Refuting The Myths Of The (First) Great Depression
Every now and then it is prudent to repeat what is promptly becoming the most critical phrase of the 21st century, which is odd considering that it was uttered over 70 years earlier by then Treasury Secretary Henry Morgenthau, who wrote: “We have tried spending money. We are spending more than we have ever spent before and it does not work.... 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!" And since this Great Depression is not really all that different from the first one, we would like to again present the must read analysis by the Mackinac Center "Great Myths of the Great Depression", which so far is predicting exactly where our own economy will be in about a decade: "At the end of the decade and 12 years after the stock market crash of Black Thursday, 10 million Americans were jobless. The unemployment rate was in excess of 17 percent. Roosevelt had pledged in 1932 to end the crisis, but it persisted two presidential terms and countless interventions later." And let's not forget the conclusion: "Along with the holocaust of World War II came a revival of trade with America’s allies. The war’s destruction of people and resources did not help the U.S. economy, but this renewed trade did. A reinflation of the nation’s money supply counteracted the high costs of the New Deal, but brought with it a problem that plagues us to this day: a dollar that buys less and less in goods and services year after year." Why should this time be any different? And even post what many perceive to be an inevitable war outcome (because history sure does rhyme), what will America export this time around to start a new US Golden Age? Unfortunately financial innovation is no longer the hot commodity it once used to be.
Great Myths Of The Great Depression (pdf)