FDR Deepens and Prolongs the Depression

         Ok, James (“FDR quickly reversed course, helped the economy,” Yuma Sun January 7, 2016) let’s look at the facts.  Check out “Macro Trends.”  It shows, definitively the response of the stock market to government intervention.  By March of 1930 it recouped half of what it lost in 29.  Hoover signed Smoot Hawley in June and boom!  The bottom dropped out again.  It struggled back and looked much better by April of 32, but   Hoover signed the Revenue Act in June which more than doubled the income tax, and boom! Again.

               FDR recognized the havoc Hoover had created and won the election on a landslide in 32 running on a reform package.  He promised to cut federal spending by 25 per cent, he promised a balanced budget and he promised sound gold currency.  Within the first 100 days he had seized the country’s gold, devalued the dollar by 40 per cent and government spending skyrocketed.  He passed a minimum wage law.  Boom! The National Industrial recovery act in 1933.  Boom! Tax rates at 90 per cent in 1934.  Boom!  The Civil Works Administration and when that didn’t work, boom! Boom!

         Battered at every turn, the economy would not recover to 1929 heights until 1959. 

             Left alone, the economy creates its own rhythm.  Our country has suffered an economic down-turn every 20 years since 1779.  Notice on the graph that only three times did it last more than two years, always in periods of intensive government intervention, under Hoover and FDR in the thirties, under Jimmy Carter in the 70’s, and most recently under George Bush and Barak Obama.  And don’t let the media trick you into thinking the depression is over.  The real unemployment rate is 25 per cent, a little higher than it was during the “great depression.”