then benefited from the disaster they had created by grabbing vast amounts of power and money.
And now it's happening again. History, sadly, is rhyming.
We're being told that the economic downturn resulting from the housing bubble is a market failure, and that massive government intervention is needed in all directions. But the truth is this:
Companies and individuals who made bad decisions based on these policies should pay the full price for their mistakes.
None of them should be rescued.
The politicians should not intervene.
In short, the politicians should stop pursuing policies that rhyme with those pursued during the Great Depression. In addition, the advocates of Big Government should be asked:
Why, precisely, was the first economic downturn in which the government intervened the only one that became so bad that it earned the name of the Great Depression?
And why is it, precisely, that the major areas of American life where the government has intervened to make things more affordable -- such as health care, higher education, and housing -- are exactly those areas where costs have risen the most?
Government intervention does not work. It does not make things more affordable, it makes them more expensive. It does not prevent economic downturns, it causes them, and deepens them.
I want to insert here a link to a brilliant column written by former Federal Reserve Chairman, Alan Greenspan (before he committed intellectual/moral treason and became a corporatist). This single article can open up the eyes of every American to the nature of the fraudulent monetary system enabled by the Federal Reserve System and its headlong departure from any standard, real commodity-based value (esp. gold) into fiat money. — bw, Coffee Coaster editor
Paste this Dispatch into the section for your personal comments and send it to them. Maybe there are a few Congressional staffers who will learn something.
Thank you for being a part of the growing Downsize DC Army.
Perry Willis
Communications Director
DownsizeDC.org, Inc.
