We keep hearing that we’re facing a reprise of the Great Depression. Well, we don’t have 25% unemployment. Yet. And people are leaving California rather than heading there in droves. But it behooves us to recall the realities that led to the Great Depression vs. the myths of its genesis.
In the late 1920s, cheap and easy money fueled a tremendous increase in margin trading and a proliferation of “investment trusts” that offered little in the way of dividends or demonstrable earnings per share, but still promised phenomenal capital gains. “
…the Hoover and Roosevelt administrations — in disregarding market signals at every turn — were jointly responsible for turning a panic into the worst depression of modern times. As late as 1938, after almost a decade of governmental “pump priming,” almost one out of five workers remained unemployed. What the government gave with one hand, through increased spending, it took away with the other, through increased taxation. But that was not an even trade-off. As the root cause of a great deal of mismanagement and inefficiency, government was responsible for a lost decade of economic growth.
It’s deja vu all over again.
Essential and engaging reading for anyone wondering if the US Government ever learns from its mistakes:*
The Worst Hard Time: The Untold Story of Those Who Survived the Great American Dust Bowl, by Timothy Egan.
It’s deeply disturbing and wildly ironic that the Dems in DC are determined to force a crap sandwich down our throats, as if it’s going to help our economy any more than Roosevelt’s New Deal crap sandwich did in the 1930s. People are getting desperate though, and afraid, and when that happens, they’ll eat anything. Especially if the government says “Eat this, quickly, right now, if you don’t, you will all be doomed.”
First the government indirectly creates a crisis. In the case of the Dust Bowl, it began with the Homestead Act and the encouragement of settlers to plow up and plant crops on 100,000,000 acres of prairie. By artificially controlling the price of grain, the government encouraged overplanting on a devastating scale that in less than a generation turned this healthy ecosystem:
Once the damage was done, and a full-blown environmental catastrophe unleashed, the government attempted to address the problem in ways that were both counterproductive and laughably inadequate, requiring massive amounts of money and intrusive government involvement. The dismal current state of US farming, economically, environmentally and ethically with its CAFOs and agribusiness corporations can be traced directly back to FDR’s Agricultural Adjustment Administration.
Sixty plus years later, we’re watching an economic meltdown yet again, and a clueless government determined to throw money at the problem they helped create in the first place.
If you want a clearer understanding of how the current crisis was precipitated, and the government’s role in it from the start, Investor’s Business Daily reprinted this column from the American Thinker.
The narrative is of another failed socialist experiment, this time a massive federal effort imperiling the whole U.S. banking industry.
Read that article, and then go read Egan’s book on the Dust Bowl. If we can’t learn from these events, next time it will be your grandchildren and mine who repeat history.
*The short answer is “Hell no.”
Confederate Yankee has a brilliantly apropos analogy of this situation, pig farmers and all.