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Bush is Indeed Like Herbert Hoover - But Not in the Way You Think:

In the course of a New Republic article analogizing George W. Bush to Herbert Hoover, historian Alan Brinkley perpetuates the long-discredited myth that Hoover failed to stop the Great Depression because he pursued laissez-faire policies:

Herbert Hoover . . . exemplifies the dangers of sticking to one's principles. One of the ablest and most widely admired men in America when he was elected president in 1928, Hoover left office four years later discredited and reviled--a victim of a Depression that he had not created, to be sure, but also a victim of his choice of conviction over pragmatism. Unwilling to challenge the pillars of free-market capitalism, strongly committed to balanced budgets and fiscal prudence, convinced that the natural laws of economics would bring the Depression to a close, he responded to the Depression with such restraint and timidity that had his administration not ended when it did, the entire financial system of the United States might have collapsed.

Far from being "unwilling to challenge the pillars of free-market capitalism," Hoover reacted to the Depression by promoting extensive government intervention. For example, he established the Reconstruction Finance Corporation, a new federal agency that gave massive loans and grants to banks, failing businesses and state and local governments - a policy similar to today's bailouts. He also supported (albeit reluctantly) the enactment of the Smoot-Hawley tariff, a protectionist measure intended to strengthen American businesses by shielding them from foreign competition. Furthermore, he sponsored a massive increase in federal spending on a variety of relief programs. Similar to today's Democratic Congress, Hoover sought to stimulate the economy by increasing federal funding for public works through the Emergency Relief and Construction Act.

Speaking before the 1932 Republican Convention, Hoover boasted that he had rejected the "disastrous" option of doing "nothing" and instead had "met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic." In that same 1932 campaign, FDR even denounced Hoover for overspending and promised to enact a balanced budget.

Nor were Hoover's interventionist policies a sudden change of heart caused by the Great Depression. He had advocated extensive increases in government spending and regulation for years, especially during his time as Secretary of Commerce in the 1920s. Even before the Depression began, the Hoover Administration promoted federal intervention in labor relations and massive farm subsidies.

None of this is news to economic historians. By the 1960s and 70s, research by a variety of scholars had shown that Hoover was anything but a laissez faire advocate. Liberal historian Joan Hoff Wilson's 1975 book Herbert Hoover: Forgotten Progressive is a good summary of the evidence. It is surprising that an outstanding historian like Brinkley would ignore this body of research.

Brinkley is right, however, to suggest that Hoover's policies were similar to Bush's. Like Hoover, the Bush administration responded to an economic crisis with a policy of bailouts. Also like Hoover, Bush sought to push the GOP towards big government policies long before any economic crisis had occurred. Under Bush, the GOP massively increased domestic spending and federal regulation. Bush also, in his own words,"use[d] the mighty muscle of the federal government" to incentivize financial institutions to issue mortgages to borrowers with dubious credit qualifications - an interventionist policy that helped cause the current crisis.

After Hoover left office, New Dealers used the myth of his supposed adherence to laissez-faire as a justification for discrediting free market policies. Today, we are seeing the creation of a similar myth about Bush. The truth, however, is almost the exact opposite of the myth.

The fact that Hoover and Bush pursued interventionist policies doesn't in and of itself prove that free markets are the way to go. Perhaps Hoover and Bush simply chose the wrong kinds of interventions. Nonetheless, the myth of Hoover as laissez-faire advocate was an important rhetorical prop for supporters of big government policies in the 1930s. Hopefully, it is not too late to forestall the creation of a similar convenient myth about Bush today.

UPDATE: It's worth noting that FDR strongly denounced Hoover for being overly interventionist during the 1932 campaign. He attacked what he called the GOP's "reckless and extravagant spending" and warned against Hoover's tendency to conclude that "we ought to center control of everything in Washington as rapidly as possible." The later liberal Democratic view of Hoover as a laissez-faire advocate is a post-New Deal invention. When Hoover was actually in office, most Democrats realized that he was an interventionist, and many criticized him for it.

Brett A. (mail):
Paul Krugman has, I believe, made the argument that while Hoover did lend money to the states, he made the terms of it really onerous, so that the states had to gut their spending at the same time as he was increasing federal relief aid. At the same time, he started the jacking-up of taxes, leading to the three-fold increase in the top rate over the entire 1930s.
1.18.2009 10:23pm
Asher (mail):
Safe to say, though, that FDR was a lot more interventionist, regardless of what he said in the 1932 campaign, no?
1.18.2009 10:26pm
HoyaBlue:
OK. So Herbert Hoover prescribed tylenol for a broken leg. Maybe he yechnically did <i>something</i>. I think Neville Chamberlain could say the same. This earns Hoover an A for effort?

Please.
1.18.2009 10:42pm
The Mojo Bison (mail) (www):
Hoover put Jesse Jones as the head of the RFC because the latter was a conservative Southern Democrat --specifically trying to allay the fears that RFC would become a Republican machine mechanism just in time for the 1932 election. So one can appreciate the irony that FDR and his allies created WPA and PWA in part as agents of political machinery. Even more ironically, FDR had to light a fire under Jones to spend the money budgeted to him; he barely spent anything out of a $1 billion budget allocated to him under Hoover.
1.18.2009 10:54pm
Jesse M. (mail):
Hoover certainly spent a lot less than Roosevelt--the chart at the bottom of this page says federal spending was 3.4% in 1930 and 4.3% in 1931, but by 1934 it was up to 10.8%. Also, Krugman points out that when Roosevelt decided to reduce spending and go back to more "conservative" economic policies in 1936, there was a sudden drop in economic growth and a new recession...correlation is not causation of course, but it's pretty suggestive (see the graphs here and here).
1.18.2009 10:55pm
BGates:
Hoya, nothing in the post besides the Brinkley quote supports the characterization of Hoover's efforts as "Tylenol". Could you point to something else that does?
1.18.2009 10:56pm
greenish (mail):
So the Smoot-Hawley tariff, which cut imports and exports by half, was like a tylenol?
1.18.2009 10:58pm
TokyoTom (mail):
Thanks for this, Ilya.
1.18.2009 10:58pm
frankcross (mail):
Some truth here, because Hoover made government interventions, but there's not much comparison with Bush. Hoover was terrified of deficits and raised taxes to pay for the increased spending -- certainly not something Bush has done.
1.18.2009 11:02pm
Soronel Haetir (mail):
Too late, the myth is already firmly established for both men. Just because there are a few who realize otherwise doesn't mean the train will come off the tracks any time soon.
1.18.2009 11:22pm
5L (mail):

OK. So Herbert Hoover prescribed tylenol for a broken leg. Maybe he yechnically did something. I think Neville Chamberlain could say the same. This earns Hoover an A for effort?

Please.


This is indeed a useful analogy, but it serves the argument's rebuttal even better. It presumes that the government can consciously and willfully alter the number of jobs saved or created through government spending, presumably by varying the amount spent. Why, we are asked, do we turn to Tylenol when morphine is available? Now, bring this argument to its logical conclusions. If this were true, then not only would the government spend "stimulus" money in times good and bad, but it could also prevent any job loss at any time by simply spending more money. If 800 billion creates 3 million jobs, why not a trillion or even two? It's morphine with no side effects! Clearly, this is not the case. Like strong medicine, large economic bailouts, stimulus packages, and large government programs are hardly the panacea that the previous commentator makes them out to be.

I understand that intuitively this may might make sense to some people. At the very least, the argument very clearly outlines cause and effect. Government money = jobs. This simplistic logic is persuasive to those who are, by their nature, predisposed to simplicity. But as previously mentioned, those who might be inclined to extend the reasoning beyond its basic conclusions would likely be alerted to its fallacy.

The private sector, albeit cyclical, will always and forever be the more efficient source of jobs. Adding another million to government payrolls only serves to remove their skills and productivity from the job-creating economy. Even if you don't buy this argument, the fact that the Obama stimulus plan spends hundreds of billions on welfare programs and the states (which goes directly into the hands of non-productive state workers and their unions) instead of direct investment in infrastructure that might pay off down the road should give you pause.

A healthy private sector is what this country needs. Yes, that does require efficient regulation and oversight, especially over banks and other institutions that are critical to macroeconomic stability. At the same time, job creation is not likely to come from politicians who've probably never had a real one. Real economic investment means putting money back into the pockets of the people who know how to spend it, pollyannaish faith in government and our new president not withstanding.
1.18.2009 11:28pm
Norman Bates (mail):
JesseM:
the chart at the bottom of this page says federal spending was 3.4% in 1930 and 4.3% in 1931, but by 1934 it was up to 10.8%
You should have asked yourself, "percent of what" while reading this chart. The chart shows federal spending as a percent of total GDP. During the period in question GDP contracted by over 30%, so absolute federal spending was relatively constant over the same period. The chart you cite appears to support the assertion that New Deal policies did not increase federal spending significantly over the levels initiated during the Hoover administration.
1.18.2009 11:29pm
Bruce Hayden (mail) (www):
The private sector, albeit cyclical, will always and forever be the more efficient source of jobs. Adding another million to government payrolls only serves to remove their skills and productivity from the job-creating economy. Even if you don't buy this argument, the fact that the Obama stimulus plan spends hundreds of billions on welfare programs and the states (which goes directly into the hands of non-productive state workers and their unions) instead of direct investment in infrastructure that might pay off down the road should give you pause.
I will suggest that it is worse than that. Those who buy into the idea that the federal government can create jobs through federal spending are also I think likely to believe that FDR and his policies had nothing to do with the depth and length of the Great Depression, and that he was just an innocent bystander, instead of one of its primary causes.

Part of the problem is indeed that the government is inefficient in creating jobs, in comparison with the private sector. Not only does much of what is created not advance the economy (except for the wages paid), but whatever is created, is created inefficiently. So, during the Depression, you have people creating stuff that we really didn't need, such as huge public works projects, instead of creating actual products that people wanted to buy. Much of our National Park infrastructure was built then, at the expense of building consumer goods. Things are worse now, due to Davis-Bacon, among other things. We may see two or three fast food jobs sacrificed for each union wage public works job created.
1.19.2009 12:02am
RPT (mail):
After the disastrous Bush years, it's great to see you guys arguing against the creation of those terrible "inefficient" high paying union jobs. How many of you work in "fast food" jobs?
1.19.2009 12:07am
Bruce Hayden (mail) (www):
After the disastrous Bush years, it's great to see you guys arguing against the creation of those terrible "inefficient" high paying union jobs. How many of you work in "fast food" jobs?
So, is it better then to have one person with a high paying union job, and three on unemployment? Or all four working at less pay?

Maybe the better way to look at this is to compare one person earning union wages building something that is of marginal use to the public and has a half century payback plus paying several people unemployment, or paying them all for their contribution to the economy.
1.19.2009 12:14am
David Warner:
Thx to Ilya and 5L for effectively making the case - there's a mountain to climb, but I'm unconvinced that the rising generation, even the Obama supporters, will be entirely unsympathetic to our arguments, especially if they're laid out with such lucidity.

One gets the sense that Brinkley has never heard it at all.
1.19.2009 1:56am
A. Zarkov (mail):
The American economy is now much different than it was during the Great Depression.

1. We had a great deal of idle manufacturing capacity.
2. We had least 25% of the population on farms compared to 2% today.
3. People were more self sufficient.
4. Crime was much lower.
5. We were an export economy as opposed to an import economy.
6. We were willing to send immigrants back home to free up jobs for Americans. In fact after 1925 immigration was highly redistricted. Today legal immigration is approximately 1 million per year, and no politician is willing to send them home.
7. Today's total debt to GDP ratio is nearly 4 as opposed to 1929 when it was 2.
8. We did not have a huge debt to foreign nations. The national debt was held by Americans in the main.

It made sense for the government to try to pump up aggregate demand by running deficits because we had idle capacity. Today the so-called stimulus packages act to create employment in China more than the US because that's who makes the stuff Americans buy as consumers.

In short, today's situation is so different that it's not useful to try to compare Bush to Hoover.

BTW Intrade Prediction Markets now put the US into a Depression in 2009 with probability of 55%, or 6 to 5 odds in favor of Depression.
1.19.2009 2:04am
Thoughtful (mail):
Brinkley is a court intellectual, an alleged expert on the New Deal yet obviously either grossly ignorant of a dominant interpretation in an era of his supposed expertise or willing to take the chance (admittedly unlikely) that a pretty faced journalist will know enough to call him on making a statement he knows to be factually false.

Why Ilya, who tells us so much about rational igorance, thinks it might be different, is unclear.
1.19.2009 2:09am
fortyninerdweet (mail):
Folks won't believe what they don't want to believe. Stop with the facts, already. They don't count. Minds have been made up on this issue for decades and it would serve no purpose now to change them. Or would it?
1.19.2009 2:31am
Jesse M. (mail):
Norman Bates wrote:
You should have asked yourself, "percent of what" while reading this chart. The chart shows federal spending as a percent of total GDP. During the period in question GDP contracted by over 30%, so absolute federal spending was relatively constant over the same period. The chart you cite appears to support the assertion that New Deal policies did not increase federal spending significantly over the levels initiated during the Hoover administration.

Do you have the figures for absolute federal spending? Just going by your rough numbers, if federal spending was 100x in 1930 and 70x in 1934 due to a 30% GDP contraction, then 3.4% of 100x is 3.4x while 10.8% of 70x is 7.6x, still a significant increase. This page gives a few real figures, saying "New Deal emergency spending on public works, relief, and rural programs drove up federal outlays to $6.6 billion in fiscal year 1934 and $8.2 billion in fiscal year 1936, well above Hoover's largest budget of $4.7 billion in fiscal year 1932". It would also be interesting to know what fraction of the money was going to public works and other ways of employing people directly (as opposed to more 'trickle down' spending): this page says:

Upon taking office, the new president faced a Congress clamoring for a $5 billion public works program. Then as now, the money was to be channeled through states and local governments. Then as now, governors and mayors said they had projects ready to go.

But according to the historian David M. Kennedy (in his magisterial, Pulitzer Prize winning book Freedom From Fear: The American People in Depression and War, 1929--1945), Roosevelt had some of the same concerns about public works spending as his hapless predecessor, Herbert Hoover.

Roosevelt "endorsed Hoover's conclusion that only about $900 million worth of acceptable projects were on the shelf," Kennedy writes. When his Labor Secretary, Frances Perkins, pressed the $5 billion list on him, Roosevelt countered by "going through the New York projects item by item, pointing out in well-informed detail how unsound most of them were," Kennedy says. "In the end, Roosevelt caved to political pressures and allowed an appropriation for $3.3 billion to be made for the new Public Works Administration.


Finally, if Brett A.'s comments at the beginning of the thread are correct that might also be another significant difference between Hoover's style of spending and Roosevelt's.
1.19.2009 4:36am
Ricardo (mail):
Ilya, you say one of Hoover's policies was "similar to today's bailouts." You really should read Milton Friedman's and Anna Schwartz's Monetary History of the United States.

Hoover lamented after the fact that his Treasury Secretary was a "liquidationist" -- someone who thought that bank failures were healthy and "purged the system" of waste and excess. At the time, the Hoover Administration allowed the failure of the large (private) Bank of the United States in 1930, and stood by while a wave of bank failures took place throughout 1931. And the Fed raised interest rates in May 1931 to protect the U.S. from a run on the dollar, an action that accentuated the credit crunch in the U.S.
1.19.2009 4:37am
lonetown (mail):
While there are certainly similarities, that would be expected since both episodes are of economic collapse, the solution will never be the same because the underlying fundamentals are vastly different.

One difference is the fact that our economy is now a service economy. If we raise tariff barriers we will have no TV's, IPods, toasters, furniture, etc to buy. We don't make that stuff anymore.

Unfortunately, a healthy service economy needs a healthy global economy.
1.19.2009 6:50am
ChrisIowa (mail):
Ricardo

Bank of the United States

Bank of United States. According to Shlaes there was no "the" in its name.
1.19.2009 8:23am
wm13:
Regarding the Intrade contract that Zarkov cites, as was noted on Marginal Revolution a few days back, that contract defines "Depression" as a 2.5% decline in GDP, which is a little short of what most people would mean by the word. (It is possible that the designers of the contract meant for it to be defined as a 10% decline, and simply worded it wrong, but that isn't clear.)
1.19.2009 9:22am
Careless:
Zarkov:

BTW Intrade Prediction Markets now put the US into a Depression in 2009 with probability of 55%, or 6 to 5 odds in favor of Depression

All that's predicting is a 2.6% decrease in GDP at the end of the year. For some reason they're adding quarterly losses together, which effectively multiplies the decline by 4.
1.19.2009 10:24am
Brian Macker (mail) (www):
Murray Rothbards "Americas Great Depression" is available online so there is no excuse for being ignorant on the subject. At least read chapter 7, "Prelude to Depression: Mr. Hoover and Laissez-Faire". Hoover was an interventionist and not a "laissez faire" kind of guy. He was pouring tons of money into the system in the same month the crash occurred. He was called "The Great Engineer" because he was supposedly goint to engineer the economy.

It was quite obvious that this "crash" was comming. All the economic signs were that interest rates were being held below market by Alan Greenspan. It's obvious that he lacked the understanding of economics that was needed for his job. Likewise Clinton, Obama, McCain, Bernarke, Barney Frank, and the rest of them.

When you set interest rates below market it will cause lowered savings, increased borrowing, an economic boom, inflated asset prices, a trade deficit, commodity price increases, over leverage, and finally bank failures, etc.

The events unfolded precisely in line with Austrian Business Cycle theory.

The Feds actions right now are highly irresponsible. Look at the monetary base. In two months it doubled. That is just crazy Zimbabwe style monetary policy.

Alan Greenspan set interest rates too low, and caused a financial bubble. His answer to the popping of the bubble was to reinflate, which only postponed and made the bubble worse. Bernarke is repeating the process. Eventually one of these bubbles will be impossible to reflate without substantial price inflation, and economic hardship.

The answer is not to give the patient more of the same drug that poisoned him.

It is absolutely sad that the politicians are listening to idiots like Krugman, Bernarke, Greenspan, and the like. Anyone who quotes any of these guys as authorities is ignorant of valid economic theory.

This whole mess was caused by having a fraction reserve monetary system backed by a central bank. The fiat aspects of the currency have not been a major factor as of yet, althought that 100% jump in the money suppy over two months is yet to play out.

The way to have a stable economy is to outlaw fractional reserve banking. It makes no sense for peoples short term savings to be lent out long term. It only leads to the business cycle, and bank runs, etc. If banks were not allowed to lend out short term savings then no one would be able to run to the bank to pull out the money that wasn't there.

The fractional reserve system is insanely unstable. It's based on banks having loans backed by assets that are very things that are run up in price by the banks loaning out unbacked currency in the first place. When bank reserves drop from 100% down through 50%, to 25%, to 4%, the banknotes increase the money supply by first double, then quadruple, then by twenty five times. This money is used to buy the very assets, like houses, that supposedly back these loans.

The run up in prices, of course, cannot be sustained because it is merely a mirage caused by the increase in the money supply, which will collapse as the distortions caused by the lending eventually correct. We can run an economy on building houses, for instance.

This whole mess, btw, was caused by lawyers and judges ruling that fractional reserve banking was not fraudlent. Well, it is. It's a subtle kind of pyramid scheme, based on the obvious fact that you can pay short term savers back if you've lent out long term.
1.19.2009 11:51am
Bruce Hayden (mail) (www):
The Feds actions right now are highly irresponsible. Look at the monetary base. In two months it doubled. That is just crazy Zimbabwe style monetary policy
I never have understood this. When I took Monetary Economics, the big thing I got out of it was MV=PQ. Sure, if V is dropping, due to bank illiquidity, you may need some more M to compensate. But Q is also either stable or decreasing slightly, and clearly not doubling. So, in the long run, if M isn't reduced accordingly, as V hopefully goes back to normal, we are going to have rampant inflation (P).

I will somewhat agree with you on the fractional reserve system. Keep in mind that the 4% = 25x, etc. assumes a constant 4%. The system works just fine as long as the reserves are constant. The problem right now may be that while legal reserves are constant, real reserves are dropping, due to the bad loans. However, this shouldn't be translating into more money to lend, but rather, less, since the banks are under pressure to meet their legal reserve requirements, thus necessitating reduced lending. So, let me suggest that maybe the better metric in monetary expansion through lending would be legal reserves, when they are below actual reserves.
1.19.2009 12:50pm
A. Zarkov (mail):
Careless:

"All that's predicting is a 2.6% decrease in GDP at the end of the year. For some reason they're adding quarterly losses together, which effectively multiplies the decline by 4."

Yes there does appear to be an error in the wording. If you define a Depression as a 10% yearly drop in GDP, that means a drop of 2.6% each quarter-- (1-.026)^4 = (1-0.1).
1.19.2009 1:13pm
MCShalom (mail) (www):
They Bail Out, We Opt Out.

All of Our Economic Problems Find They Root in the Existence of Credit.

Out of the $5,000,000,000,000 bail out money for the banks, that is $1,000 for every inhabitant of this planet, what is it exactly that WE, The People, got?

If Your Bank Doesn't Pay Back Its Credits, Why Should You Pay Yours? Or Else ...

If the Banks Get 0% Loans, How Come You Don't?

At the Same Moment, Everyday Some of Us Are Losing Our Home or Even Our Jobs.

Credit is Mathematically Inept, Morally Unacceptable.

They Bail Out, We Opt Out

Opting Out Is Completely Anonymous.

The Credit Free, Free Market Economy

Is Both Dynamic on the Short Run &Stable on the Long Run, The Only Available Short Run Solution.

I Am, Hence, Leading an Exit Out of Credit:

Let me outline for you my proposed strategy:


Preserve Your Belongings.

The Property Title: Opt Out of Credit.

The Credit Free Money: The Dinar-Shekel AKA The DaSh, Symbol: - .

Asset Transfer: The Right Grant Operation.

A Specific Application of Employment Interest and Money.
[A Tract Intended For my Fellows Economists].


If Risk Free Interest Rates Are at 0.00% Doesn't That Mean That Credit is Worthless?

Since credit based currencies are managed by setting interest rates, on which all control has been lost, are they managed anymore?

We Need, Hence, Cancel All Interest Bearing Debt and Abolish Interest Bearing Credit.

In This Age of Turbulence The People Wants an Exit Out of Credit: An Adventure in a New World Economic Order.

The other option would be to wait till most of the productive assets of the economy get physically destroyed either by war or by rust.

It will be either awfully deadly or dramatically long.

A price none of us can afford to pay.

"The current crisis can be overcome only by developing a sense of common purpose. The alternative to a new international order is chaos."

- Henry A. Kissinger


They Bail Out, Let's Opt Out!

If You Don't Opt Out Now, Then When?



Let me provide you with a link to my press release for my open letter to Chairman Ben S. Bernanke:

Chairman Ben S. Bernanke, Quantitative [Ooops! I Meant Credit] Easing Can't Work!


Yours Sincerely,

Shalom P. Hamou AKA 'MC Shalom'
Chief Economist - Master Conductor
1 7 7 6 - Annuit Cœptis
Tel: +972 54 441-7640
http://edsk.org/
1.19.2009 1:25pm
A. Zarkov (mail):
Bruce Hayden:

The Fed seems to be treating the problem as a bank liquidly crisis, not an insolvency crisis. If the Fed exchanges bad assets from the banks for their (created) base money, then they can't "run the printing press backwards" to control the monetary base when V returns to normal. That means rampart inflation. I suspect this is why the Fed refuses to disclose what's in its balance sheet. Bloomberg financial news has a FOIA suit going to force them to disclose what they have taken in.

It seems to me that the US government has decided to rescue the banking system and other failing businesses by taxation via inflation. In other words, the bad bank assets are passed on to the citizens in the form of depreciated currency instead of explicit taxes. This way taxpayers get mad at merchants instead of the government. This is why the government will first try wage and price controls (as Nixon did) even though they know it won't work. The controls send a signal that greedy business is responsible for the increasing prices and not the Fed. In other words, the inflation is made to appear as some kind of exogenous event.
1.19.2009 1:31pm
Joseph Slater (mail):
It's obvious that he lacked the understanding of economics that was needed for his job. Likewise Clinton, Obama, McCain, Bernarke, Barney Frank, and the rest of them.

Does "the rest of them" include G.W. Bush? If not, why not? If so, interesting that you would mention Clinton by name and not the President on whose watch the economy melted down.
1.19.2009 1:46pm
fat tony (mail):
Perhaps the referenced quote intended to point out the failings of the three most prominent presidential candidates this last cycle. If so, interesting that you would jump to assume Bill Clinton needed defending.

If, on the other hand, you were just nitpicking a hastily written blog comment, may I direct your attention to the incorrect spelling of Chairman Bernanke's last name? I would be interested in your Rorshaching of that error, which I expect to be just as fruitful as your last effort.
1.19.2009 3:38pm
JoeSixpack (mail):
Clnton is the President on whose watch the economy melted down. This entire mess can be traced back to the dot com bubble of the late 90s and 9/11, wich was planned during and a product of the Clinton administration.
1.19.2009 3:45pm
Joe in NM:
This is a good discussion. But more confusing than the regular con law banter.

To the econ pundits, we seem to be experiencing deflation, not inflation. How to explain this, given the apparent increase of the money supply?

And if some unimaginable amount of money is owed through CDSs and similar obscure financial arrangements, perhaps a better solution than the Feds buying everything up would be to abrogate those contracts. Who holds these trillions of $ of derivative instruments? The Obama administration should consider breaking these contracts, maybe it might help. (Nothing seems likely to help the US economy.) Clear the deck and start over. No need to repeat Hoover and FDR. Try something different.
1.19.2009 4:32pm
Joseph Slater (mail):
Fat Tony: If the original poster's point was about 2008 Prez candidates, then why did he specifically mention Clinton? And why would I care about somebody else misspelling B's name?

JoeSixPack:

The economic meltdown of 2008 happened eight years after Clinton left office. And Clinton left office with economic numbers Bush would have killed for in most of Bush's eight years. But if your theory is that there were economic problems late in Clinton's second term, shouldn't those have been the fault of Bush, Sr.? After all, he was president eight years before the end of Clinton's second term.

To both:

Look, I don't the economic crisis that happened on Bush's watch is All Bush's Fault Entirely. But not naming him (in the first place) and getting so defensive by refusing to admit that he was a signifcant part of the problem in future comments is more than a little odd/unbalanced.
1.19.2009 5:41pm
A. Zarkov (mail):
Joe in NM:

"To the econ pundits, we seem to be experiencing deflation, not inflation. How to explain this, given the apparent increase of the money supply?"

The increase in the money supply has not caused inflation yet because the money isn't circulating. Banks don't want to lend because they fear the borrower might default. Consumers aren't buying because they are paying of debt and saving from fear of unemployment. Fewer transactions, less circulation. Moreover many investors have to sell their liquid assets to meet margin call etc. Suppose someone's money is tied up in a hedge fund which has stopped honoring redemptions. That someone might have to go out and sell other assets like cars or houses to raise cash to meet expenses. All this tends to depress prices. When we go from deflation to inflation is hard to tell.
1.19.2009 5:55pm
Troll Feeder:

Bruce Hayden 2009-01-19 12:02 am:
Part of the problem is indeed that the government is inefficient in creating jobs, in comparison with the private sector. Not only does much of what is created not advance the economy (except for the wages paid), but whatever is created, is created inefficiently.


That is not the worst of it. The worst of it is that the jobs that the govt. creates are created at the expense of jobs that the private sector could create.

Money, work, and ownership are all transferred from the privately-controlled sector to the governmentally-controlled sector.

Starve the beast before it turns on us.
1.19.2009 6:18pm
PlugInMonster:
I notice the libs have nothing to say about Smoot-Hawley. Right down the memory hole!
1.19.2009 6:26pm
Phil Byler (mail):
Hoover did take "progressive" steps in an attempt to halt what we call the Great Depression. FDR took even more "progressive" steps. Neither Hoover nor FDR were successful in stopping the Great Depression with their "progressive" efforts. World War II was what worked.
1.19.2009 9:15pm
lucklucky (mail):
"To the econ pundits, we seem to be experiencing deflation, not inflation. How to explain this, given the apparent increase of the money supply?"

Lack of trust in system. I think the behavior of all authorities have been dismal but the main problem is that no ones know the depth of this.

I think there are very big mistakes being made. One thing that most economists and polititians apparently don't grasp is that many of the things that improve the lives of millions and as such give profit to economy are already made. There is no need more essential routes and public works. Most of them are already there.
1.20.2009 1:56am
fat tony (mail):
Joseph Slater:

I suggested that the poster may have been referring to the THREE big Presidential candidates: Barack Obama, John McCain, and HILLARY Clinton, by last name only. If so, you have jumped to a conclusion in assuming he referred to BILL Clinton and defensively left out George W. Bush. You have responded by repeating your question as if you had not read my post, or I had written too opaquely.

As to why you might care about the other poster's misspelling, don't you realize that I am mocking your armchair psychoanalysis based on your uncharitable interpretation of what he wrote? Right now I am doing the same regarding your last comment
1.20.2009 1:59am
Joseph Slater (mail):
Fat Tony:

Ah, I see what you mean. If the original poster meant Hillary Clinton that does undercut my point a bit -- although still naming Mr. B - whose-name-can't-be-spelled-correctly and not naming G.W. was still odd. But fair enough.
1.20.2009 1:20pm

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