Quote:
Originally Posted by dc_dux
Sure, if you want to ignore the facts.
Five years of negative GDP growth between '28-'33, followed by eight years of economic growth when the New Deal programs kicked in (rising GDP, with the exception of '37 when FDR cut New Deal spending).....all of which took place before any war spending. |
This is the second time the above chart has been used here as proof that government deficit spending was the cause of economic recovery. It has be awhile since I seriously looked at Depression era data, and thought I would revisit some of the data given some of the conclusions being drawn from negative economic growth starting in 1937. I will just give raw data, from government sources, draw your own conclusions.
Here is the M1 money supply in billions:
1931 - 24.1
1932 - 21.1
1933 - 19.9
1934 - 21.9
1935 - 25.9
1936 - 29.6
1937 - 30.9
1938 - 30.5
1939 - 34.2
http://www.sjsu.edu/faculty/watkins/depmon.htm
Here is total government expenditures (first column) and total government "Civil and miscellaneous" expenditures (second column
1931 - 4.0 - 1.1
1932 - 5.1 - 2.1
1933 - 5.1 - 2.1
1934 - 7.1 - 4.6
1935 - 7.3 - 4.3
1936 - 8.8 - 4.1
1937 - 8.1 - 4.7
1938 - 7.7 - 4.9
One interesting note regarding the drop in spending between 1937 and 1938 - in 1937 there was 2.3 billion spent by the Bureau of Pension and Veterans Administration and 1.1 billion spent in 1938 and actual spending in the area of Civil and miscellaneous went up.
And next let's look at the actual deficit (first column) and tax receipts (second column).
1931- (.9) - 3.1
1932 - (3.1) - 2.0
1933 - (3.0) - 2.0
1934 - (3.9) - 3.1
1935 - (3.5) - 3.8
1936 - (4.7) - 4.1
1937 - (2.8) - 5.2
1938 - (1.5) - 6.2
http://www2.census.gov/prod2/statcom...ts/1937-07.pdf
1901-1950 Statistical Abstracts
When I look at the data I don't see government spending or government deficit spending as the driver of our recovery from the depression the depression. I do think there is a clearer connection with money supply growth and economic recovery. I do give government credit for that, however I still hold that deficit spending does not have a lasting positive impact on the economy and that increased taxes or increased inflation cancels any positive impact of deficit spending.