Quote:
Originally Posted by GregE
Government intervention didn't cause the 1929 stock market crash but it most certainly would have mitigated (if not actually prevented) it.
Ditto re the 2008 meltdown.
Moreover, the 1930's depression didn't really end until after the government started spending unprecedented amounts of money preparing for and eventually entering WWII.
TRANSLATION: It took massive government spending to get us out of the last depression.
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Common myth.
The Depression of 1920?21 lasted 18 months and it took no gov intervention to end it. In fact the Depression of 1920-21 was a result of the massive gov intervention during WW1.
Gov intervention in the form of credit expansion by the Fed caused the bubble that led to the 1929 crash. Massive gov intervention under Hoover and FDR turned the 'natural correction process' that a depression actually is into "the Great Depression". Things only got better AFTER WW2 when the gov intervention was greatly reduced.
Yes, it's true that the gov spent a lot of money during WW2 and this did result in high nominal wages. But what good were those when you couldn't buy anything with them?! People built tanks and bullets and got paid in USD, but they couldn't buy milk, butter, meat, sugar,... because all those things were rationed.
At the end of WW2, the Keynesians screamed the world would end if the gov intervention wasn't continued. It wouldn't be the last time they'd get it wrong.