Keynes ended a depression around about the time of 1936.

Protip: Bitter conservative jpegs might not be the best way to improve your knowledge of economics.

Cue corporatist apologists in 3... 2... 1...

Nope.

Am I psychic or what?

haha old people argue about the dumbest shit...

That's taking Paul Krugman's statements out of context.

Creating a housing bubble was a necessity at that time. No one predicted the run away corporate greed and shenigans that occurred when Banks started issuing CDOs and other financial instruments that lead to the GFC due to the housing market.

Krugman mentioned all this before the crisis occurred.

Let's not forget that that only occurred because government oversight and intervention was crippled severly in the Bush era, a fact Krugman himself pointed out.

Apologists.

Full orignal article: http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html

Krugman's semi-recent commentary on the misreading of that quote: http://krugman.blogs.nytimes.com/2009/06/17/and-i-was-on-the-grassy-knoll-too/

Arnold Kling explains more fully: http://econlog.econlib.org/archives/2009/06/defending_what.html

Krugman wasn't calling for a housing bubble. He said Greenspan's fixation on using monetary policy without any attempt to directly deal with the drop in aggregate demand would lead us to one of two bad places: a double-dip recession, or a housing bubble. Krugman at the time thought the double-dip was where we'd end up, but we got the housing bubble instead.

Also, 1936 != 2002.

You and your research and your facts, NR.

Libertarians: prevented from succeeding by Keynesians (and the rest of society) since 1936.

Rapists.

Leave out the Taxocrat "Free Houses for Poor People Who Won't Repay The Loans Act" and the history of the housing crisis is neatly rewritten.

"No, no, government interference didn't cause people to take stupid risks at ALL! It was all GREED!"

(BTW how much was Blarney Fwank's bonus after running Fan-Fred into the ground)?



"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 now if I am wrong somebody else can have my job. I want to see this country prosper. 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 enormous debt to boot."

--Henry Morgenthau, Secretary of Treasury under FDR, as written in his personal diary in May 1939

"NO NO, FDR socialism ENDED the Depression! It just prolonged ITSELF for 14 years afterward!"

@quantumushroom the response you'd get from modern Keynesians like Krugman is that the New Deal wasn't a big enough fiscal stimulus to fully end the depression and bring the country back to full employment, but it did help.

Look at unemployment during the Great Depression: http://en.wikipedia.org/wiki/File:US_Unemployment_1910-1960.gif

It rose starting in 1929, and kept going up while Herbert Hoover implemented tight monetary policy, fiscal austerity, and refused to interfere with the banking sector out of concern for creating moral hazard. The peak closely coincides with FDR's New Deal taking effect. After that, it fell fairly rapidly. As spending grew, GDP went up, and unemployment went down. The reversal happened in 1937 when they decided that the depression must be over, and switched to trying to reduce deficits, and tighten monetary policy again (to return to the gold standard). The economy crashed in response. So they resumed it, and the economy started getting better again.

What happened at the end? Well, the giant fiscal stimulus (and not incidentally, the near total socialization of the American economy), known as World War II, which brought us back up to full employment again.

Those data points all support, not discount, Keynes's General Theory.

And yet here we are with our current SCAMULUS not helping at all.

http://www.weeklystandard.com/blogs/obama-s-economists-stimulus-has-cost-278000-job_576014.html

I'm calling FOUL, Keynes! You hear me? KEEEEYYYYNNNEEEEEESSSS!

>> ^quantumushroom:

And yet here we are with our current SCAMULUS not helping at all.
http://www.weeklystandard.com/blogs/obama-s-eco
nomists-stimulus-has-cost-278000-job_576014.html
I'm calling FOUL, Keynes! You hear me? KEEEEYYYYNNNEEEEEESSSS!


That article says it created 2.4 million jobs. Its main point was that if you take the number of jobs it's estimated to have created, and divide it by the total sum of the bill, it was expensive per job. But it wasn't buying jobs, it was buying goods and services.

Of course you can get more jobs per dollar if the government just directly hires people, and puts them to work doing what needs to be done (like build cars, sweep floors, grow corn, etc.). But that's socialism, so instead we just buy stuff from the market, and let the market decide how many (and which) jobs get created.

You know even those numbers are lies, NR. For chrissakes, the liars switched from "jobs created" to "lives touched" late last year.

Sorry Dudes, I know you mean well, but you are defending the indefensible. Obama has failed, just like those of us who know socialism (or semi-socialism) fails knew he would. Couldn't care less that the moonbats hate him for not being Marx enough, His Earness has failed.

Government jobs are not real jobs as they do not reflect market needs. With government, when 30 desk jockeys can replace 300, the other 270 stay on board for the ride (and pensions). No wonder we're headed for Greece.

Here's a RADICAL idea: let people keep more of their own money, across the board. Recognize it's not the government's money, even if it prints the sh1t.

Another wonderful side effect of letting people keep the lion's share of what they earn: you get a properly-restrained government too small to rape and plunder in the name of "social justice" or any other bullsh1t of the day.

And lay off Herb Hoover, moonbats, he was an unwilling or ignorant ally of yours.

wiki:

Franklin D. Roosevelt blasted (Hoover) for spending and taxing too much, increasing national debt, raising tariffs and blocking trade, as well as placing millions on the dole of the government. Roosevelt attacked Hoover for "reckless and extravagant" spending, of thinking "that we ought to center control of everything in Washington as rapidly as possible."[54] Roosevelt's running mate, John Nance Garner, accused the Republican of "leading the country down the path of socialism".[55]

Ironically, these policies pale beside the more drastic steps taken under Franklin D. Roosevelt's administration later as part of the New Deal. Hoover's opponents charge that his policies came too little, and too late, and did not work. Even as he asked Congress for legislation, he reiterated his view that while people must not suffer from hunger and cold, caring for them must be primarily a local and voluntary responsibility.

Even so, New Dealer Rexford Tugwell[56] later remarked that although no one would say so at the time, "practically the whole New Deal was extrapolated from programs that Hoover started."




>> ^NetRunner:

>> ^quantumushroom:
And yet here we are with our current SCAMULUS not helping at all.
http://www.weeklystandard.com/blogs/obama-s-eco
nomists-stimulus-has-cost-278000-job_576014.html
I'm calling FOUL, Keynes! You hear me? KEEEEYYYYNNNEEEEEESSSS!

That article says it created 2.4 million jobs. Its main point was that if you take the number of jobs it's estimated to have created, and divide it by the total sum of the bill, it was expensive per job. But it wasn't buying jobs, it was buying goods and services.
Of course you can get more jobs per dollar if the government just directly hires people, and puts them to work doing what needs to be done (like build cars, sweep floors, grow corn, etc.). But that's socialism, so instead we just buy stuff from the market, and let the market decide how many (and which) jobs get created.

>> ^quantumushroom:

You know even those numbers are lies, NR. For chrissakes, the liars switched from "jobs created" to "lives touched" late last year.

Hey, you're the one that put that article forward, not me.

I think it's impossible to actually track specific jobs created by the stimulus. You can make estimates based on theory, but that's not really evidence, either for or against.

What's a bit easier to measure is the overall employment trend. You'll love that these are Nancy Pelosi's charts, but they're based on BLS statistics (what the whole economic world uses as the source for data on employment, BTW).

Here's the chart of the recession through to May's jobs report (June's report will probably come out this week). The stimulus bill was passed in February of 2009. The trend changed immediately, with the job losses slowing, and then turning into gains.

>> ^quantumushroom:
Government jobs are not real jobs as they do not reflect market needs.

That's my point, the stimulus wasn't about creating "government" jobs, it was an attempt to reverse the unemployment trend in the private sector. Right now the biggest drag on the jobs reports coming out is job losses in the public sector.

Here's a chart showing the last year in the ongoing march of Obama's supposed socialist revival. Private sector jobs up, public sector jobs down.

>> ^quantumushroom:
Here's a RADICAL idea: let people keep more of their own money, across the board.

I know it was another thread, but that idea's been tried. Hell, it's still being done to a greater degree than it's been done since well before I was born. That idea has clearly and unambiguously been tried, and has utterly failed to produce anything like what Republicans from Reagan forward have claimed it would.

>> ^quantumushroom:
And lay off Herb Hoover, moonbats, he was an unwilling or ignorant ally of yours.
wiki:
<long quote about things FDR said on the campaign trail>

A couple paragraphs above that, you find a description of Hoover's actual policies:

Calls for greater government assistance increased as the U.S. economy continued to decline. Hoover rejected direct federal relief payments to individuals, as he believed that a dole would be addictive, and reduce the incentive to work. He was also a firm believer in balanced budgets, and was unwilling to run a budget deficit to fund welfare programs.[45] However, Hoover did pursue many policies in an attempt to pull the country out of depression. In 1929, Hoover authorized the Mexican Repatriation program to combat rampant unemployment, reduce the burden on municipal aid services, and remove people seen as usurpers of American jobs. The program was largely a forced migration of approximately 500,000 Mexicans and Mexican Americans to Mexico, and continued until 1937. In June 1930, over the objection of many economists, Congress approved and Hoover signed into law the Smoot-Hawley Tariff Act. The legislation raised tariffs on thousands of imported items. The intent of the Act was to encourage the purchase of American-made products by increasing the cost of imported goods, while raising revenue for the federal government and protecting farmers. However, economic depression now spread through much of the world, and other nations increased tariffs on American-made goods in retaliation, reducing international trade, and worsening the Depression.[46]

In 1931, Hoover issued the Hoover Moratorium, calling for a one-year halt in reparation payments by Germany to France and in the payment of Allied war debts to the United States. The plan was met with much opposition, especially from France, who saw significant losses to Germany during World War I. The Moratorium did little to ease economic declines. As the moratorium neared its expiration the following year, an attempt to find a permanent solution was made at the Lausanne Conference of 1932. A working compromise was never established, and by the start of World War II, reparations payments had stopped completely.[47][48] Hoover in 1931 urged the major banks in the country to form a consortium known as the National Credit Corporation (NCC).[49] The NCC was an example of Hoover's belief in volunteerism as a mechanism in aiding the economy. Hoover encouraged NCC member banks to provide loans to smaller banks to prevent them from collapsing. The banks within the NCC were often reluctant to provide loans, usually requiring banks to provide their largest assets as collateral. It quickly became apparent that the NCC would be incapable of fixing the problems it was designed to solve, and it was replaced by the Reconstruction Finance Corporation.

That all sounds very familiar to me as modern-day Republican policy proposals -- eschew direct assistance to the unemployed, try to boost employment by deporting Mexicans, attempt to defer interest payments on foreign debts, and ask banks to put in place their own policies to fix their own shortcomings rather than resort to regulation, and stick to preserving the gold standard at all costs. The only thing out of place is tariffs, but I've seen those mentioned from the conservative rank and file in discussions about what our response to China's ascendance should be.

In the election year of 1932, with unemployment at 25% and with people throwing things at his motorcade everywhere he went, he did start engaging in a little attempt at mortgage loan stabilization and fiscal stimulus, and they did seem to make a positive impact, but were too little too late, but they weren't policies that were the centerpiece of his administration, they were things he tried to do out of desperation.

It's also quite true that FDR in 1932 ran on a platform that included promises to balance the budget, but that's because it'd been the Democratic that had always been scolds on that topic up to that point. Besides, FDR was no student of Keynes; General Theory wasn't even published until 1936. I don't really know where the ideas for FDR's New Deal came from. I'm guessing just simple populism, and maybe some Keynesian influence amongst his economic advisers.

The Big Lie About The Great Depression

Ben Shapiro

In her vital and fascinating new book, "The Forgotten Man: A New History of the Great Depression," Amity Shlaes tells a story about national icon President Franklin Delano Roosevelt. Shortly after FDR took office, Shlaes explains, he began arbitrarily tinkering with the price of gold. "One day he would move the price up several cents; another, a few more," writes Shlaes.

One particular morning, Shlaes relates, FDR informed his "brain trust" that he was considering raising the price of gold by 21 cents. His advisers asked why 21 cents was the appropriate figure. "It's a lucky number," stated Roosevelt, "because it's three times seven." Henry Morgenthau, a member of the "brain trust," later wrote: "If anybody knew how we really set the gold price through a combination of lucky numbers, etc., I think they would be frightened."

Ignorance of basic economics — and the concurrent attempt to obfuscate that ignorance by employing class-conscious demagoguery — remains the staple of the Democratic Party. For over 60 years, Democrats and their allies in the media and public school system have taught that the Great Depression was an inevitable result of laissez-faire economic policies, and that only the Keynesian policies of the FDR government allowed America to emerge from the ashes. The Great Depression, for the left, provides conclusive proof that when it comes to economics, government works better than business.

This point of view has a sterling reputation. That reputation, unsurprisingly, was created by FDR himself. FDR turned the Great Depression into a morality play — a morality play in which those in favor of individual initiative were the sinners, while those who relied on government were the saints. "We have always known that heedless self-interest was bad morals," Roosevelt intoned in 1937. "We know now that it is bad economics."

This, as Shlaes convincingly shows, is hogwash. The Depression lasted nearly a decade longer than it should have, due almost entirely to governmental meddling under both Herbert Hoover and FDR. High tariffs and government-sponsored deflation followed by enormous taxation and unthinkable government expenditures turned a stock market stumble into a decade-long nightmare. Only the devastation of World War II lifted America out of the mire, solving the drastic unemployment problem and providing a legitimate medium for FDR's pre-war wartime policies.

Nonetheless, the myth of a grinning FDR leading America forth from the soup kitchens remains potent.
And today's Democrats rely desperately on that fading falsehood, hoping to bolster their bad economics with worse history. Hillary Clinton routinely hijacks Rooseveltian language, most recently disparaging the "on your own society" in favor of a "we're all in it together society." John Edwards' "two Americas" nonsense drips of FDR's class warfare. Never mind that Keynesian economics does not work. Never mind that it promotes unemployment, discourages investment and quashes entrepreneurship. For Democrats, the image of government-as-friend is more important than a government that actually protects the rights that breed prosperity.

"The impression of recovery — the impression that a President was bending the old rules and, drawing upon his own courage and flamboyance in adversity and illness, stirring things up on behalf of the down-and-out — mattered more than any miscalculations in the moot mathematics of economics," novelist-cum-economist John Updike recently wrote, defending FDR from Shlaes' critique. "Business, of which Shlaes is so solicitous, is basically merciless, geared to maximize profit. Government is ultimately a human transaction, and Roosevelt put a cheerful, defiant, caring face on government at a time when faith in democracy was ebbing throughout the Western world. For this inspirational feat he is the twentieth century's greatest President, to rank with Lincoln and Washington as symbolic figures for a nation to live by."

For Updike and his allies, image trumps reality. The supposed harshness of the business world matters more for Updike than the fact that profit incentives promote economic growth, efficiency and creativity. The "caring face" of government is more important for Updike than creating a framework that produces jobs and affordable commodities. Updike's sporadically employed father liked FDR because FDR made him feel "less alone." No doubt Updike's father would have felt less alone if he had been steadily employed by a private enterprise — the kind of enterprise stifled by Roosevelt.

"We are beginning to wipe out the line that divides the practical from the ideal," FDR announced in 1937, as unemployment stood at 15 percent, "and in so doing we are fashioning an instrument of unimagined power for the establishment of a morally better world." Today's Democrats continue to embrace the vision, even at the cost of a prosperous reality.