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I'm not really sure how you can read what Hoover did to counter the GD and be a democrat today...
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During the early days of the Great Depression, Hoover launched the largest public works projects...
The president appealed to industry to keep wages high in order to maintain consumer purchasing power...
The Smoot-Hawley tariff, signed by Hoover in 1930, raised rates but provoked retaliation from Britain, Canada, France, Germany, and other traditional trading partners. The United States found it much more difficult to export its products overseas.
Hoover persuaded local and state governments to sharply increase public works spending. However, the practical effect was to exhaust state and local financial reserves, which led government by 1933 to slash unemployment relief programs and to impose sales taxes to cover their deficits.
Appealing to industry to keep wages high feel on deaf ears. Industry layoffs were in the millions.
The was protectionism on both sides of the Atlantic and state and local governments do not have the power to deficit spend.
That's why strong fiscal and monetary policy was needed and had to wait until Roosevelt was elected. Hoover kept the budget rather balanced when a massive public spending policy was needed to fill the vacuum of private demand.
Let's review this. Here is Debt to GDP chart from that period:
From this, it sure looks like Hoover massively increased debt. If anyone concludes that, they'd be wrong. This is the 'denominators matters' error. Remember the debt to GDP ratio is debt/GDP. A constant debt with a falling GDP produces the same result of a constant GDP with a rising debt.
This is the raw debt numbers:
As you can see, Hoover didn't run up much debt while FDR did.
Debt didn't increase as much because revenue didn't drop as much. By June of 32 debt was up over 15% by June of 33 (3 months after he left office) it was up by almost 30%.
Yes, it is but it's used by history revisionists as 'evidence' that FDR's policies didn't work, even though they did.
The theory is really blown away by post#10 of this thread.
The two are really different.
Harding had a recession, not a depression. The 1920-21 recession was basically an inflation-fighting recession -- which was caused by the reaction to a postwar bulge in prices.
FDR was facing a demand side great depression based upon deflation caused by lack of consumer demand because the stock bubble burst. As when faced with two different problems, the solutions are different.
Quote:
Originally Posted by BentBow
You think Obama is doing a better job of it?
No I don't. I think he should have been more aggressive and proposed a stimulus plan that was twice as big, as many economists said.
Instead, he settled on a stimulus and let protagonists convert much (40%) of the stimulus into tax-cuts, which are poor stimulus, and much of the rest into extended benefits to the unemployed.
FDR's stimulus was larger in comparison to the GNP then (although still too small), provided work programs and mortgage relief and large capital programs that we're still making use of today.
Paul Krugman explains it in his blog:
Quote:
First, I think that it has paid too much attention to the short-run political risks of taking unpopular positions versus the medium-run political risks of having a lousy economy. Yes, a real mortgage-mod program would have fed Tea Party sentiment — but it might have meant a stronger economy in the second half of 2010, and that would have mattered a lot more. As best as I can tell, the political types in the White House have, year after year, operated on the principle that the economy is on the mend, so it’s time to pivot to centrist-sounding themes — only to keep finding that no, the economy isn’t on the mend, and they’re paying for that at the polls.
Second, the administration made what I continue to believe was the awful decision to pretend that the half-measures it was actually able to get were exactly right, not a penny too small. Would it have made a difference in 2010 if Obama had been able to say to the country, “I asked for more aid to the economy, but those guys blocked it, and that’s why we’re not recovering faster”? I don’t know — but it could hardly have been worse than the position he actually found himself in, which was trying to explain why a policy he insisted had been perfect wasn’t doing the job.
Third, it’s one thing to recognize that there’s only so much you can do; it’s another to adopt the arguments of your enemies. Since some time in the fall of 2009, Obama’s rhetorical stance has been basically that he’s like the GOP, but less so; can you even remember him offering a full-throated defense of Keynesian policies?
Finally, while the White House doesn’t set Fed policy, it does get to appoint Fed governors. Why are there all those vacant seats? Why weren’t there recess appointments?
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Why did Hardings policies work to get us out of a depression and FDR's didn't?
