It’s all about bigger is better.
Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.
After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years…
In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.
“President Roosevelt believed that excessive competition was responsible for the Depression…
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…
Found by Guy Fawkes.
#72
Really. Of course, you have some shred of evidence to back such a wild assertion. Milton Friedman is considered one of the greatest economists of the past century. He was the biggest proponent of free markets since Adam Smith. How you conclude that he was a fascist I have no idea. Compare that to Keynes and Krugman that both could be argued were far closer to fascist considering their policies of government intervention into markets.
#75
> It finally gave the massive government
> spending Keynes had been advocating all
> along. Since soldiers, munitions, and
> armaments serve no purpose to the
> national wealth
> , the effect was the equivalent of
> digging a lot of holes.
You are conveniently forgetting that this policy of government spending almost bankrupted the country. However, luckily, the rest of the worlds economies were far worse off than ours after the war and the effect of investing human capital in training all those soldiers in various trades paid dividends in the years that followed. Last I checked, the British *also* spent massive amounts of money on soldiers, munitions and armaments and strangely they did not recover for years if not decades.
RE: WWII and unemployment
A *slight* improvement? Really. I say that WWII saw a dramatic change and was *the* catalyst that brought us out of the depression. Let’s see who’s right. Unemployment rates:
1939 17.2
1940 14.6
1941 9.9
1942 4.7
1943 1.9
1944 1.2
1945 1.9
So, from 1941 to 1945, the unemployment rate dropped 8% and dropped 15.3% from the outset of war in Europe. Military expenditures increased from about 500mil in 1934 to a little over a billion in 1938-39. Still sticking to “slightly”?
> Balanced budgets didn’t put
> people to work, stimulating
> the economy did.
Then you also think that Clinton’s policy of balancing the budget was wrong? After all, if massive government spending provides more jobs and stimulates production, why should it always work?
If you step back and look at that cycle over 50 years or more, you see that it cannot be sustained. You cannot spend your way out of every recession. At some point, the government will accumulate so much debt that it will crumble during a recession as CA is on the brink of doing.
#94–gooddebate==insulting to some perhaps but I only see good/relevant response or not. That would be my real concern. You have recognized it, so nuff said.
I don’t need to address your direct question because there is a superseding general principle that is more important. All issues of import are affected by MANY variables. It is almost always an error to think in either/or terms or even that you can rank order anything. Especially bad is to think/argue that ONE ISSUE is germane and ignore/devalue the rest. Right now, that appears to be your quest.
What difference does it make whether or not interest rates are most important or should be the first to be acted on when your unstated assumption is not true? As Obama said: “We can do more than one thing at a time.” Thats true for thinking about subjects in general as well as the economy.
Why is it not sufficient to say interest rates are important and need to be looked at as part of the total package?
I’m not an economist so I don’t know exactly what interest rate you are talking about. Aren’t there about 50 of them? But lets see if we can devine what you are thinking of . . . . . .
1. I think that the manipulation of interest rates is a much bigger regulation than any other economic regulation /// I don’t know if that is true or false but lets say it is
2. and that all other regulations exist because of it. /// Well that is demonstrable false, but again, lets say it is.
3. For instance we wouldn’t need a regulation for packaging home mortgages if the interest rate was at a level that didn’t make people think that it’s time to buy. /// Gosh, thats so whack, I’m having difficulty making it relevant. I guess your statement is true but totally fantastical and irrelevant. You are describing an impossible market and want to derive working hypotheses from it? What is a market where the interest rate on mortgages is so high that no one will take out a mortgage? I guess that could be a market where everyone pays cash and/or that as a result, houses are very cheap. You see, once you impose an impossible variable, you have to define all the other ones as well.
4. Also, people wouldn’t have the false idea that prices always rise without the inflating policy of the currency. /// The recent price inflation has gone on with relative stable/no inflation of the currency. People got the idea that prices “always rise” because over a 10 year period there was steady housing price escalation. This was partially caused by yes the interest rates for housing mortgages being artificially set low, but it was only one fact of about 5-6 main ones I could list as you should as well.
5. So, I think that inflating the currency and artificially lowering the interest rate leads people to buy when they shouldn’t, creating the need for regulations about mortgage market financing. /// Currency has not been inflated, yes interest rates were low, and people bought when they should not have. Lending standards were ignored and not enforced. With all your factors the same, much of the housing crises could have been avoided if income was verified, payments were no more than 30% of income, and 20% down payments were made. A whole other set of variable about “regulation” having nothing to do with interest rates. Regardless, regulation of the mortgage market is clearly required.
6. Is there a reason why we shouldn’t look at the interest rate policy and inflation policy first? /// Fatally vague. What is this interest rate policy you are talking about? Home Loan rates, home loan guarantee rates, prime lending, interbank loans==what lending rate? How do you think it is set now, and how do you think it should be set? You sound like you have access to god who will tell us all what the interest policy should be from time to time? Just recall that when people set policy, it will always be wrong and need to be constantly modified. How do you propose to do that any better than what you think is wrong now?======But if interest rate policy floats your boat, I have no objection. I even trust you can create/modify other policies at the same time or at least 3 days later?
7. Is this policy working to make us wealthier? Or is it the reason why we are having this recession? /// Again, vague and I’ll bet you can’t even say what the policy is that you rail against. What is this wealth you refer too? Define it, measure it? Stock Market? GNP? Realize all these issues are definitional.
We are having this recession for 5-6 major reasons. I would put interest rates policies at probably 7 or 8, but won’t argue if you insist 5 or 6.
Gooddebate–your style/performance is very muddled, undefined. Take a few debate classes. You might enjoy and benefit from the exercise.
#92, Poison Twin,
Again, when confronted with facts, you attack the source.
Do Obamabots go to school to learn how to do this or does it just come naturally to the ignorant?
#96, Thomas,
The comments about Friedman stand.
Paul Krugman, Nobel Laurate, 2007
Orlando Letelier, 1976
Naomi Klein
Murray Rothbard, 1971
#96, Thomas,
You are conveniently forgetting that this policy of government spending almost bankrupted the country.
Did it?
However, luckily, the rest of the worlds economies were far worse off than ours after the war and the effect of investing human capital in training all those soldiers in various trades paid dividends in the years that followed.
The rest of the world had been bombed into the stone age, were too small to make much difference on the world stage, or were third world tin pot dictatorships still. Britain’s industry had been overworked into disrepair. The US, Australia, and Canada were the only countries to come out much stronger than they went in industrially.
What trades were American servicemen taught? How to kill? How to peel potatoes? How to iron your shirt? How many Pilots and tail gunners were needed out of the 100s of thousands taught to fly and shoot?
The very few trades that did become beneficial later were the number of radio servicemen and techs.
#96, Thomas,
RE: WWII and unemployment
A *slight* improvement? Really. I say that WWII saw a dramatic change and was *the* catalyst that brought us out of the depression.
Really? So sad. Why not quote my comment a little more accurately.
The discussion was the time period BEFORE the war started, not after.
*
> Balanced budgets didn’t put
> people to work, stimulating
> the economy did.
Then you also think that Clinton’s policy of balancing the budget was wrong? After all, if massive government spending provides more jobs and stimulates production, why should it always work?
Are you asking me, telling what I think, putting new meaning into something I didn’t infer, or just demonstrating your economic prowess?
Stimulating the economy is like giving medicine. Most medicines have an effective range; take too little and it doesn’t help, take too much and you get sicker, take it for too long and it can do other harm. Large government interventions in the economy are the same as far as stimulating a recession.
When the economy is doing well we can expect the government to need do little in the way of fiscal or monetary policy change. That was evidenced by the Fed’s actions through most of Clinton’s terms.
You cannot spend your way out of every recession. At some point, the government will accumulate so much debt that it will crumble during a recession
Which is why a balanced budget and paying down the debt is so important when times are good. These are the things YOUR boy, Bush, didn’t do. He not only allowed us into a recession, he continued to deplete the coffers and rack up a huge debt.
#97 – Now were getting somewhere. Let me fully define what interest rates we’re talking about. You can read all about it at about.com. Just google “federal reserve interest rates” and pick the link “current federal reserve interest rates – the impact…”
It’s like a primer on interest rate manipulation. There’s a committee called the FOMC (Federal Open Market Committee) whose goal is “…its long-run goals of price stability and sustainable economic growth”. How does it do this, “If the FOMC raises the rate, then money becomes more expensive, which slows the economy down.” and “If the FOMC lowers the rate, then money becomes more liquid, which stimulates the economy.” I think I said exactly the same thing in a previous post, guess I got lucky.
Here’s another quote about how this interest rate control will help you, “Through control of the Fed Funds rate, the FOMC affects the value of your retirement portfolio, the cost of your next mortgage, the selling price of your home, and the potential for your next raise. By following the prouncements of the FOMC and its members, you can anticipate economic changes and take steps to enhance your personal finances.”
I assume that everyone got the memo to change their portfolio before the recession hit but me, right?
What about inflation, more quotes “Answer: The primary job of the Federal Reserve is to control inflation while avoiding recession. The tools it uses are:
* Raising and lowering the Fed Funds rate,
* Tightening or relaxing the amount of money allowed into the market,
* Raising or lowering the amount of reserves banks need to keep on hand.”
So, if the primary job of the fed is to control inflation and avoid recession, how is it doing on a grading scale? A, B, F…
#99,
On Paul Krugman: Of course, he would criticize him for believing government intervention wouldn’t work. Krugman’s entire reputation and research ran counter to Friedman’s. This isn’t objective criticism. What you have are two Nobel Prize Winners arguing over who is right.
On Orlando Letelier: Mr. Letelier was upset his country had fallen to a military coup. Letelier was mistaken that Friedman supported Pinochet. From the same page you cherry-picked from: In the 2000 PBS documentary The Commanding Heights, Friedman continued to claim that criticism over his role in Chile missed his main point that freer markets led to freer people, and that Chile’s unfree economy had led to the military government. Friedman argued that the economic liberalization he advocated led to the end of military rule and a free Chile.
Friedman was down there advocating free markets and acknowledged that they would undermine the current regime. I agree with him.
On Naomi Klein: She is going for shock value. She doesn’t know what she’s talking about. ‘nuf said.
On Murray Rothbard: This is rich, coming from you. You are actually using an Austrian School Libertarian to support your hypothesis that Friedman was a fascist?
If you really want to know what Friedman is about, you should read his book, “Free to Choose.” If you still feel he is a fascist after reading that book, we need to discuss the definition.
#104, LibertyPoser,
Of course you would attack those who have spoken out against Friedman. But then Liebertarians only accept the quotes that they like.
Friedman is widely discredited for his later theories. I have posted links to four differing people that disagree with him. I have seen nothing, other than ad hominem attacks on those critics, each of whom stand on their own merits.
#105
“Discredited”? What are you smoking? Discredited from what? You make it sound as if he cooked his research or did something dishonest.
There are arguments that some his theories do not fit the available data in some circumstances just as there is plenty of evidence to show he was exactly right in many if not most circumstances. Smith was wrong on numerous accounts and yet his theories are still widely accepted given the right perspective. The same is true of Keynes. No one ever said that you could not find people that disagreed with Friedman. That is a far, far, far cry from saying he has been discredited. Smith, Keynes and Friedman are probably the three most influential economists in the past 200 years. The theories of all three are studied in every university in the world to this day. He is far from discredited.
#105, Poison Twin,
Of course you would attack those who have spoken out against Friedman. But then Liebertarians only accept the quotes that they like.
Attacked? Whatever.
The only one I attacked was the journalist and only because she isn’t qualified to state facts or an opinion.
The other three were expressing opinions. If you can’t tell the difference between opinions and facts, you are in for a long, rough life.
#102–gooddebate==”So, if the primary job of the fed is to control inflation and avoid recession, how is it doing on a grading scale? A, B, F…” /// I think as their job is to do the above BY SETTING PRIME INTEREST RATES they have been doing an excellent job.
Its FAILURE to enforce lending standards in the home mortgage market and TOTAL LACK OF REGULATION of the mortgage based securities that in the main has caused the current recession.
Life is more complicated than X = Y and so should your understanding of it.
Thomas and Poser,
Nice try guys, but I don’t want to start debating Liebertarianism policy. Friedman supported the fascist government of Chile and encouraged others to go work for Pinochet. NORMAL people see his policies as being pro-business, government control, and anti people. Like it of not, that is the main stream opinion.
#109, You need a reading comprehension school if you honestly think that.
You’re nuts.
Saying that Friedman supported the fascist government is like saying Carter supported the Islamic religion because he brokered a peace deal between Israel and Egypt. Friedman went to Chile to teach them about the Free Market. He has numerous times said that the free market will ultimately undermine the dictatorship.
I don’t suppose you consider the fact that America orchestrated the coup in the first place a redeeming factor?
The “Miracle of Chile” is a term coined by Milton Friedman to describe Augusto Pinochet’s support for liberal economic reforms in Chile drafted by the “Chicago Boys.”
The implemented economic model had three main objectives: economic liberalization, privatization of state owned companies, and stabilization of inflation. These market-oriented economic policies were continued and strengthened after Pinochet stepped down.[1] Successive governments have continued these policies for a quarter century.
[…]
According to the 2008 Index of Economic Freedom, Chile is the world’s 8th “most free” economy today and 11th “most free” in the 2009 Index of Economic Freedom.[31]. Chile is ranked 3rd out of 29 countries in the Americas and has been a “regional leader” for over a decade. Chile had GDP growth of 6.1% in 2004, and has averaged a 4.0% annual increase in GDP over the last five years for which data is available. [6]
http://tinyurl.com/6jz84l
As a typical right wing nut you are attempting to change the subject from Roosevelt being the cause of the Depression lasting so long to worshiping the god of Liebertarianism . Why? Simply because your claims are baseless.
Sorry, I don’t want to play that game. Consider your claims about Roosevelt and Keynes refuted.
#110–LibertyLover==because I criticize your extreme Ayn Rand nincompoop libertarian views so consistently, its only appropriate to note this response is quite the exception. Well done.
I knew you guys couldn’t stand not to get in the last word 😉
#111, As a typical right wing nut you are attempting to change the subject from Roosevelt being the cause of the Depression lasting so long to worshiping the god of Liebertarianism . Why? Simply because your claims are baseless.
Funny. You are one who tried to discredit him when SL suggested there was ANOTHER Nobel Prize Winner with an opposing view to Keynes. All you’ve done is try to discredit him because he brought a dictatorship into a free market.
I suppose you would have preferred they remain a dictatorship? After all, that’s what Keynes recommends by increasing the size of government, so I guess that fits.
#114, Poser,
Still trying to turn it to Liebertarianism. Go back and read who brought Friedman and Churchill into the conversation.
The end result is the right wing nuts will continue to invent crap and rewrite history to suit their needs. Roosevelt is one of the better things to ever happen to this country.
#115,
Still trying to turn it to Liebertarianism. Go back and read who brought Friedman and Churchill into the conversation.
#66 – SL stated that Friedman, a Nobel Prize Winner, proved Keynes wrong – kinda like you stating that Klugman, another Nobel Prize winner, liked him.
#73, In response, you called Friedman a fascist.
#63, I referenced a speech by Churchill. It seemed as appropriate as what he was talking about was exactly what Obama is trying. Kinda like you referenced Klugman to prove your point.
If you can reference outside sources, why can’t anybody else?
#65, In response, you called Churchill a racist.
Nope, your contrived argument that I’m trying to change the subject doesn’t hold water. As much as you hate the idea, there are people out there who know how to do their own research and don’t rely on Obamabots to tell them what is right and wrong.