Federal Governemnt doesn't cut back on spending in 36, economy is stable by 38 and growing by 39. US intervenes earlier in WW2.
fortyseven said:Federal Governemnt doesn't cut back on spending in 36, economy is stable by 38 and growing by 39. US intervenes earlier in WW2.
fortyseven said:I meant generally, the federal government cut back on spending when there signs of recovery, but the worst part of the Depression hit then, it's debatabl;e thatt if the spending hadn't cut back, then the economy would have recovered earlier.
david3565 said:Well, it depends upon what school of economics you come from. Neo-classical/Keynsian economics would say that increased spending might have jump-started the economy. The Austrian school of economics would say it only made it worse. The primary problem is that much of the money spent was to create "busy work" to help get people employed. That only treated the symptoms. And worse still it was robbing Peter to pay Paul, who both had to live and work in the same economy . It ends up muddling the call and response mechanism of the market. Even if the government did spend money in places where the market would normall go, they didn't spend it on the needs that needed to be met. In other words it was a step backward, not a step forward.
Neo-classical/Keynsian economics is considered to be largely debunked and considering that is the primary economic theory FDR was using, I would say it would have to be reduction in spelling and a policy shift toward small business that would have jump started the economy quicker.
Grey Wolf said:What about Nazi Germany ? Or was Schlacht saying that it wasn't sustainable in the long run ?
However, what occurs to me about the USA is that if they go for a short-term unsustainable boost to the economy a la Nazi Germany, and this merges into a market-orientated upturn, then you have de facto achieved an earlier up-swing that a market-only application of economics would not have done
Grey Wolf