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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (5862)	7/15/2001 1:20:23 PM
From: Ilaine	Read Replies (1) \| Respond to of 74559

>>What did the recovery result from, domestic or foreign business?<< An increase in the money supply. Also, taking the country off the gold standard and devaluing the dollar caused reflation. Also, there was a huge inflow of gold from Europe after the National Socialists took power in 1933, especially after they started "Aryanizing" the government, the civil service, the universities, businesses, the professions, and everything else. Roughly 1/3 of the wealthy families in Germany were, in fact, Jewish. And the smart ones (or the lucky ones) got out while the getting was good. But every country except France started to recover in 1933, even Germany, so gold can't be the only reason. At any rate, when the money supply started to expand, the real interest rate was no longer negative. >>Do you know when FDR began a stepup in defense spending?<< No, but I expect that it wasn't until after Germany invaded France, in 1940 - and we were certainly not prepared for World War II before Pearl Harbor, but we got there fast. Everyone knows that wars are good for the economy - the government pumps money into the economy, usually through deficit spending. I don't know if Keynes ever actually came out and said it this way, but deficit spending counteracts recessions, without spending the money on war. Why spend the money on war if you don't have to? Why does deficit spending work? I don't think it matters what the money is spent on, what matters is that the money is available, that the money supply is increased.