You probably saw it at Zero Hedge:
It’s 5 minutes 45 seconds worth spending and confirms that it is shaping up the same way again. Key points:
1. Not one recession but a number one after the other.
2. Pre-depression, govt doubles money supply, loans easier to get, massive boom, prosperity and stock mart growth, all unsustainable, roaring 20s.
3. Govt removes a third of the money, reducing loans, raising prices, increasing interest rates, wise investors get out, people follow, crashing the stock mart. Still possible to recover, as before.
4. Depression ensured by Hoover’s tariff act, ban on imports, foreigners then raise own barriers, export industry collapses, agriculture goes down, ruining world banks, unemployment soars, businesses close, deficit increases, Hoover doubles income tax.
5. Other half of tag team wins election on promises to reverse Hoover’s damage, instead criminalizes ownership of gold, devalues dollar by almost half, closes banks as Milliband is talking of, destroying savings, creates social security to compensate, doubles debt to pay for all this, enacts minimum wage, unskilled workers now unemployed, brings in New Deal, depressing economy further.
6. To kill competition, he brings in National Industrial Recovery Act, pro-union when businesses need the help, forcing industry into govt run monopolies, enacts thousands of regulatory codes to choke business further, increasing business costs 40%, tried to reduce supply and raise prices, Agricultural Adjustment Act, taxing farming, destroying livestock and crops, paying farmers to do nothing.
7. It doesn’t work. He raises taxes even higher, creates Civil Work Administration and Works Progress Administration, both expensive bureaucracies [half the budget allocation goes in bureaucratic costs], paying the unemployed to do faux jobs which create nothing, e.g. sending grads to shelf-stack today, this prevents capital and labour moving to productive sectors.
8. Supreme Court eventually overturns Roosevelt’s worst laws, economy starts to recover, Roosevelt raises taxes again to stop it recovering, enacts Undistributed Profits Tax, amking business and investment virtually impossible, raises top rate to near 100%, enacts Wagner Act, labour disputes now settled by a Labour organization, the National Labour Relations Board, businesses are seized, unions go on strike, unemployment skyrockets again, WW2 comes, trade frees up, economy starts recovering.
That capitalism caused the depression and that govt intervention ended it. It was govt intervention which artificially kept it going for so long. When things are bad, govt needs to butt out and let business find its own level.
We’re then faced with the old conundrum – was it incompetence or was it deliberate? I believe it was cynically deliberate, knowing incompetence would win the day.
That’s where we are now. All that’s missing is the end war.
Filed under: Politics & economics