Guest Post by Martin Armstrong
It was not socialism that saved capitalism, it was a shift in the understanding of money itself. George Warren convinced Roosevelt to devalue the dollar and end AUSTERITY, as Germany imposes on Europe today, which reversed the economy.
The Dust Bowl was the primary cause of the rise in unemployment to 25%. In 1900, 41% of the civil workforce was in agriculture. The invention of the combustion engine began to displace jobs as the internet has done recently. Tractors replaced workers in fields, so there was a huge transition in the labor force. Then the Dust Bowl took place and that created the hobos.
There was nothing the government could have done to prevent the Great Depression. The best that one can hope for is to understand the business cycle and prepare for the downturns. In that manner, it becomes more like Joseph warning the Pharaoh of 7 years of plenty to be followed by 7 years of drought. If we accept that the business cycle is complex and not a single source that can be controlled, then we will live with the cycle and understand it.
FDR’s programs came in 1935. The economy had already bottomed and turned up from July 1932. I find the argument that socialism saved capitalism as self-serving for the socialists, but the timeline does not agree.
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It’s obvious this fool has never heard of the “roaring 20s”where the Federal reserve created much ” new money” and credit. Then withdrew it.
Having created the problem, of COURSE the govt buddy complex is best able to solve it…
End sarcasm.
The fundamentals for the 20s were put in play by Harding and Hoover, in response to depression of 1920-21. The excesses came after Churchill took Britain back on gold exchange standard in 1925, but at the pre War rate to the dollar. The overvalued sterling led to capital flight, which Strong addressed stateside by dropping NY rates. THAT’s where it started. And the blame belongs squarely on Winnie.