In this study…after examining American recessions and depressions significantly affecting economic activity, it was surprising to find that the Federal government or Federal Reserve Board were directly involved in providing the economic expansive conditions that…always precede the inevitable contractions. And more times than not, it was for political gain that the expansive conditions were produced…
The next President to trigger a depression was Andrew Jackson [1829-1837]. Unfortunately for the country, it was a severe, long-lasting one regarded as being second in misery only to the Great Depression of the 1930s… Jackson’s headstrong actions to cripple the [Bank of the United States] and at the same time help settlers and farmers buy needed land produced a strong [financial] expansion followed by a sharp contraction [1837-45]. Newspaper drawings depicted widows and children begging for food, shops for sale, runs on banks, factories closed, unemployment lines and sheriffs auctioning off foreclosed farms…
As soon as [Benjamin] Harrison and the Republicans entered office in 1889, they started making good on their expansive promises. The veterans’ pensions were doubled, the McKinley Tariff Act of 1890 gladdened the protectionists and the Silver Purchase Act placated farmers and the silver interests. All this Federal largesse helped the economy to take off. Millions of dollars were poured into the economy. Lending began in earnest again to the railroads and construction; businesses expanded and hired more workers. It was the same expansive exuberant scenario all over again… The Republican Congress came to be pejoratively called the “Billion Dollar Congress”…
In the gathering economic gloom of early 1930, the Republican Congress passed the Hawley-Smoot Tariff Bill in June. Benjamin Anderson (ibid. p. 224), a banker, economist, professor and author, called it the worse “folly” of the government between 1929 and 1933. In an unprecedented move, 1028 economists took out a full page ad in The New York Times urging Hoover to veto the extremely high tariff bill which they said would destroy foreign trade and cause worldwide unemployment.
Hoover, however, being a true Republican with their obsessive liking of high tariffs, signed the bill. Almost immediately…world trade came to a stand still… Anderson (ibid.) had noted that many of the Republican Senators and Representatives elected in the 1920 Republican landslide were ignorant in economics. Presumably many of those members were still present in Congress in 1930…
The evidence is clear cut whenever one of [Franklin] Roosevelt’s socialistic laws, stripping assets from the rich, was passed, economic activity slowed and unemployment rose. Just the opposite occurred whenever one of the hated laws was found unconstitutional or repealed: economic activity rose and unemployment dropped.
One would think that Roosevelt and his advisors would have noticed the correlation and changed policies. But that was not to be. His egotistical stubbornness saw to that. It was the greedy rich not cooperating that were to blame for the slowness of the recovery; it was the out-dated gold standard restricting the economy; it was the nine “old men” of the Supreme Court holding back job creation; it was disloyal Democratic Senators undermining is endeavors. Everyone or everything was to blame except him or his policies…
In 1980, Ronald Reagan took advantage of the country’s economic woes that were saddled on Jimmy Carter by promising the voters a tax cut in his campaign speeches. Although a politically practical thing to do – nobody wins the Presidency by promising a tax raise – it was fiscally irresponsible. The national debt in 1980 stood at $930.2 billion with little chance of paying it down without a tax raise. The last big tax cut proposed by Kennedy and passed by Johnson ($11.5 billion) ended up dragging the nation through some twelve years of inflation, decreased production, unemployment and four recessions [1970s]. Reagan’s tax cut of $750 billion in 1981 phased out over five years was sure to have the same negative effects down the line as seen in previous expansive periods…
So the 1990s ended with a severe recession just as they started and both had the fingerprints of Mr. Greenspan closely entangled with the beginnings of each recession. Indeed, the 1990s are a clear example of just how difficult it is to maintain a stable economy based on fiat money.
…the scorecard for Chairman Greenspan in his first 13 years in office (1987-2000) was two recessions and one “soft landing.” As we shall see, his record in the new century wasn’t too impressive either…
In essence, for over a hundred and fifty years the government has enabled the rich to get richer… It has been a giant con game as the Congress became more corrupt and the money amounts involved larger. The country started as a republic, changed to a democracy because of populist pressure and is now a corporate oligarchy posing as a democracy…
But the little people, the voters, aren’t blameless in this transformation. After all, it is they who vote the increasingly corrupt politicians into office election after election. It is they who accept the politicians’ bribes leading to expansions and later contractions. They, who value tax cuts and earmarks over integrity and frugality, are the first culprits in eroding the government… The 2007-08 financial collapse is clear evidence that reform is needed in our political process and corporate governance. Not just reluctant, patchwork reform as in the past but DRASTIC REFORM meaning Constitutional amendment reform to insure that the political and financial future of the country is stable, frugal and strong… The first change should be removal of financial responsibility from Congress. Their historical fiscal record has been atrocious as evidenced by the too-many recessions and depressions the country has endured not to mention the stultifying current national debt… In place of the House handling the country’s finances, a Federal Economics Board (FEB) should be established… Their mission should be a long-term stable economy catching in the bud any expansive tendencies [leading] to a destructive contraction negatively affecting employment – the ultimate life force of any economy.
|