~ FDR’s Treasury secretary, architect of the New Deal, and close friend, Henry Morganthau, 1939

First of all, there is a general consensus (at least among mainstream economists) that FDR’s Keynesian policies did have an impact- the classic graph of GDP looks sort of like a W written on an upward sloped line. The middle of the “W” begins with FDR’s election in 1933 and continues till ‘37-’38, during which time he pulled back government intervention because of conservative pressure. Also, none of the actions were large enough, relative to the size of the economy.

Spending associated with the war, however, is exactly the sort of action Keynes was talking about and large enough to jump start the economy…

There is certainly a healthy argument about the role of FDR’s stimulus policies vs. expansionist monetary policy vs. devaluing the dollar vs. flight to quality from a collapsing Europe, and the modern understanding is the “more of everything” approach with Ben Bernanke (no wilting liberal) wrote often about and put into practice the past couple of years.

As for Hoover’s stimulus, you’re probably talking about the RFC and ERCA which were both passed in 1932 and adopted and expanded by the FDR Administration in 1933. BTW, Hoover also tried the favorite solution of conservatives for everything- tax cuts for the highest brackets (75%-25%) in 1929… That sure turned out well.

I do disagree with your analogy- this most recent crisis, for example, has many causes- expansionary monetary policy by the Fed is certainly one of them. You could also say that housing (or actually, the credit crisis) was the symptom of a number of underlying ailments- the foreign savings glut fueled by export driven policies and rising oil prices. “Innovation” in the financial system and laissez-faire oversight of shadow banking system were also critical to the crisis. Equally important, though more subtle was the stagnant or declining income of middle class households. How many of these can be answered by pointing at loose monetary policy?

What I am doing is attempting to find an instance where Keynesian economics ever lifted a country out of a depression. You can make the case that deficit spending from WWII lifted us out. Your argument is significantly undercut by the undisputed fact that the US government flooded the economy with money during the 1930’s to no avail. This is AFTER Hoover attempted a “stimulus” himself.

And no, the cause has little to do with the solution just as my infection needs an antibiotic regardless of how I contracted it. The “antibiotic” is the government allowing the market to correct itself. If you want to argue this point, we can though. I would just point out that the Austrian School believes that depressions are caused by the expansion of bank credit causing bad investments. Nothing like that in the last 5-10 years, right? We did not lend money to every person with or without a job so they could purchase houses and cause a market bubble, right?

Hard to argue with the Austrian School on that point.

I’m not quite sure how you can maintain that the cause of a recession/depression is irrelevant to the solution… Are you stating that the only answer to a deflationary cycle is to reduce government expenditures and tax rates?

I think Steve’s larger point about WWII is that it was a Keynesian stimulus program. Do you not think that war related government spending had anything to do with depression ending?

You state: “You learn history. What do you think my degree is in, baseball?”

Sociology? No, that was not it. I’m pretty sure it started with S.O.C… though.

You state: “The 1920-1921 recession/depression and the Great Depression are not at all comparable…”

Actually they are comparable, mainly because you are arguing the wrong point. The CAUSE of a depression is mainly irrelevant. All depressions are plagued by “debt”, “unemployment”, etc. regardless of their causes.

It is the solution that matters. The Fed’s activities were not until late 1921 (rates were reduced to 4% in November ‘21), when the worst of the depression was over and there was daylight. Did cuts in spending and taxes reduce unemployment and debt? Yes. I do not see how this point is even arguable.

FDR (and the Japanese during the 1920’s) took an opposite approach. He did not allow for a correction and employed Keynesian policies. Both nations ended up with a lost decade of production.

Hayek and the Austrian School were correct.

You state: ” Nor was I implying that the New Deal solved the Great Depression. The greatest federal spending program of all time, World War II, did that. ”

LOL Then WHAT is your point?

You state: “Rather, I said that those that decry the New Deal, or for that matter deny the utility of the government trying to do something about unemployment now,…”

So, you admit that FDR’s “solutions” did not correct the great depression, yet state we should utilize the SAME methods for today’s issues. I’ll take mustard on that pretzeled logic.

You state: “…forget that with the exception of the Woodrow Wilson years, people who shared their laissez-faire point of view had control of the government from the late 1890s to the early 1930s.”

Is it too late to get a refund on your degree? Really? You want to make the claim that Teddy “shared their laissez-faire point of view?”

I cannot begin to debate someone who has such a belief because it is such a distorted principle. You apprently see an “R” after a name and assume they MUST be laissez-faire capitalists. Either that or you graduated from the University of Wisconsin or perhaps Columbia, where Progressive revisionism was invented.