Sunday, June 07, 2009

Myths of the Great Depression


Jim Puplava of the Financial Sense Newshour had a good interview with Robert Murphy summarizing some of the big picture points described in his book The Politically Incorrect Guide to the Great Depression and the New Deal.

Far from getting us out of the depression, Roosevelt’s “new deal” made things much worse. In fact, his “deal” wasn’t even new. He campaigned against Hoover by calling him “the biggest spendthrift in history” (which, in terms of American political history, was true). Then after he was elected, he proceeded to enact a supercharged version of many of the same, failed Keynesian pump-priming measures that Hoover tried (along with a few new and even worse ideas). Giant deficit spending, public works, wage and price controls, attempts to hold up agricultural prices, and the list goes on and on. The myth that Hoover was anything like a free market sympathizer goes hand in hand with the myth that Roosevelt “got us out of the great depression.” Instead, both Hoover and Roosevelt turned a recession into a great depression with a slew of interventionist policies, many of which were precisely the opposite of what should have been done.

Those sympathetic to Roosevelt sometimes describe his methodology as throwing all kinds of things against the wall to see what sticks. This would be bad enough if it were true as it would show that Roosevelt had no idea what he was doing. But it was actually much worse than this as described in painstaking (and painful to learn) detail by John T. Flynn in 1948 in The Roosevelt Myth.

Anyway, useful interview with Murphy to cover some of the big picture basics.

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