What ended the Great Depression? #1

It was neither massive federal spending during the Depression nor even more massive federal spending during World War II that ended the Great Depression.

That’s what I was taught in school and what most people believe today.

Stephen Moore explains the WWII part of the falsehood in his article How did the Gret Depression actually run its course?

FDR and his whiz kids were totally convinced that the economy would completely collapse after the end of the war. They planned but fortunately did not implement a New Deal II. Doing so would have strangled the economy, perhaps for yet another decade.

Here is the conclusion to the article: (more…)

Quick recap of damage from the New Deal

Lack of jobs for a decade and a half in the Great Depression. What could have slowed the economic recovery that started to appear a few times?

Amity Schlaes provides a quick summary in her Forbes column, Roosevelts versus Plutocrats, in which she also describes the slant and bias in the new PBS series on the Roosevelts.

After the turn of the century, Teddy Roosevelt started his war on big business by going after railroads and coal. The railroad industry was already weak and the litigation toppled a tottering industry. The far less regulated trucking industry made sure rails never recovered.


Appeals court says devastation from New Deal is still okay; We lost a hero who also suffered at the hands of the New Deal

Did you know the enlightened wizards of the New Deal worked out a plan that raisin producers had to turn over a percentage of their crop to the government and not get paid for the raisins?

Yes, that was actually a plan developed back in the ‘30s.

Did you know that plan is still in place? Eighty years later?

(Cross posted from my other blog, Outrun Change.)

I discussed that a year ago – Economic destruction from the New Deal just keeps rolling on.

The lawsuit I mentioned back then involved farmers who were told to give 47% of their ’02 crop and 30% of their ’03 crop to the government without compensation.  The case went to the Supreme Court, which ruled the farmers did actually have standing to sue the government. The case went to the 9th Circuit Court for consideration of their claims.

Guess what?


The minimum wage made unemployment worse during the Great Depression

Minimum wage laws also extended the Depression. That from Amity Shlaes, in The Minimum Wage Makes Depressions Worse. (cross post from Outrun Change.)

In a lousy economy, forcing wages above the value of the output makes employment worse. When there is currency deflation the effect is compounded. Adding another layer of minimums every couple of years and slowly gathering more employers into the minimum wage rules further compounds the effect.

If you can’t afford the staff you have, and you can’t reduce wages, what options are left? Lay off more employees. Shrink your company.


200 years of economics history in one editorial, which explains how we got into our current mess

(Cross-post from my other blog, Outrun Change.)

World War I generated most of the horrible disasters we’ve seen in the last 100 years.

With the possible exception of the decline of the Roman Empire, World War I was the greatest disaster in human history.

It contributed mightily to the Great Depression, which fed the Nazi revolution. That in turn led to WWII.

The war unleashed the totalitarian ideologies of communism, fascism and Naziism, which very nearly destroyed Western civilization. Their poisonous legacy lives on in radical Islamic extremism.


Q: Was the middle class created by federal law or large, profit-hungry corporations?

A: It wasn’t the generosity of Congress.

Instead, Large, Profit-hungry Corporations Helped Create the Middle Class, as explained by Voices for Reason.

Big companies looking to make a buck created large supermarkets containing refrigerated produce and a large selection of dry goods. The article quotes The Great A&P, which points out before the age of large supermarkets: (more…)

Q: Did the New Deal end or extend the Great Depression?

A:  Extend.

That’s the conclusion of Dr. Lee Ohanian, Professor of Economics at UCLA, as explained in his video Did FRD End or Extend the Depression?



The primary reason cited by the Professor is artificial increases in prices and wages driven by federal policy, specifically the National Industrial Recovery Act. (more…)