"Reaganomics caused the Great Depression" Fair?

[oscar111]

My expertise is not in this area.

is it fair to say that

Reaganomics {from Hoover} caused the great depression

i understand hoover DID cut taxes on the rich, which is reaganomics. Didnt he also curb gov spending?

Wasnt it anti-Reaganomics that ended the Depression.. namely lots of gov spending. On the middle class.

[applegrove]

1. Bush is deficit spending to keep America out of recession. War &

tax cuts to the rich are how he has so far avoided recession. The correction that needs to happen will just get worse and worse and worse.

[Warpy]

4. Tax cuts to the rich did NOTHING but spur offshoring

Tax cuts to the rich don't spur employment. That's neoclassical hooey.

No rich man ever gave anyone a job he didn't have a customer for.

That was the mistake Hoover made when he tried to jawbone the captains of industry into hiring people they didn't need to produce goods and services nobody could afford.

The money pump works from the bottom up. Don't ever forget that.

[applegrove]

5. The government - by giving tax cuts to the rich - essentially is going

into deficit to make sure certain amounts of money go to the stock market. The money pump works where ever you decide to pump it. And it benefits only the people who it is pumped towards.

So this is not government spending to create jobs or education or roads. This is government deficit spending (tax cut) to keep only the stock market going. Which is what they want (not jobs). Full employment will only cause inflation to rise and rich people hate that. Since they will not give up their oil and high interest rates will just make their $$$ loose value - they now have a policy of less than full employment. Which is a very supply side way of looking at things.

So they are following Keynesian theory ... they just are not applying it to the goal of making everyone better. Or investing in people. They are using Keynesian deficit spending to make rich people and upper middle class people better off. And to keep the economy rolling only for those people. In a way it is just one transfer of wealth from the middle class to the rich after another.

War is also deficit government spending - again - to benefit only the people they like.

There economy does not include the whole of the United States. Just certain portions of it. And yes they want it full throttle and they'll mess with your retirement to make the stock market the only goal that is met. They want to create an uber-rich class in the USA - just like the Saudis did. They want to have the riches to dominate the world. Only once the USA is so rich (in part of the country) will the US corporations and wealth be able to dominate the world. Investment is being made in increasing the capacity of the rich. Not the capacity of the poor or middle class.

All faster than you can say 'snafu' these elites will send their money offshore.

Bush is acting as a Keynesian only his economy is the top half of America.

Just like archaic monarchies used to go into debt to war or get slaves or form oligarchies to get their economies going in all the history of civilization..Bush is doing the same thing. It is Keynesian. And information & access is hidden from the people. Who do not matter because they are only 125 million people and the rich plan on making money in markets of 4 Billion people.

It doesn't have to be that way. 200 million people could benefit from the markets of 4 Billion people. If they had proper health care and low cost drugs (based on the biggest buying power in the world). If they had schools that were well funded. And cities that were safe. Then all the people could benefit from world markets. All you have to do is serve everyone and make sure there is a transfer of wealth the world over every so often.

[JeffUAW]

15. Tax cuts to the rich

I see a lot of bashing on tax breaks for the middle class out here, and I see where you all are coming from. I, on the other hand, I would like to see where all this money is going! 40 billion dollars to Africa to bail them out on loans they could never pay back. Who loaned them the money? Make them pay it back! I don't know about everyone else out there, but I could find some really good humanitarian projects out there that I could fund with $40,000,000.00!

[JeffUAW]

16. Oops

Sorry! 40,000,000,000.00. You get the point.

[newyawker99]

26. Hi JeffUAW!!

Welcome to DU!! :toast:

[sendero]

6. Exactly...

........ and it's impossible for me to believe that there is anyone who can't see that :)

You can push on a string all you want, it just curls.

[Linette]

20. According to James Kroeger...

...you are absolutely correct, Warpy. From his website:

"...any time money is spent in the economy, it becomes someone's income (wages, profits). All incomes are dependent on the spending of others. When aggregate spending drops, there is less money available to pay those incomes, so people lose their jobs. Spending must occur in order for people to have jobs..."

"...The only reason why governments collect tax revenue from citizens is in order to spend it. When governments spend money, it automatically becomes income to a large number of citizens. So instead of causing aggregate spending to drop, an increase in tax rates actually causes it to increase. Why? Because some of the money that people receive as income from the government---that was originally obtained from taxpayers---would have been saved, if certain taxpayers (typically wealthy ones) had not used it to pay their taxes. When the government collects & spends money that would have been saved, it is pumping money into the economy that would otherwise have been removed from it..."

"...The act of saving money may not be egregiously harmful to the economy most of the time, but it can do an incredible amount of damage if it "gets out of hand." The Great Depression, for example, occurred for one very simple reason: those who had money that they could have spent chose to save it instead, denying people jobs. Those who would have been happy to spend that money did not have it in their possession."

also...

"...Blaming government institutionalism for the poor results that they are responsible for, themselves, is a favorite political stratagem of anti-government zealots. A great example of this in economic history occurred during the Great Depression."

"In the mid-term elections of 1938, Republican politicians pointed out that the Roosevelt administration had failed to end the depression in spite of the dramatic increase in government spending that had occurred during the previous five years. They pointed to this ‘failure’ as evidence that increases in government spending will not fix an economy that is mired in recession. Only a few years later, the inanity of that argument was revealed. When government spending skyrocketed during World War II, the Great Depression ended almost overnight. The reason why the Great Depression dragged on as long as it did was not because fiscal stimulus initiatives failed; it was because the dedicated efforts of the Republican opposition succeeded in limiting federal government spending increases to levels that were insufficient to restore the economy to full-employment spending levels. Today, we can see clearly that it was the Republican Party that was responsible for both the length and depth of the Great Depression."

Great stuff...

[AX10]

23. True.

The stock market is being propped up by the wealthiest. The lower 90% are not doing that well.

[Robert Oak]

9. wrong o

that's "Hooverville" economics.

Keynesian economics, massive govt spending w/ deficit is when
the money is given directly to the people who are unemployed.
that's "fdr" new deal stuff and a huge difference between
giving it to the very rich.

Yes, the disparity between rich and poor in the US was one
of the causes of the great depression.

[Double T]

2. The Government Can't Spend Like A Bunch Of Drunken Sailors,....

...cut taxes to everybody including the rich, continue to subsidize the pentagon and the Iraq war and run up insane deficits without the result being catastrophic for the US Economy. You can only prop up the economy for so long using this method, before the whole damn thing will collapse. It was time for an economic reality check a long time ago.

[Warpy]

3. Hoover tried to renege on the bonuses

given to old soldiers who had survived WWI. There was a huge march on Washington to shame him into coughing up, and he called out the National Guard to destroy their camps on the Mall and chase them out of the city.

It was a tremendous scandal over what was a very small amount of money, and yes, I'd say Hoover stupidly tried to curb social spending, just like Reaganomics did.

Just like the seeds of the Depression were sown decades before the crash, so have the seeds for this one been sown. It had been nearly 30 years since the last progressives in the GOP had gotten elected, and it had devolved into the rich man's party it is today, even drawing on the same fundy church mentality it does now (although not giving them quite as much in return).

It is now inevitable. DLC Democrats may have been able to delay it, but I don't think anyone in either party has the will to stop it.

[ArmHayseed]

7. Look closer at the Federal Reserve

In my opinion the Federal Reserve and the banking system’s credit inflation was far more responsible for the depression than Hoover.

Hoover was inaugurated on March 4, 1929 and the depression ‘officially’ began August of 1929, just five months later. Any changes to the tax code advocated by Hoover would not have had time to filter through Congress, then the economy, in order to effect the onset of the depression.

The most notable tax cuts prior to the depression were after the debts from WW1 had been cleared. The taxes to pay that debt had been narrowly based and very progressive. (I believe the top tax rate was more the 70 percent.) When the rates were lowered it naturally resulted in huge tax cuts for those with higher incomes.

According to the Census Bureau the Federal outlays were $3,127 million in 1929. The outlays for 1932, Hoover’s last year in office, the outlays were $4,659 million.

Hoover originated many of the ideas, in the United States anyway, that Roosevelt later named the ‘New Deal’. Not all the methods used by either President were popular especially those designed to maintain high price levels. Roosevelt did seem to put a higher priority on getting the poorest back to work which was a big boost to his popularity. Hoover on the other hand had favored price supports, especially for select producers.

[fasttense]

8. Actually it was the Coolidge prosperity that set up the fall for

Hoover and the economy.

Snip:
The "roaring twenties" was an era when our country prospered tremendously. The nation's total realized income rose from $74.3 billion in 1923 to $89 billion in 1929. However, the rewards of the "Coolidge Prosperity" of the 1920's were not shared evenly among all Americans. According to a study done by the Brookings Institute, in 1929 the top 0.1% of Americans had a combined income equal to the bottom 42%. That same top 0.1% of Americans in 1929 controlled 34% of all savings, while 80% of Americans had no savings at all.


The unequal distribution of wealth created an economy that couldn't take any hits. When over speculation on the stock market stopped. The middle class could not absorb the damage and the great depression hit.


http://www.gusmorino.com/pag3/greatdepression/

[ArmHayseed]

10. "The Coolidge Prosperity"

The Harding/Coolidge prosperity was made possible by the inflation of credit by the Federal Reserve and reserve banking.

Banking records can be found at:
http://fraser.stlouisfed.org/publications/bms
On June 30, 1921 the Total Deposits Adjusted were $34,114m. By June 29, 1929 they had increased to $51,532m, a 51% increase in only 8 years.

From Mr. Gusmorino’s essay:
”Thanks to pressure from President Coolidge and the business world, the Federal Reserve Board kept the rediscount rate low.”

Mr. Gusmorino identified the root cause of the “Coolidge Prosperity” but regrettably didn’t explore it further. Other areas to investigate include: acceptances, Bills Bought, purchase of government securities, foreign loans and, most interesting of all, the connections between the individuals in the government, the Federal Reserve banking fraternity and the captains of industry.

Coolidge and the Federal Reserve were apparently operating under the theory that if they pumped money/credit into the top of the food chain it would trickle down to those who were unemployed and hungry.

On the other hand, if you have just a twinge of cynicism, you could say that their overriding concern was that their friends and associates were the primary beneficiaries of monetary and fiscal policies and the rest were admonished to take "personal responsibility" for their own affairs.

[fasttense]

11. Wow a 51% increase in eight years. They sure did pump it in.

There seems to be so many similarities between now and Coolidge's prosperity that I keep wondering when the other shoe will drop. Perhaps any era could find similarities and I'm just pessimistic by nature?

[AX10]

12. Remember, Hoover wanted to "assist" the economy by...

aiding the wealthiest. Hoover was a supply sider, just as Reagan and Bush II are. Supply side economics has been proven to be a sham. I find it absurd to compare FDR to Hoover. FDR saw the need to assist ALL AMERICANS, not just "select producers". But remember, it was the economic policies of Harding and Coolidge that led to the depression.

[newyawker99]

27. Hi ArmHayseed!!

Welcome to DU!! :toast:

[Robert Oak]

13. Keynesian economics

Right now there is a lot of BS rhetoric slamming Keynesian economics.

But, Sweden used it to end their depression in the 1930's and it worked.

The truth is FDR put into place a series of government spending programs, but until 1937, the Supreme court would blast them down,
using a "broad" interpretation of the commerce clause in the US constitution (same one interpreted differently that blasted Marijuana medical state law recently).

But, true Keynesian economics were in play in the great defense
spending war built up that pulled the US out of the great depression.

Also, the unemployment rate was greatly reduced by FDR's policies.
It was @ 33% in 1933 and at 14% 1937.

So, I can see an analogy to "trickle down" economics and Hoover...
but there are many causes on the great depression but Hoover's solution...was partly "trickle down" economics and clearly did nothing...
as it's done nothing today for the middle class.

[JeffUAW]

14. Reaganomics caused the Great Depression "Fair"

My father and I get into this one a lot. What Reagan did was reduce taxes on business to stimulate growth. Reagan never decreased govt. spending, if fact, govt. spending went through the roof. I don't have the numbers in front of me, but spending increased significantly on the military. What Reganomics did, however, was increase tax revenue to the govt, but did not make it down to the little guy. It did, however, bring interest rates, and inflation down to reasonable rates. In 1983 I had a 13.5% mortgage rate. A few years earlier, it was as high as 18%.

[oscar111]

17. "Reaganomics made 225 starve to death in Thirties"- good point if OP true

if indeed

Reaganomics caused the Great Depression,

then criticize our current version of Reaganomics best, by using a little known fact about the Thirties - americans flat out starved to death.

{evidence, sources - see Demopedia page, Great Depression. Sources at end of table of contents}

225 well documented, but a DU'er commented "thousands died - just poor records and cause of death not truly given as well" I forget name, forgive me.

[oscar111]

18. Thirties experts: can you get 2 books on starve,

mentioned in Demopedia G Depress page at bottom,
and post there in demopedia, any new info on starvation deaths?
exact pages are given , to be seen, those two books.

I dont have time to look up the books at the library.

[oscar111]

19. Reaganomics, Hoover; Similar, Dissimilar points

similar:

both supply siders
---cut tax on rich




diff:
--Hoover not spend
--RR spent but on Military, not middle class

I like bare bones, to really see clearly. Can you add to, or correct this?

[Odin2005]

21. Last semester while studying my US history...

It hit me that the '20s and the '90s seemed hauntingly similar, both had a lot of speculation that created a lot of fake wealth (.com bull market, BUY, BUY, BUY, the NASDAQ's gonna hit 10,000 soon, etc.).

[rman]

30. Krugman on those similarities

"What went wrong"
Paul Krugman
rtsp://real.dialnsa.edu/REAL_BEARD/spring2003_events/schwartz.rm
(realplayer)

(...)
(Economic) policies are being sold with a sales campaign that bares no resemblance to the actual content of the policies. I believe this is completely new.

Elimination of taxes on dividend income benefits people high up on the income ladder. 40% of wealth is in the hands of 1 percent of the population. The direct benefits of this policy flows to very very well-off people.

You couldn't sell this policy on the basis that it is a populous policy, that it is about cutting taxes for the regular people.

Yet that is exactly how it is being sold.

It is being sold trough... "lies" is not quite the right word, because they are careful to phrase things so that they are literally true, just misleading. The scams are transparent, they are almost childish, it is hard to believe that anyone would dare to do such a thing.

One of the scams that is used is a variant of the old "When Bill Gates walks into a bar that makes everybody in the bar a billionaire, because once he's in the bar the average income of the people in the bar is a billion dollars".

That is exactly the logic that is used in the speeches; over and over again it says "93 million taxpayers will get an average tax break of 1083 dollars next year".
Which is true. The problem is that the great bulk of that is huge tax breaks for a few people at the top, and about 250 dollars for the person in the middle.

You have this image of 93 million people getting 1000 dollar checks, which is completely misleading.
They didn't exactly say that because they don't want you to think that, and it is amazing that they can get away with it.

Another argument is that it's "for helping the elderly; most of the benefits of dividend tax exemption will go to older people".
Which is true. That is if you look at multimillionaires, you find they tend on average to be elderly.
If you do the arithmetics, you find that 75% of elderly get zero. More broadly, for elderly Americans with an income of less then $50.000, a grand total of 4% of this tax break will go to them.

This is amazing, it is so transparent it's ridiculous. It is typical of the way that policies have been sold these last two years.
Not just in economics but i'm going to stick to economics.

If we are polarized country politically it might well be at least in part is because we are polarized country economically. What has been happening is a extraordinary pulling apart of the income distribution. Traditionally people look at income distribution by "quintiles", by blocks of 20%. But that is not where the action is. It is not in the top 10%, it is not even in the top 5%.

To really see what is going on you need to look at the top 1%, the top 0.1% and the top 0.01%. Then you discover that there has been an explosion of income on the very top of the scale;

top 1%
1970 9%
2000 22%

top 0.1%
1970 2.8%
2000 11%

top 0.01%
1970 1%
2000 5%

"We are by these numbers fully back to and by some measures above the level of concentration of income that we had in the 1920's."

[On the Road]

22. Reagonomics is Not Exactly "Cutting Taxes on the Rich"

it's another name for supply-side economics, which is the theory that in order for the economy to grow, government should focus on policies which increase investment and production rather than consumer demand. It's a good political excuse for cutting taxes on the rich, but not really the heart of the issue.

The problem with supply-side economics is that it completely depends on continual optimism in the business community. Once that's broken, stocks tank, businesses stop investing, and the economy unravels. That's what happened in 1929. One reason it's not happening now is government is a much larger part of the economy, and the deficit is providing massive fiscal stimulus.

[CrookStreet]

24. Reaganomics

My guess, is that it was a combination of his social programs, and then World War II's full employment.

[newyawker99]

28. Hi CrookStreet!!

Welcome to DU!! :toast:

[Ouabache]

25. Yes that's fair and the New Deal reforms saved us from the same result

in the 80's.

But, with the way the neocons are chipping big chips out of the New Deal reforms, and doing end runs around those same, I don't see how those reforms and safety nets will save us much longer. Mainly just because they WON'T be there to do the job.

[Name removed]

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