Yes, I am a voracious reader and I do know how Hoover tried to balance the budget.
However, the mechanics of the operation are not as important as the operation itself. The operation was the problem. Everything else is just details.
Hoover was badly misinformed and totally misguided on what was needed to get the economy back on track, but he did hold many bullshit meeting to give the illusion that he was doing something.
He believed that tightening credit and balancing the budget was what needed. Just about every damn thing that administration did only served to further strangle the already convulsing economy. They raised tariffs so that other countries suffered more and the Great Depression become a Global Depression.
The Great Depression did not have to be so deep or so prolonged if the leaders of this country had loosened credit and worked to boost the economy instead of trying to balanced the damn budget at the worst possible time.
The Great Recession that was a bitter legacy of Bush could easily have become another Great Depression if this country had not taken drastic steps to revive the economy and bail out Detroit.
. . . Furthermore you should note that you can raise the level of your debate if you can stop making tired and worn-out references to kool-aid. That is just thread-bare joke that has outlived its humor long ago and used as a throw-down argument when people have nothing of real substance to say.
Originally Posted by Fast Gunn
First of all, let me just suggest that if you're going to lambaste a couple of people for the invocation of Kool-Aid metaphors, insinuating that they lower the quality of the debate, you might try refraining from calling those who disagree with you "dummies" (post #5), and suggesting that someone has "puny pig eyesight" (post #12). That way, you might be able to ensure that you avoid hackneyed pot and kettle metaphors!
Now to some substance:
Your statement (regarding deficit reduction) that the "mechanics of the operation" were not important, and that deficit reduction
per se was the problem, is completely wrong. Mechanics (or methods) are, in fact, of the utmost importance always and everywhere. In this case, Hoover failed the test miserably, calling for big increases in taxes to pay for all the new spending. You correctly noted that there were other factors, such as a Smoot-Hawley-inspired trade war and contractionary monetary policy. (Monetary aggregates declined by about one -third in the early 1930s.) But bad fiscal policy (taxes and spending) exacerbated the problem.
By contrast take a quick look at the recovery from the 1920-21 severe deflationary recession. It was similar to the "Great Recession" of recent years inasmuch as it followed the Fed's money pumping during the World War I period, when bubbles in assets such as farmland were created and then deflated. Thus it was in large measure a "balance sheet" recession, not a simple cyclical downturn. But instead of big-government interventions and "stimulus packages", Warren Harding responded by cutting
both taxes and
spending, and quite dramatically:
http://www.washingtonpost.com/opinio...sEQ_story.html
(Note: Although I'm not sure austerity "cured" the depression, it's clear that spending cuts did not impede recovery, thoroughly discrediting the view that an economy cannot recover from a severe recession without fiscal stimulus. If Paul Krugman had been around then, his head would surely have exploded!)
Just look at what's been going on in recent years. As we noted in another thread, the $825 billion "stimulus package" of 2009 was squandered on political payoffs and did little to boost prospects for growth. It should come as a surprise to no one that the current "recovery" is anemic compared with every other post-recession bounceback.
Big, entrenched increases in government spending
retard prospects for economic growth; they do not stimulate them. History is quite clear on that.
A quick note regarding I. B.'s last post:
It was at the time (and still is) my belief that Bill Clinton had in essence fiscally conservative beliefs. I recall hearing back in 1993 (from some people who were in a position to know!) that Rubin, not Reich, was the guy he was listening to. Bob Reich is a clueless, old-time Keynesian who wanted to push through all sorts of government spending programs in an effort to kick-start the economy, which was still struggling to recover from the mild 1990-91 recession. But Bob Rubin, who clearly understood the issue better, would have none of it and steered the president toward deficit reduction -- advising that if a fiscally irresponsible course were chosen, "bond vigilantes" would eventually exact their revenge. It is my view that all of this was unfolding as early as midyear 1993. Of course, the aggressive 104th Congress offerred quite an assist beginning in early 1995. Policy went in the right direction for several years, and during the period, government spending as a percentage of GDP
fell by about three percentage points. It is no accident that we then enjoyed one of the best periods of prosperity in our nation's history.
I think it's also worth mentioning that Clinton also sought to run a strong-dollar Treasury, and certainly succeeded in this effort given that gold prices in the late '90s were in the $250/oz. range, and oil prices were considerably less than one-fifth what they are today.
Generally speaking, Nixon, Carter, G. W. Bush, and Obama were all weak dollar presidents, while Reagan and Clinton were relatively strong-dollar presidents.
The results speak for themselves.
