Tuesday, October 9, 2012

Huffington Post Comments 10/9/2012


It took so long to reverse the Great Depression because it was a massive example of letting the Financial Markets and Banks Fail while those who were liquid in their assets took advantage of the situation, combined with a massive drought, and a huge flue epidemic all one on top of another. It took putting 12 Million People to work in CCC and WPA work for welfare programs, a near 100 percent tax on income above 1,000.000.00 per year. The recovery was also stimulated by a manufacturing shift and employment shift off of farms to war tooling and eventually war. Then this was enhanced by the capping of prices on commodities such as bread, milk and gas along with the rationing of the same items. This forced people to save, when there is no product to buy, you save. Credit was harder to obtain then, there were rules preventing people and businesses from going too far in debt. Glass Stegal Regulation was put in place. AND it took years to over come the folly of the RICH that created a Global Depression and Financial Collapse.

Thank goodness we were a bit wiser this time in not letting bad get worse than it did. We could have done more to make the recovery happen sooner. We can avoid going to WWIII to solve the problem of unemployment. 


Even FDR's Treasury Secretary disagreed with you assessment of government spending helping the economy.

Henry Morganthau, Jr. U.S. Secretary of the Treasury 1934-1945

"We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. 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."


Your welcome to that opinion. The fact for my family is that the debt during that period provided roads, campgrounds and projects like Schools, and the Hoover Dam. Much of which are used today, some of which have continued future use. Debt also paid for WWI and WWII debt. I'd rather avoid the conditions that caused WW's and we can. I am also glad that the Government Stepped in and stopped starvation of the masses, by the assistance programs. Yes, WWII was avoidable if the Economics of the Period had not added fuel to the flames of excessive nationalism. 


That's not just my opinion, that is a direct quote from Franklin Franklin Delano Roosevelt's Treasury Secretary!

The stuff that was built may have been good, but what makes you think that those things would not have existed without government spending?


Morgenthau is an interesting review point.

Morgenthau accepted Roosevelt’s double budget as legitimate — that is, a balanced regular budget, and an “emergency” budget for agencies, like the Works Progress Administration (WPA), Public Works Administration (PWA) and Civilian Conservation Corps (CCC), that would be temporary until full recovery was at hand. He fought against the veterans’ bonus until Congress finally overrode Roosevelt’s veto and gave out $2.2 billion in 1936. In the 1937 "Depression within the Depression," Morgenthau was unable to persuade Roosevelt to desist from continued deficit spending. Roosevelt continued to push for more spending, and Morgenthau promoted a balanced budget. In 1937, however, Morgenthau successfully convinced Roosevelt to finally focus on balancing the budget through major spending cuts and tax increases; Keynesian economists have argued that this new attempt by Roosevelt to balance the budget created the Recession of 1937. On November 10, 1937, Morgenthau gave a speech to the Academy of Political Science at New York's Hotel Astor, in which he noted that the Depression had required deficit spending, but that the government needed to cut spending to revive the economy. In his speech, he said: You quoted that.....


To reduce the deficit he argued for increased taxes, particularly on the wealthy.

"We have never begun to tax the people in this country the way they should be..... I don't pay what I should. People in my class don't. People who have it should pay."[13] 


All of the stuff you list in the first paragraph may be true but that was before his quote that I presented to you. The quote I quoted was from 1941. The things you listed were before that.

In 1937 he believed in more government spending, after 8 years of government spending, and witnessing the results he admitted that the spending did nothing but add to the debt.

You have quoted him too. Was your quote from before or after he had witnessed the poor results from government spending?

I quoted him because he is a man from YOUR side who agrees that your side's position of government spending is bad.

If you want to convince me by way of quote that your position is correct, then find a quote from someone whose opinion I already respect that agrees with your point.



Have you heard of the depressions/ recessions of 1921, 1980, and 2001? Those all had the same potential to be bad as the great depression and our current one. But rather than have the government "help," the government stayed out of the way and our economy recovered.

During our current depression and the great depression, our government has decided to try and "help" our economy. The great depression lasted more than a decade and our current depression isn't over after four years.

For a very modern example of proving that cutting government spending is the way to go, let's look at Estonia: http://www.cnbc.com/id/49086123/

"Although Estonia’s economy shrank 18 percent in 2008-2009, the Baltic state pulled itself out of the doldrums and managed to grow by 7.6 percent last year — five times the euro-zone average. The country joined the currency bloc 18 months ago. The country has a national debt of ‘just’ 6 percent of GDP, which compares to Germany’s 81 percent and Greece’s 165 percent of GDP.

How did Estonia get to these numbers? Following the 2008 economic contraction, the Estonian government cut its budget by 6.1 billion Estonian kroon (around $500 million) and its expenditure by 3.2 billion Estonian kroon (around $260 million). By 2010 Estonia’s GDP grew by 3.1 percent, according to the country’s finance ministry."


IN 2007, the GDP of Estonia decreased by 1.4% in the 2nd quarter of 2008, over 3% in the 3rd quarter 2008, and over 9% in 4th quarter of 2008. The Estonian government made a supplementary negative budget, The revenue of the budget was decreased for 2008 by EEK 6.1 billion and the expenditure by EEK 3.2 billion. In 2010, the economic situation stabilized and started a growth based on strong exports. In the fourth quarter of 2010, Estonian industrial output increased by 23% compared to the year before.

According to Eurostat data, Estonian PPS GDP per capita stood at 67% of the EU average in 2008. In March 2011, the average monthly gross salary in Estonia was 843€

However, there are vast disparities in GDP between different areas of Estonia; currently, over half of the country's GDP is created in Tallinn, the capital and largest city. In 2008, the GDP per capita of Tallinn stood at 172% of the Estonian average, which makes the per capital GDP of Tallinn as high as 115% of the European Union average, exceeding the average levels of other counties. There are many poor people there.

Unemployment rate is 11.7%, above the EU average, while real GDP growth as of 2011 was 8.0%,five times the euro-zone average. As of 2012, Estonia remains the only euro member with a budget surplus, and with a national debt of only 6%, it is one of the least indebted countries in Europe. 

Your example of Estonia was interesting. A former member of the USSR. It has shale oil which produces its electricity but still they have to import oil and use old USSR Nuclear Power Plants to produce all they need. The use of these power generation methods have ruined a significant amount of their environment. Their economy is heavily dependent on construction jobs. Their average income is lower than the EU so EU businesses are moving north for the attractive lower wages. This increases the demand for power, and facilities needing to be built. Yet their unemployment rate is above ours at over 11 percent. They are a much smaller population and as such can make quicker changes as needed. Their government being new is less complex and thus more nimble. Even so they voted to approve an unbalanced budget in order to get over the Financial Crisis hump. Their conclusion was this was successful and mitigated the hardships of their citizens and businesses positioning them for the prime spot for the world's recovery.

Thanks for expanding my understanding. Oh and they have Universal Health Care paid for by the taxes they pay. They have a very high standard of living in spite of paying a significantly higher tax rate than we do... SO you want to be Estonia.... Pay more taxes.... Please make my day.


I never said that I "want to be Estonia."

I presented one point of, very recent, evidence that showed a country that was in debt and had a large amount of unemployed but it reduced government spending and the unemployment rate fell and their national debt fell.

That is one point of evidence for: reducing the size of a government resulting in improved numbers in its economy.

More government spending = more debt and higher unemployment

less government spending = less debt and lower unemployment

See Estonia for an example of these two facts.

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