Don't Trust the Depression Brain Trust
Lew Rockwell at LewRockwell.com - is it too much to hope that the Bush and McCain or Obama administrations will learn quickly that FDR's policies were what caused the 1929 depression to be Great? Unfortunately, it probably is. Sigh...
The ghost of FDR is everywhere, haunting both Washington and New York. The terrible trouble is that the minds in power have confused an economic wrecker with an angel of mercy. They are following his confusions and prescriptions day-to-day in an attempted repeat of the longest economic calamity in modern American history.
They have looked at the history of the New Deal and completely misunderstood it, believing the civics-book claptrap about how FDR saved us from the depression, whereas the fact is that FDR's theories and policies lengthened and deepened it to the point that the only way out that the Roosevelt administration saw was war.
The great theoretical error of the New Dealers was to confuse the symptom of low prices with the causes of the economic downturn. The real problem was that prices were massively inflated before the stock market crash of 1929. The correction had to occur and would have occurred peacefully, if not wholly painlessly, had the government not intervened.
No government in all of human history that has waged war on prices has won. The Great Depression is exhibit A.
...
No matter how many disasters FDR created -- and it was nonstop -- and no matter how much his ridiculous "rabbits from the hat" were exposed as economically harebrained, with every new bureau, every new law, every new initiative, the economy continued to sink. The New Deal is a paradigmatic case of how to turn a downturn into depression. That U.S. leaders regard this as a model to follow does not speak very well of their economic literacy, and it doesn't bode well for our future.
On the other hand, if you want to see how to handle a crisis, consider the Panic of 1819. Never heard of it? That's because it came and went, and that's because the government did nothing about it.
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