Lessons from The Forgotten Depression of 1920

Bush lowered taxes and raised spending.

Obama has raised taxes and raised spending (OK, he sort of lowered spending after he raised it).

Now let's talk about the most likely method to reinvigorate this country (I shouldn't restrict this converstion to the US, everybody can save their countries! ):

Lower taxes AND lower spending.

The Three Types of Austerity

Growth will come from the private sector, and the austerity we need is one that makes the private sector larger than the public sector and one similar to that implemented in 1920 in the United States. In what Thomas Woods calls “The Forgotten Depression of 1920,” the U.S. government cut spending 50 percent and sharply reduced taxes. The public debt was reduced by a third, while monetary policy was kept on hold. The economy recovered quickly (in 18 months) and by 1923 the unemployment rate had fallen below 3 percent.

reply to post by greencmp


Another thing America is increasingly becoming the new Weimar Republic

Weimar America?
Charles Derber and Yale Magrass, Truthout - In the 1920s and early 1930s German Weimar Republic, the world witnessed the rise to power of far-right groups, supported by only a minority of the population, but aided by the conservative establishment. An American Weimar could emerge as far-right elements gain increasing dominance in the Republican Party...

The Weimar Syndrome involves the following elements:

1. A severe and intensifying economic crisis

2. A failure by majoritarian liberal or Left groups to resolve the crisis

3. The rise of right-wing populist groups feeling economically threatened and politically unrepresented

4. The decision of the conservative political establishment to ally with and empower these right-wing elements, as their best way to stabilize capitalism and prevent the rise of progressive movements against corporations or capitalism itself

prorevnews.blogspot.com...

reply to post by greencmp

Every post in favor of sound economic policies gets my S+F.

OP, prepare for posts like "but austerity doesn't work, just look what it did to Greece"...
To those people I say this (shameless self-quote):

Originally posted by ColCurious
I posted this before... guess I have to post it again.

- Austerity is a tool, and like all tools it can be used wrong.
(You can't blame a soup-plate if you use it upside down.)

- If a nation has to resort to austerity measures, that nation already did something wrong (budget mismanagement; IOW: spending beyond the means).

- Austerity cannot work for an economy, if the most important element is missing: the economy still has to create something of real value.

Real value as in: either extracting ressources, or building/creating something that will generate revenue,
like factories/industry that can build products, engineers creating new technologies, or a highly trained workforce.

If there was a clear-cut economic model that always worked everyone would be using it.

There isn't.

reply to post by Tinkerpeach

I am a little startled to get "just trust the government, they know what they are doing" from ATSers. I detect a distinct disconnect.

reply to post by greencmp


I never said to trust the government, I simply stated that there is never a solution so easy to our economic woes that some writer can post the answer to all our problems on his blog.

Its a bit more complicated than that.

He also fails to mention the fact that the little recovery in 1923 helped lead us directly to the crash of 1929. At least many people believe that to be the case.

reply to post by ColCurious

OP, prepare for posts like "but austerity doesn't work, just look what it did to Greece"...

Thanks for the support ColCurious!

reply to post by Tinkerpeach

I never said to trust the government, I simply stated that there is never a solution so easy to our economic woes that some writer can post the answer to all our problems on his blog.

I see Paul Krugman doing it all the time.

He also fails to mention the fact that the little recovery in 1923 helped lead us directly to the crash of 1929. At least many people believe that to be the case.

So, by fixing our debt and unemployment we caused a problem 6 years down the road?

reply to post by Tinkerpeach

Originally posted by Tinkerpeach
If there was a clear-cut economic model that always worked everyone would be using it.

No reason to continue a model that clearly doesn't work.

Also, the current model does work for some people... those in charge, who are remarkably also those who benefit the most of the status quo: the oligarchy.

Originally posted by Tinkerpeach
[...] I simply stated that there is never a solution so easy to our economic woes that some writer can post the answer to all our problems on his blog.

Its a bit more complicated than that.

The writer merely stated that "this is a policy much more likely to succeed." and his argumentation is conclusive IMO.

reply to post by greencmp


I am not an economist nor is it necessarily my argument but many do say that the economic turbulence of 1920 was never actually fixed and actually became worse leading to the market crash of 1929.

The roaring 20's, according to some, was a façade that hid a bigger problem underneath the surface.

reply to post by Tinkerpeach

First of all, thanks for engaging. This is what we all need to do, start challenging the ideas presented.

I am not an economist nor is it necessarily my argument but many do say that the economic turbulence of 1920 was never actually fixed and actually became worse leading to the market crash of 1929.

I have heard this argument before, it would help to quote the source. Frankly, I think it was Paul Krugman.

Come on people, all the economic downturns and upturns are a manipulation by the vile banksters that run all economies on the globe. In my 48 years I have seen a few recessions and seen a few recoveries it is obviously
cyclical and contrived.
No doubt there will be a recovery over the next few years but not before they have rorted more of your hard earned savings or foreclosed on the house you now cannot afford to buy.
Money is made round to go round, but always ends up in the banksters pockets.

The Depression of 1920 was "forgotton" because the recovery model worked.
Harding and Coolidge were railed; in the former for corruption, and a "laisse-faire"
approach (per Wiki) for the latter. But, the model of hands-off allowed the system
to fix itself much quicker than FDR's.

What we've got right now with socialized everything is a government imposed
cost overhead and appalling inefficiency. And that root cause assessment is
being charitable-- in consideration of even a shred of the caldera of evidence
bulging like a Yellowstone nightmare.

Micromanaged economics imposed into areas of at best limited expertise by
beaurocrats is a major cause of aspirin abuse.Essential case-in-point: every
one of those Obama-appointed czars that was supposed to go in and fix the
"private sector" never had a job there.

Only five star lunatics do war for a reset. I've just got a really bad sinking feeling
the necessary diversion to flush this size of turd will be quite far reaching in
scope and influence.
Upside:
We Americans sometimes overcome deliberately rewritten history... and in
isolated cases also survive and retain a quite irritable disposition.

Thanks for waiting. Your selected broasted chicken's name tonight was Andre' ;
and lived a somewhat uneventful but artificially accelerated life in a flashlight can.
If he tastes like hormones, you're normal.

Originally posted by Tinkerpeach
If there was a clear-cut economic model that always worked everyone would be using it.

There isn't.

There is one, but it has never been tries, as it wouldnt benefit those at the top much more than those at the bottom.

Tie worker pay directly to business profits, walmart should not be able to collect hundreds of billions off the backs of the slave wage workers who depend on welfare to live.

They have the means and the ability to pay them well for their labors, they deserve to share in the companies profits, as they are making all those profits for the company, there is not one single walmart board member who has made that money for them, they dont stock or sell or clean the stores that generate these revenues, they only cost the company money in outrageous wages and corporate luxuries.

Fare pay for a fare days work, the whole problem would fix itself in days or even weeks at the most.

Dont listen to me though, because the people generating hundreds of billions for walmart through their works dont deserve to make anything off that, all the while the tax payers are paying to feed them, because walmart "cant afford" to pay their people a living wage.

Originally posted by Tinkerpeach
If there was a that always worked everyone would be using it.

There isn't.

I disagree. There is a clear-cut economic model that works. The problem is that model does not win votes at election time. The very thing that makes a democracy great also weakens it because the political parties try to win votes by bad policies.

P

reply to post by kudegras


We are in agreement then, I don't hear any opposing viewpoint here. What I do hear is a failure to recognize the state's complicity if not participation in these crimes.

reply to post by derfreebie

What we've got right now with socialized everything is a government imposed
cost overhead and appalling inefficiency.

Word

reply to post by oblvion


So, now that Walmart has cut hours and reduced hiring as a direct result of the ACA, has this socialist solution resulted in any benefit to anyone except the insurance and pharmaceutical companies and the administrators of obamacare?

Why is the second largest employer in the US a temporary employment agency?

Do you think that raising the minimum wage would have any different result? Or, can we agree that would spark further reductions?

I am looking out for the common man here and what is best for us is to be able to get jobs and have access to goods and services at unmolested free market rates.

reply to post by pheonix358

The problem is that model does not win votes at election time. The very thing that makes a democracy great also weakens it because the political parties try to win votes by bad policies.

Indeed, we have to stand up for ourselves which means we have to start paying attention.

Originally posted by greencmp
reply to post by oblvion

 

So, now that Walmart has cut hours and reduced hiring as a direct result of the ACA, has this socialist solution resulted in any benefit to anyone except the administrators of obamacare?

Why is the second largest employer in the US a temporary employment agency?

Do you think that raising the minimum wage would have any different result? Or, can we agree that would that spark further reductions?

I am looking out for the common man here and what is best for us is to be able to get jobs and have access to goods and services at unmolested free market rates.

edit on 9-9-2013 by greencmp because: (no reason given)

The "regular joe" is not served by being paid so little for their labors that generate so much revenue.

Walmart makes literally hundreds of billions a year, and has one of the lowest average pay scales of any company in the nation.

They can and should pay much better.

What I propossed has nothing to do with raising the minimum wage.

That is an across the board raise, that all sectors and all businesses cant afford.

What I propossed was tying worker pay to company profits, where a percentage of a companies net profits would be required to be used to pay the workers, then no amount of raised priices would leave them out of the loop, they would always be kept at a fare rate of pay, no matter the sector or the company.

So walmart would be paying like $18 an hour, let them raise their prices to compensate, the employeee would still get another raise from that, so they would still be making a good wage, and have more money to purchase goods and services.

This would make the wealth gap shrink overnight, and cause the economy to grow also, as there would not be any more of the top level raking in hundreds of billions, while paying their millions of workers combined less than a 10 billion in the same time frame.

If the company does well and makes money, so would the workers, so the workers would want the company to do well, sio they would waste less, and produce more, so the company would do even better.

It is a self reinforcing circle, instead of the self defeating one we have now.

Businesses that werent doing well, would not be stuck paying high wages they couldnt afford, as their wages would drop along with their profit margins.

The economy would constantly correct itself in real time.

No more bubbles caused from noncorrections, no more wealth gaps, no more causing the customer base to shrink by so many not paying enough.

Yes the "rich" would take the hair cut they need to anyways, not like they dont already have enough as it is, let the "eat cake" for once.