All Posts Tagged With: "Great Depression"

War Would End the Recession?

In his September 28 New York Times blog post, Paul Krugman announced that “economics is not a morality play.” That turn of phrase is his way of defending the idea that in unusual times, such as the sort of deep recession we are in, we can get strange relationships between economic cause and effect. The result [...]

22Dec2010 | | 42 comments | Continued

The Politically Incorrect Guide to the Great Depression and the New Deal

The Great Depression ranks as one of the most misunderstood periods of history. For that, we can thank biased historians who for generations have favored activist government, along with Keynesian economists who never understood how the economy works. Since the last few months of 2008, the Great Depression has been thrust back into the national debate [...]

22Dec2010 | | 3 comments | Continued

The Broken-Window Fallacy Writ Large and Dangerous

Veteran Washington Post political columnist David Broder yesterday: What else might affect the economy? The answer is obvious, but its implications are frightening. War and peace influence the economy. Look back at FDR and the Great Depression. What finally resolved that economic crisis? World War II. Here is where Obama is likely to prevail. With [...]

1Nov2010 | | 9 comments | Continued

America’s Depression within a Depression, 1937–39

The Great Depression in the United States is generally dated as beginning in 1929 and ending in 1941, give or take a year. This has led many commentators to disregard or to pass quickly over the serious depression that began in 1937 and ended—if returning to the 1937 level can be considered a depression’s end—in [...]

22Oct2010 | | 8 comments | Continued

The Rise and Fall of Glass-Steagall

The ongoing financial crisis has pundits, bloggers, academics, and politicians scrambling for explanations. Deregulation gets a major share of their attention, specifically the 1999 repeal of the Glass-Steagall Act of 1933. Just what was Glass-Steagall and how did it come about? Bank failures were among the most dramatic and devastating aspects of the Great Depression. [...]

22Sep2010 | | 8 comments | Continued

FDR’s Folly: How Roosevelt and His New Deal Prolonged the Great Depression

The Great Depression of the 1930s was by far the greatest economic calamity in U.S. history. In 1931, the year before Franklin Roosevelt was elected president, unemployment in the United States had soared to an unprecedented 16.3 percent. In human terms that meant that over eight million Americans who wanted jobs could not find them. [...]

6Jul2010 | | 3 comments | Continued

Comparing the Great Depression to the Great Recession

President Obama has often remarked that the Great Recession (2008–10) is the greatest economic crisis since the Great Depression. It’s interesting to study the many parallels between the Great Recession and the Great Depression. Causation. The main causes of both crises lie in actions of the federal government. In the case of the Great Depression, [...]

20May2010 | | 59 comments | Continued

Federal Deposit Insurance: A Banking System Built on Sand

Federal deposit insurance grew out of a turbulent time in American history: the Great Depression. During two waves of bank failures in the 1930s an astonishing 9,000 banks closed and millions of depositors lost some or all of their savings. The Federal Deposit Insurance Corporation (FDIC) began operations in 1934, insuring deposit accounts up to [...]

20May2010 | | 11 comments | Continued

What Ended the Great Depression?

What finally ended the Great Depression? That question may be the most important in economic history. If we can answer it, we can better grasp what perpetuates economic stagnation and what cures it. The Great Depression was the worst economic crisis in U.S. history. From 1931 to 1940 unemployment was always in double digits. In [...]

24Feb2010 | | 59 comments | Continued

Deflation: The Good, the Bad, and the Ugly

During the current recession a number of commentators have made various comparisons to the Great Depression, mostly because of the dramatic decline in the stock market and ongoing troubles in the financial industry. When oil prices also began a dramatic decline in the autumn of 2008, pulling the overall consumer price level downward for the [...]

5Jan2010 | | 59 comments | Continued

The Return of Depression Economics and the Crisis of 2008

Reading The Return of Depression Economics, I have to admit I was surprised. Paul Krugman, 2008 Nobel Prize winner in economics and New York Times columnist, isn’t as feisty and partisan in the book as he is in his column. Moreover, he presents some useful information about the many economic collapses that have occurred in [...]

18Nov2009 | | 14 comments | Continued

World War II Ended the Great Depression?

In his 2008 book, The Return of Depression Economics and the Crisis of 2008, Paul Krugman writes: “The Great Depression in the United States was brought to an end by a massive deficit-financed public works program, known as World War II.” He has since repeated this bon mot in a number of columns and television [...]

23Oct2009 | | 30 comments | Continued

FDR’s Lucky Timing

It’s not clear how any of FDR’s 1933 policies could have accounted for a 17 percent increase in GDP, even if they promoted expansion, because they wouldn’t have had time to ripple through the economy. It seems more likely that FDR had the good fortune to come into office near the bottom of the Depression, and enough adjustments in wages, prices, and other factors had occurred that the economy was ready to recover.

10Jun2009 | | 5 comments | Continued

The Dynamics of Disintervention

1) government interventions into the market process tend systematically to generate unintended consequences; 2) many of these unintended consequences frustrate the announced goals of those who support the interventions; 3) the response to these frustrated intentions tends strongly in the direction of further intervention; 4) the economic system performs less effectively in coordinating the plans of buyers and sellers as it becomes burdened with the cumulative effects of an increasingly chaotic mix of interventions; and 5) the process comes to an end when these cumulative effects result in a major system-wide crisis and public choosers decide to reject interventionism in favor either of comprehensive planning or radically freer markets.

21May2009 | | 3 comments | Continued

The NRA: How Price-Fixing Perpetuated the Great Depression

The National Industrial Recovery Act (NRA) dramatically altered America’s traditional free-market system. Under the NRA, a majority of firms in any industry had government approval backed by force to determine how much a factory could expand, what wages had to be paid, the number of hours to be worked, and the prices of products. Whether or not a businessman helped write the code for his industry, he was bound by the terms and subject to a fine or jail term if he violated them.

1Apr2009 | | 26 comments | Continued

Paul Krugman Flunks Capital Theory

Nobel laureate and New York Times columnist Paul Krugman is said to have bested commentator George Will over what prolonged the Great Depression during a joint appearance on ABC’s “This Week with George Stephanopoulos” back in November. But all Krugman really did was show that he, as a Keynesian, holds an unrealistic Play-Doh model of [...]

1Apr2009 | | 6 comments | Continued

Krugman Watch

Because someone has to do it. Remember, Herbert Hoover didn’t have a problem making unpleasant decisions: he had the courage and toughness to slash spending and raise taxes in the face of the Great Depression. Unfortunately, that just made things worse. –“Stuck in the Middle” Federal spending rose in 1930 and1931.From Murray Rothbard’s America’s Great [...]

26Jan2009 | | 5 comments | Continued
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