Great Depression
By Fatcat44
@Fatcat44 (1141)
United States
November 15, 2011 11:00pm CST
I just watched a film on www.dickmorris.com about the great depressions.
It was interesting that as the economy was falling Hoover started some programs and raised taxes to make up his budget deficit. Which in return caused the economy fall dramatically.
When Franklin was voted in he did a lot of the same.
Also, social security was started in the 1930's and did not pay out until the 1940s. This pulled a lot of spending power out of the economy and made the economy fall further.
So my point is to Democrats that raising taxes is sure to make the economy fall further.
1 person likes this
6 responses
@bobmnu (8157)
• United States
16 Nov 11
What most people do not know is that in 1920 we had a down turn in the economy that was worse than the great depression. What President Coolidge did was to cut taxes and reduce government spending. Things bottomed out and started ot rebound in about 6 months. After the 1929 stock market crash the economy was starting to recover when the government stepped in and pass a restrictive tariff and add more regulations to the economy. This made things worse and it took a war to start to get us out of the depression but it was into the 1950's before there was any real growth in the economy. What the government is doing now could well lead us into a decade of high unemployment, low growth and a stagnant economy.
1 person likes this
@bobmnu (8157)
• United States
17 Nov 11
Raising taxes during a recession is bad policy. It makes things cost more and it takes capital out of the economy. Every report that comes from the business sector calls for reduced taxes and fewer regulations from the government. For every dollar that the government collects it cost them up to 25% of the amount collected for administrative expenses.
@bagarad (14283)
• Paso Robles, California
16 Nov 11
I think at the present time, the general goal of this administration is to bring the economy down to the point that everyone will be dependent, as to have better control. I'm still hoping a fair election will be possible in 2012. I sure hope there will be a paper trail to follow if the people who program the machines that count the votes try anything funny. I hope there will even be an election. Maybe the Occupy Movement will start such unrest martial law will be declared so the elections can be postponed or canceled. Maybe that's also part of the grand scheme. Or maybe I'm paranoid.
@bagarad (14283)
• Paso Robles, California
16 Nov 11
Looks like Occupy has been sent home, so that's good. Hope they won't be back in the spring with warmer weather. I still think we will have a lot of fraud come election day.
@sid556 (30953)
• United States
16 Nov 11
Hi Bagarad,
Did they go home? Last I heard, they were only being moved in order to clean up the place and that they could no longer camp out there but I thought they were going to be allowed back. They didn't sound as if they were giving up to me. Did something change that? As for being paranoid, we can only hope but I will say that you aren't alone in that feeling. My brother has a lot of theories on things to come and let's just say, none of them are good. I hope he's wrong.
1 person likes this
@suspenseful (40192)
• Canada
18 Nov 11
I think lit is a combination of things. For instance, they started social security to help those who had been kicked off of their land, and to pay for that, raised the taxes. Trouble is that there are parasites who think the taxes are to pay for them and it seems that thet they want to overcome, those who were not reduced to poverty even though they worked hard, . Higher taxes make it harder for business to hire people, what they could have used to pay wages goes to the government.
@lawdude (237)
• United States
17 Nov 11
That's true to some extent. The traditional Austrian school of economics at the time believed fiscal policy should be pro-cylical. . .that during economic booms, bad decisions and investments are made. . .and when the boom bursts, the best policy to deal with economic depression is to leave the economy alone to liquidate the bad decisions and investments during boom time. . .so the economy can reach a new equilibrium to foster economic growth. So the Hoover thinking was that fiscal policy should be revenue neutral and taxes should be increased to balance the federal budget. Little thought was given to the effect of monetary policy as an economic tool.
That school of economics was uprooted in the 1930s by the Keynesians who espoused that fiscal and monetary policy to control the business cycle should be anti-cylical. . . so that during depressions, the government should run fiscal deficits and expand monetary policy to counter the effects of falling demand. . .and when the economy gets overheated, run budget surpluses and decrease the monetary supply to prevent inflation.
The conservative supply side economists today believe that reducing taxes (rather than increasing spending) is the proper way to grow the economy even when the government is running a fiscal deficit because the increased growth will pay for the deficit (seems to work in theory, more than in practice)and increasing taxes will stunt growth. . .thus making government policy anti-cylical (contrary to the conservative Austrian school).
Actually, in 1990 Pres. George W. Bush raised taxes as did Bill Clinton after he got in office in 1992, and the economy picked up from a recession and the annual fiscal budget was in balance the last 2 years of the Clinton administration. . .which contradicts the supply side model. What happened was the bond market rallied when revenues increased from the belief the government was getting its fiscal house in order and the economy fueled by the internet boom prospered. Under GWB, taxes were decreased and economic growth was slow and culminated in the financial meltdown of 2007-2008. So I'm not sure the argument that it's bad policy to raises taxes at this time is really valid.
According to several economic studies, the real causes of the Great Depression was the credit freeze resulting rom the failure of our banking system in the early 1930s. That is why Hank Paulson and Ben Bernanke under GWB in 2008 promoted the 760 billion TARP program and 125 billion bank rescue plan to prevent another total credit freeze and another great depression.
That's my take on this topic.
@Fatcat44 (1141)
• United States
17 Nov 11
You do present a good argument but I am not in total agreement with you.
Yes the financial freeze was a gigantic hit. But they turn around and take further spending power by increasing taxes so there was less money out there, which further hurt the economy.
As for the conservatives, they want to lower government spending and taxes. They realize that you have to do both.
You missed it when Reagan lowered the taxes in the 80's, the economy took off after a big recession in the late 70's and early 80's. And how about the tax cut by JFK in the 60's and the boost in the economy then.
Reagan set a proven pattern that if we follow it, it will work.
Also the Tarp was, same as the auto bailout, a loan. Aren't these banks supposed to pay it back? I know the car industry is paying theirs back. Why aren't the banks?
@lawdude (237)
• United States
18 Nov 11
Thanks for your response, Fatcat. I just want to air a few observations on what you said.
I liked President Reagan and think he did a good job but there is too much mythology associated with him. R.R. was a tax cutter and reduced the top marginal tax rates, but he also increased taxes 11 times during his terms. His 1986 tax reform act closed corporate loopholes and preferences and raised revenue substantially. He also increased the capital gains tax rate from 20% to 28%. Reagan's pragmatic brand of Republicanism would not surive in today's GOP under the jurisdiction of Grover Norquist where any notion of increasing taxes is considered socialistic treason.
R.R. vastly expanded the capital markets through creation of 401Ks, IRAs, and other investment vehicles. These, together with electronic trading, financialized our commercial and investment banking industries, and helped fostered a 30 year boom in the stock and financial markets.
When R.R. took office in 1980 the national debt was 920 billion and when he left office in 1988 it stood at 2.684 trillion. By 2000, the national debt had risen to 5.662 trillion. So between 1980 and 2000 our fiscal policy was heavily expansionary, fostering the great economic boom over that period.
The economic record of George W. Bush was lousy. During his 8 years the national debt rose from 5.662 trillion to 10.7 trillion. It was the first time the U.S. ever reduced taxes in time of war. His tax cuts did not expand the U.S. job market as multi-national corporations,which dominate the world, were exporting them abroad. We also suffered a terrible economic bust when the real estate and stock market bubbles burst. By the end of Bush's 2 terms our economy was contracting.
The notion that tax cuts by necessity will produce prosperity and jobs is bogus. Our long economic boom fueled by the debt expanion since 1980 eventually ran out of steam in 2007-2008. We are now in that part of the economic cycle where we must pay down debt in a contractionary economy. Those saying we need more tax cuts and de-regulation are full of it.
