Remember President Harding
****COOKSEY FILLS IN FOR TODD**************
There is a lot of talk these days about remembering the Founding Fathers, and while I think this is important I think it is also equally important to remember those that stood up for the principles and beliefs that we are fighting for today.
We all know the economy is cyclical. It'll go up. It'll go down. It will rise. It will crash. There is nothing anyone can do to stop that from happening. There is, however, something that can be done to minimize the fallout or, in the case of President Obama, drastically increase the damage.
One of the most frightening things I heard was soon after Obama was elected it was reported that he and his administration were reading books about FDR and the Great Depression. The fallacy of the New Deal is something that persists to this day. Let's not sugar coat it, folks: FDR DID NOT END THE DEPRESSION. THE NEW DEAL MADE IT WORSE.
Despite massive government spending from the New Deal, unemployment never dropped below 10% until the out break of WW2.
in 1933: 24.9%
in 1934: 21.7%
in 1935: 20.1%
in 1936: 16.9%
in 1937: 14.3%
in 1938: 19.0%
in 1939: 17.2%3
in 1940: 14.6%
in 1941: 9.9%
in 1942: 4.7%
It wasn't until the end of WW2 did things start springing back to normal. America's heroes became factory workers and laborers. Our goods and services had an immediate market at home from the returning soldiers who kept working to help a destroyed and rebuilding Europe. FDR's policies led to widespread panic because business wouldn't expand or hire because the admistration wasn't being very clear with what they were planning to do, or who they would go after next. Ask Andrew Mellon about it.
This is what is going on with Obama. What implications will the new healthcare bill mean to buisness? What about this Financial Reform? Will Cap And Trade become a reality? If you don't know, you don't spend. Period.
While it is true that massive amounts of people were put to work under FDR, the paychecks were not being spent, and therefore not stimulating the economy. Why, you ask? Because even the guy cutting a path in the woods to make a trail on the CCC knew that the job wasn't long term and when it was over, back to the soup line he went. So, he saved the money. Under the mattress, baby.
Government intervention only leads to problems. Long term problems that could take years, even decades to get out of.
Now, there is another way. It's not popular in our Washington today, because it means that the politicians can't send absurd amounts of money back to their districts to fix a sewer pipe and have a picture in the paper with the mayor. But, it works.
You remember John Adams, George Washington. You are romanticizing about Thomas Jefferson. How about President Harding?
It was January 1920 when the market fell. It was correcting itself from the influx of soliders coming home and massive labor union strikes, federal debt and other market problems.
President Harding, against the advice of his Commerce Secretary Herbert Hoover (yeah, same Hoover), took a hands off approach. He felt the market would correct itself.
We don't really talk about this depression do we? It lasted a from January of 1920 to July of 1921, but it isn't held up as the way to deal with recession/depression.
What did President Harding do? Are you sitting down? No, really. Grab a chair and hold on cause this is just CRAZZZZYYYY:
HE CUT TAXES FOR ALL INCOME GROUPS (that son of a.....)
and then...(still sitting?)
CUT GOVERNMENT SPENDING (why you piece of....)
From FY 1919 to 1920, federal spending was slashed from $18.5 billion to $6.4 billion—a 65 percent reduction in one year. The budget was pushed down the next two years as well, to $3.3 billion in FY 1922.
Now, ask yourself- What is the right way to deal with a depression/recession?
NEW DEAL (see above unemployment numbers)
President Warren "you no good do nothing republican" Harding who left us with what is commonly refered to as the "Roaring Twenties"
Now ask yourself- "What approach is Obama taking?"
Exactly. Sorry I ruined your day.
Just as a side note, before I leave, Remember a couple paragraphs up when I told you Hoover's plan to deal with the Depression of 1920 was rejected? Yeah, well, he got his chance to tinker with the economy in 1929. Worked out well, huh?
Good night, and good luck.