WWII ended it. But recovery was well under way by the time the war started. By 1940 most indices had returned to, or exceeded 1929 levels, except for unemployment.
Like tejek, you quite obviously don't understand the facts.
While the New Deal put people to work, it simply masked the underlying weakness in the economy that continued to be present.
The instant FDR tried to cut these programs, unemployment spiked sharply ('37-'38), and had he not quickly reinstituted federal spending, the depression clearly would have been right back to early-30s levels.
FDR wanted badly to balance the budget and thought he was safe to do so in the late 30s; his budget would have been balanced by '39 but for the fact that after cutting expenses in '36-'37 unemployment returned. So, he did what he had to do.
Ultimately, it was the massive expenditure for war materiel, coupled with putting millions of men to work as a result of conscription, that gave the economy time to recover. It is not even clear that the wartime SPENDING solved the problem; only that by the time returning GIs came home, the problem had receded.
By the time the military industrial complex had started to unwind a bit, the United States owned HALF the wealth in the world. Under the GI Bill, more Americans attended college than ever before. Which is probably what led to us becoming a great power.
All we know for sure about the New Deal, which is intuitively obvious, is that with deficit spending, you can put people to work temporarily and give the economy time to heat up a little. There is zero evidence to suggest that it is the spending, itself, that causes it to heat up. Maybe, maybe not. We just don't know that based on the information available.
It is pretty silly, however, to think this stimulus bill will solve the current economic crisis. This problem is a crisis of consumer confidence, and doling out free paychecks and health insurance to the unemployed is certainly not going to make the unemployed more confident. It is consumption, at the end of which, the situation will be as bad or worse than it is now -- largely because the so-called stimulus bill -- wasn't.
Personally, I know of no evidence that would suggest there is much that can be done about a major economic cycle downturn. You may influence it on the margins. But they aren't created by Herbert Hoovers or GWBs, and they can't be fixed by FDRs or Obamas.
We had depressions starting in 1807, 1837, 1873, 1893, and 1929 -- essentially, every 20-30-40 years -- until now. One can speculate that the economic cycle was disrupted by lots things that happened around the time of FDR -- the New Deal, a strengthened banking system, WWII followed by the GI Bill, etc. But there is no evidence to suggest any of these things has the ability to curtail a depression, stop one in progress, or stop one from beginning. It is just speculation.
Personally, I believe that New Deal programs are responsible for some disruption in the economic cycle because they have effectively slowed the pace at which the economy reacts to various problems. But whether these programs "saved" us a depression in the 70s, or merely set us up for a bigger fall today, I don't know.
Our country is flat broke right now. The TARP program along with this new spending, and the trillions these people will spend in the coming months if not stopped, could well mean the end of our democracy. It is serious. |
