April 09, 2019
Progressive Lie about Roots of Great Depression
Timothy Birdnow
Here is an article by one Jared Cohen, a Google Alphabet executive, feeding into the lie that Laissez Faire economics caused the Great Depression.
This is woefully incorrect. The Great depression was caused by Progressive economic policy, and the prosperity of the Roaring Twenties was a result of reasonable taxation, and it was over-regulation and tax hikes that ended that prosperity,
Author Jared Cohen states:
This is wrong. The principle cause of the Great depression was Fed monetary policy and the Republicans stupidity in raising taxes. Harding and Coolidge both supported lowering taxes. In fact, the Depression of 1920-21 was more severe than the Great Depression, but it ended quickly because Congress cut taxes and reined in spending. The top marginal rate in 1918 was 77%, which was subsequently cut to 25% by The result was the most prosperous decade in American history up to that point. The Von Mises Institute
points out:
And the cause of the Great Depression? We are forever told it was an unregulated economy and low taxes. In point of fact, Herbert Hoover was a radical interventionist who believed he could fin-tune the economy (he was an engineer by training) and he disgusted Calvin Coolidge, who called him "the Wonder Boy". Hoover was so bad Franklyn Roosevelt actually ran to the right of him economically!
The Revenue Act of 1932 raised taxes to a top rate of 63 percent, and Hoover approved the Reconstruction Finance Corporation to take tax dollars and redistribute them.
And the Federal Reserve contracted the money supply 2.6 percent after the stock market crash. But they had been manipulating currency prior to the crash, first inflating then deflating it. See here. The Fed drove up real interest rates through this monetary contraction, thus stopping investment in it's tracks.
This is at odds with what author Jared Cohen claims:
It was not lack of regulation, or "business first" but rather gross mismanagement by the Fed and a hyper-interventionist policy by Hoover, as well as a dunderheaded response by Republicans in Congress, who passed a number of tax increases. The mistakes leading to the Great Depression had nothing to do with "trickle down" economics as Cohen so smugly states.
I suppose we shouldn't be surprised that a Google executive would trash the free market and praise the very policies that caused the Great Depression. But then, so many Americans have been miseducated by our educrats on this matter. The fact is the Great depression was the crowning glory of Progressive economic thought. Hoover's policies - followed by Roosevelts - were the real root of the disaster.
Here is an article by one Jared Cohen, a Google Alphabet executive, feeding into the lie that Laissez Faire economics caused the Great Depression.
This is woefully incorrect. The Great depression was caused by Progressive economic policy, and the prosperity of the Roaring Twenties was a result of reasonable taxation, and it was over-regulation and tax hikes that ended that prosperity,
Author Jared Cohen states:
The country, intoxicated with the perks of prosperity, mortgaged its future at every level as it marched blindly toward the greatest economic catastrophe in history.
This is wrong. The principle cause of the Great depression was Fed monetary policy and the Republicans stupidity in raising taxes. Harding and Coolidge both supported lowering taxes. In fact, the Depression of 1920-21 was more severe than the Great Depression, but it ended quickly because Congress cut taxes and reined in spending. The top marginal rate in 1918 was 77%, which was subsequently cut to 25% by The result was the most prosperous decade in American history up to that point. The Von Mises Institute
points out:
The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover — falsely characterized as a supporter of laissez-faire economics — urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored.
Instead of "fiscal stimulus," Harding cut the government's budget nearly in half1925. between 1920 and 1922. The rest of Harding's approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.
The Federal Reserve's activity, moreover, was hardly noticeable. As one economic historian puts it, "Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction."2 By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.
Instead of "fiscal stimulus," Harding cut the government's budget nearly in half1925. between 1920 and 1922. The rest of Harding's approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.
The Federal Reserve's activity, moreover, was hardly noticeable. As one economic historian puts it, "Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction."2 By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.
And the cause of the Great Depression? We are forever told it was an unregulated economy and low taxes. In point of fact, Herbert Hoover was a radical interventionist who believed he could fin-tune the economy (he was an engineer by training) and he disgusted Calvin Coolidge, who called him "the Wonder Boy". Hoover was so bad Franklyn Roosevelt actually ran to the right of him economically!
The Revenue Act of 1932 raised taxes to a top rate of 63 percent, and Hoover approved the Reconstruction Finance Corporation to take tax dollars and redistribute them.
And the Federal Reserve contracted the money supply 2.6 percent after the stock market crash. But they had been manipulating currency prior to the crash, first inflating then deflating it. See here. The Fed drove up real interest rates through this monetary contraction, thus stopping investment in it's tracks.
This is at odds with what author Jared Cohen claims:
Harding, Coolidge and Hoover had all been architects of the policy that put American business first. Each bears responsibility for rebuffing demands to regulate the financial sector and for permitting rampant stock market speculation.
It was not lack of regulation, or "business first" but rather gross mismanagement by the Fed and a hyper-interventionist policy by Hoover, as well as a dunderheaded response by Republicans in Congress, who passed a number of tax increases. The mistakes leading to the Great Depression had nothing to do with "trickle down" economics as Cohen so smugly states.
I suppose we shouldn't be surprised that a Google executive would trash the free market and praise the very policies that caused the Great Depression. But then, so many Americans have been miseducated by our educrats on this matter. The fact is the Great depression was the crowning glory of Progressive economic thought. Hoover's policies - followed by Roosevelts - were the real root of the disaster.
Posted by: Timothy Birdnow at
11:21 AM
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