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Hey all,

There's an argument that WW2 helped speed up American recovery from the depression by stimulating the economy. Is this necessarily true?

This is mostly rambling, based on what I know of economics. Essentially, the 1937 had a few causes.

-First, the Roosevelt administration cut the deficit, reducing the amount of money the government pumped into the economy.

Good, normally. But but at the same time:

-Capital flowed into the country from abroad. The Federal Reserve's response was to "sterilize" the gold, basically taking it out of the economy, by raising the banks reserve requirements.

(This is the money banks need to keep on hand to make loans).

There were other causes:

-People began to pay social security taxes, reducing discretionary spending.

-Increasing labor costs.

-This last one is a bit, umm, finicky, but you could basically call it profit expectations. I feel that this is affected summat by the onrushing war and rearmament in Europe, but I'm not sure by how much.

Thoughts?
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