Ominous parallels between Obama and failed economic policies of FDR

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  • Truthseeker SLO, CA
    Aug. 17, 2011 10:38 p.m.

    More Utahns ought to know about Marriner Eccles, born in Logan Utah, attended Brigham Young College, LDS mission to Scotland, millionaire by age 22 and Chairman of the Fed under FDR. Eccles became involved with the creation of the Emergency Banking Act of 1933 and the Federal Deposit Insurance Corporation. Today, the building that houses the Federal Reserve bears his name.

    Marriner Eccles is often seen as an early proponent of demand stimulus projects to fend off the ravages of the Great Depression. He wrote: As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth ... to provide men with buying power. ... Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. ... The other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.".

  • Screwdriver Casa Grande, AZ
    Aug. 17, 2011 8:52 p.m.

    The tea-party are neo-confederates, thay hate america it's government and most of it's people.

    AUSTIN, Texas 2009 -- Texas Gov. Rick Perry fired up an anti-tax "tea party" Wednesday with his stance against the federal government and for states' rights as some in his U.S. flag-waving audience shouted, "Secede!"

  • the truth Holladay, UT
    Aug. 17, 2011 7:59 p.m.

    RE: ljeppson

    You forgot to mention:

    1. After all temporary jobs ended unem[plymewnt went back up after 1936 to over 20%

    temporary government project jobs didn't work.

    2. FDR continued and put into over drive all his predeccesor programs.

    FDR didn't fix a thing.

    3. THe depression did ot end until AFTER he war.

    the war did not solve anything.


    IF want the real solutions look to what president cooleridege did circa 1920 to end a severe recession created by woodrow..

    He got government out of the way of the people!

  • JustGordon Cottonwood Heights, UT
    Aug. 17, 2011 7:10 p.m.

    News flash...the tea party is less popular in the US than atheists and Muslims. Good job of reading the tea leaves!

  • T. Party Pleasant Grove, UT
    Aug. 17, 2011 3:22 p.m.

    @ljeppson: Earl is using the language with precision. "Cronies" is exactly the right word.

    Earl has pointed out another difference, by the way, between tax cuts -- which benefits the general population -- and stimulus spending -- which enriches friends of the administration in a targeted manner (in case you are still wondering why Reagan succeeded and Obama failed.)

    Labor union bosses don't use money very efficiently to expand the economy.

  • Earl Sandy, UT
    Aug. 17, 2011 3:03 p.m.

    Sorry, Lew. I know how much you revere FDR. But I don't. His presidency was one of the worst things to happen in the 20th century. I have no respect for him, or almost any other president. The one thing they all have in common is that they lie. The one exception might be Jimmy Carter. He's about the only one I have a scintilla of respect for.

  • Brett Marietta, GA
    Aug. 17, 2011 2:34 p.m.

    Earl is right,

    Additionally, if WWII spending ended the recession, why didn't the DOW show it? In 1945, it was the same level it was in 1939.

    It is easier to decrease unemployment when 416,800 people die in a war, not a very practical solution for decreasing unemployment now.

    It has been said that the passage of the Smoot-Hawley tariff was a significant match that sparked the Great Depression. True enough, but by 1944 the tide was happily turning when it came to trade. The very legislation that put us on the path to economic decline was reversed in a very substantial way in 1944.

    New Deal legislation limited the hours people could work, in contrast, the government got out of the way during the war and allowed people to work, production increased significantly.

    Compare this to the economic downturn in 1921, which initially was worse than the Great Depression, but it turned out to be relatively short and weak precisely because the federal government did nothing.

  • ljeppson Salt Lake City, UT
    Aug. 17, 2011 2:24 p.m.

    RE: Earl "That took no genius at all for FDR and his cronies." Cronies? I was carefully reading your remarks when I hit this. A little respect please.

  • Brett Marietta, GA
    Aug. 17, 2011 2:21 p.m.

    glendenbg

    You are leaving out data as well. Hoover did not cut spending, he spent a ton.

    In 1929, Federal spending increased $166 million or 5 percent.
    In 1930, it rose by $193 million over the preceding year, at 6 percent.
    The pattern continued in 1931, with an increase of $257 million, nearly 8 percent.
    And for 1932, it rose a whopping 30 percent, by $1.08 billion.
    All told, federal spending increased 57 percent in this four-year period, according to the Office of Budget and Management Web site.

    During that time, GDP declined by 25%; unemployment rose to 25%, as you mentioned. If you want to advocate Keynesian economics, why didn't all this extra spending do anything?

    Talk about using highly selective in its use of data, your data ends at 1936, why? Because FDR raised taxes to pay for the deficit spending and the economy went in a free fall. Looking at all the data, (not just 1933-36) it is clear that the New Deal DID NOT work.

    And the war spending didn't get us out of the depression either, but that's another story.

  • Earl Sandy, UT
    Aug. 17, 2011 2:07 p.m.

    It's not that hard to grow GDP when you're down at the bottom to start. That took no genius at all for FDR and his cronies. They just started another bubble that eventually burst, as predictable. You guys need to stop giving him so much credit for that.

    As for the WWII argument, that's what this is all about. That's the ultimate example for Keynesians of the deficit-spending success story. But those of you who cling to it are living in the past. First, those GDP figures during wartime were skewed by wage and price controls. They were extremely unreliable for comparing to non-command economies. It's an oranges and apples comparison. Second, Robert Higgs, a noted political economist, has demonstrated to an almost irrefutable degree that the "WWII recovery" didn't begin to take effect until a year or more after war end. It finally took hold because FDR's policies were abandoned by Truman and the hostility toward business came to an end. Keynesians warned Truman that leaving those polices would throw us back into a depression. The opposite happened. The same thing will happen now if Obama stops listening to Bernanke, Geithner, Krugman, etc.

  • Irony Guy Bountiful, Utah
    Aug. 17, 2011 1:56 p.m.

    This nation under FDR saw its highest and steepest GDP growth in history -- BEFORE WW2. It has not been matched before nor since.

  • Brother Chuck Schroeder A Tropical Paradise USA, FL
    Aug. 17, 2011 1:45 p.m.

    Walter Williams is like calling on an arsonist to help put out a fire, don't even compare how much debt we oue.

    Here are the 10 developed countries with the most gross debt, compared to GDP, based on the OECD's projections for 2011:

    1. Japan - 213 percent of GDP
    2. Greece - 157 percent
    3. Italy - 129 percent
    4. Iceland - 121 percent
    5. Ireland - 120 percent
    6. Portugal - 111 percent
    7. United States - 101 percent
    8. Belgium - 101 percent
    9. France - 97 percent
    10. United Kingdom - 89 percent

    Worries about the growing U.S. debt, combined with concerns about the uncertain strategy for dealing with that debt, played into Standard & Poor's recent decision to cut the rating on the nations long-term debt securities one notch to AA+ from the highest AAA rating.

    Better get your fact's straight.

    This is 2011, not 1945.

    Your still living in the illusion of WWII and The Great Depression. That's all water under the bridge.

    So other then being a Obama basher, what's your real point, did "Human Events" toss you out again?.

    That's my truthful views.

  • glendenbg Salt Lake City, UT
    Aug. 17, 2011 1:17 p.m.

    The publication Williams cites is highly selective in its use of data.

    From 1929 to 1932, GDP declined by 25%; unemployment rose to 25%. There was no unemployment insurance. Factories, businesses and banks were closing all over the nation. Homes and farms were being foreclosed upon. The economy had collapsed. The Hoover administration did exactly what Williams and other anti-New Dealers claim would have worked - and things only got worse year after year.

    In 1933, FDR was inaugurated in March and launched the New Deal. By 1936, unemployment was down by 25%, GDP had grown 36%. Believing the crisis was over, FDR pushed for a balanced budget - cutting back New Deal programs and the economy went into recession. So they started the programs back up again - voila, GDP grew 8% a year.

    For those who say it was WWII that pulled us out. What do you think that was? WWII was the New Deal on steroids. Government spending rose to 46% of GDP; factories were put to work building things for the government. At its peak, 10% of the population was in the military. It was Keynesiansim on a vast scale. And it worked.

  • Earl Sandy, UT
    Aug. 17, 2011 12:53 p.m.

    ljeppson is correct about both of his last comments, but he needs to consider this: Obama and FDR inherited economies that were falling (not quite in freefall) and made them worse! It was Keynesianism that exacerbated and lengthened the longest depression in American history.

    It's true that the "Reagan miracle" was merely another form of stimulus. And it resulted in an eventual recession, as every stimulus does.

    Stimulus and correction are inseparable. Stop the stimulus and you stop the corrections. It's that easy. Recessions come and go, but we're way beyond that. We're into a correction that the government Keynesians refuse to allow. They're living in the illusion that you can stimulate your way out of a correction. All you can do is delay it and make it worse, which is exactly what's happening now.

  • ljeppson Salt Lake City, UT
    Aug. 17, 2011 11:17 a.m.

    Re: Tea Party - "Stimulus spending didn't work for Roosevelt, it didn't work for Bush, and it didn't work the multiple times Obama has tried it. " Consider something else. Stimulus tax cuts did work for Reagan. Reagan ran up huge deficits via tax cuts. This was stimulus a la Keynes (the Keynesian model includes running deficits via tax cuts as well as spending increases). The Reagan recovery was a Keynesian one!

  • ljeppson Salt Lake City, UT
    Aug. 17, 2011 10:55 a.m.

    Another parallel Williams might want to consider is that both Obama and FDR inherited economies in free fall. And don't forget it.

  • Brett Marietta, GA
    Aug. 17, 2011 10:16 a.m.

    one vote

    Money doesn't change the facts.

    Any chance you can make an argument on the merits of Williams argument?

    Can you make a case for why Obama's policies are NOT like Roosevelt's? Or can you explain why "this time is different?"

  • one vote Salt Lake City, UT
    Aug. 17, 2011 9:48 a.m.

    It is apparent from articles such as this and on local media outlets that the million dollar media anti-obama 2012 elections has begun. The conservative media is funded by the billionaires seeking to keep lower taxes. These will become three time dailies as dictated by the editors of conservative newspapers.

  • Ultra Bob Cottonwood Heights, UT
    Aug. 17, 2011 9:34 a.m.

    The problem with history is that the number of versions are only limited by the number of people in existence at the time. Today's politicians and their minions rewrite history to prove their point and fool the public.

    The facts I believe:

    Boom times and recessions are promoted and fed as a part of the economic strategy of people and groups in their quest to own and control the wealth of the world.

    Consumer spending is the main force that moves the economy. When spending goes up, the economy goes up. When spending goes down, the economy goes down.

    Freedom varies inversely between business and worker/consumers. If one side gains more freedom it is at the expense of freedoms for the other.

    Business has overgrown it's value to our society.

  • Screwdriver Casa Grande, AZ
    Aug. 17, 2011 9:08 a.m.

    Wow I was sweating there mountainman. Looked like you had me for a second... until I decided to compare investemnts of Bush VS Obama.

    Ok Iraq pays back 400 million of 1 trillion in 11 years..... mmmmm

    GM paid back 8 BILLION with a B in less than 2 years - during a recession....

    Clear winner is Obama in investement choices. I'm betting Libya turns out fine too.

  • JoeBlow Miami Area, Fl
    Aug. 17, 2011 9:04 a.m.

    Isn't it comforting to only see the problems caused by the other side?

    If we are honest with ourselves, and drop the partisan spin, we would see that both parties are steering this country off of a cliff.

    Perfect example is just above, where one can only see where the Dems have created crisis for gains.

    Remember how the Homeland security level would be elevated before any election?
    Remember how we used the term "Mushroom cloud" to garner support for the war in Iraq?

    Until we hold both parties accountable, things will not change.

    But, I guess you cant hold your own party accountable until you can see their faults.

    Does not happen with most partisans.

    C'mon Independents. Rise up and take control.

  • procuradorfiscal Tooele, UT
    Aug. 17, 2011 8:54 a.m.

    Obama's administration became famous for its motto, "Never let a crisis go to waste." As Dr. Williams points out, it seems now to have shifted its emphasis from venal political profiteering during naturally occurring crises, to artificially producing and prolonging them.

    This is to be expected, and is wholly consistent with standard evolutionary socialist tactics and dogma. Liberals crave crises to frighten the ignorant into, not just acquiescing to an otherwise unpalatable and unattainable agenda, but into a lemming-like defense of it.

    Previous posters demonstrate an apparent short-term wisdom in this regime's contrivance, but it's hard to see why any American -- even famously gullible liberal elites and academics -- would embrace such a tired, failed, thoroughly discredited socialist economic stratagem.

    Particularly, when history definitively demonstrates that those policies are certain to create another 16-year depression that can only be shaken off by world war.

  • JoeBlow Miami Area, Fl
    Aug. 17, 2011 8:50 a.m.

    Mountanman,

    You forgot to include that Iraq has cost us a TRILLION or so and Libya is under a billion.

    Apples to Apples?

    I am not supportive of either war, but $400 million is nothing compared to what we spent there (and what did we get for it?).

  • T. Party Pleasant Grove, UT
    Aug. 17, 2011 8:32 a.m.

    John Maynard Keynes had been proven wrong over and over again. Stimulus spending didn't work for Roosevelt, it didn't work for Bush, and it didn't work the multiple times Obama has tried it. So what is Obama's latest proposal? Spend more money. That is doubling down on stupid.

  • Mountanman Hayden, ID
    Aug. 17, 2011 8:29 a.m.

    @ Screwdriver. According to a newspaper article recently, Iraq has repaid the US $400 million. How about Libya? Thanks for asking!

  • Earl Sandy, UT
    Aug. 17, 2011 8:28 a.m.

    @ Roland: so the minority is always wrong, is that what you're saying? It's the economic policies of Keynes and Samuelson that have shaped the majority of economists today, and look where it's got us. Williams is correct about the comparison between the two presidents. Both of them have turned the economy over to advisers who adopted Keynesian fallacies.

    There is no such thing as the multiplier effect, and there is no such thing as priming the economy with deficit spending. That sort of thinking is where economic bubbles and high unemployment come from. Yes, Keynesianism is the source of higher unemployment and inflation. How much longer do we have to see our economy destroyed by this sophistry before Keynesians finally admit they were wrong? I'm afraid it won't even be after they destroy it completely.

  • Screwdriver Casa Grande, AZ
    Aug. 17, 2011 8:18 a.m.

    Weird how conservatives sell government spending on a war as good for the economy but spending on teachers, fire fighters and road construction is desructive.

    That says a lot about your personalities.

    BTW how it getting the oil to pay for the Iraq war comming along?

  • Brett Marietta, GA
    Aug. 17, 2011 8:14 a.m.

    Roland:
    "opinions ... shared by only a very small ... share of economists."

    It was FDR's very own treasury secretary. That's a pretty significant opinion.

    But this article was filled far more with facts than opinions.

    increasing federal spending to $10 billion while revenues were only $3 billion.
    Between 1933 and 1936, government spending rose by more than 83 percent.
    Federal debt increased 73 percent.
    legislation that raised the top income tax rate to 79 percent and then later to 90 percent.
    Roosevelt proposed a 99.5 percent marginal tax rate on incomes more than $100,000.
    factory employment and payrolls had increased by 23 percent and 35 percent.
    oThen came the NRA, . industrial production dropped 25 percent."
    National Labor Relations Act, . gave them new powers, . pushed productivity down sharply and unemployment up dramatically.
    In 1938, Roosevelt's New Deal produced the nation's first depression within a depression.
    o The stock market crashed again, losing nearly 50 percent between August 1937 and March 1938, and
    o unemployment climbed back to 20 percent.

    Most economists agree the New Deal was a failure, and say it wasn't until WWII, that we got out of the depression.

  • Eli Tesecular PhD Salt Lake City, UT
    Aug. 17, 2011 7:47 a.m.

    Printing and spending trillions more will work this time, if we just give it a chance. And don't forget.... we've got hope and change on our side in addition to faster printing presses.

  • one vote Salt Lake City, UT
    Aug. 17, 2011 7:10 a.m.

    It is not the President that controls the economy. The economy controls what is going on. The bad economy cannot be blamed on Bush or Obama. It is ironic that people that hate the federal government want a President to control the economy. However, reactionary anti-business attempts by the tea party to destroy credit or drastically reduce revenue will effect economic cycles.

  • Mountanman Hayden, ID
    Aug. 17, 2011 6:59 a.m.

    Another excellent article by Dr. Williams! Should be required reading in every economics and US history course in America! History is indeed repeating itself! Some who think denial is a river in Eygpt will refute this truth but as the great Winston Churchill once said, "Truth is incontrovertable. Malace will always attack it, ignorance will always deride it, but in the end, there it (truth) is?

  • ljeppson Salt Lake City, UT
    Aug. 17, 2011 12:47 a.m.

    When FDR took office the unemployment rate was 25% (!). By 1936, the end of his first term, the unemployment rate was 17%, still high but a whole lot lower that 25%. I remember my late father comparing Hoover (yes I know you tea partyers see no difference) and Roosevelt. Hoover said over and over again "there's nothing that can be done." Roosevelt said "there's something to be done and we're going to do it." Doesn't Williams understand that we could have ended up with our own version of Hitler absent FDR?

  • Roland Kayser Cottonwood Heights, UT
    Aug. 17, 2011 12:10 a.m.

    It should be noted that the opinions expressed in this piece are shared by only a very small, but very vocal, share of economists.

    The highest economic growth rate ever recorded during a single presidential term during peacetime was F.D.R.'s first term. Spin that any way you want.