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655727 tn?1283296048

One thought on why the stimulus isn’t/didn’t work

In 1932, when the American public voted President Herbert Hoover out of office, they were searching for an end to the economic chaos and unemployment that had gripped the nation for two years. They turned to a man promising a better life than the one they had known since the beginning of the Great Depression — Franklin D. Roosevelt.
When FDR took office, he immediately commenced a massive revitalization of the nation's economy. In response to the depression that hung over the nation in the early 1930s, President Roosevelt created many programs designed to put Americans back to work. http://www.u-s-history.com/pages/h1586.html

President Franklin Roosevelt needed innovative solutions if the New Deal was to lift the nation out of the depths of the Great Depression. And TVA was one of his most innovative ideas. Roosevelt envisioned TVA as a totally different kind of agency. He asked Congress to create “a corporation clothed with the power of government but possessed of the flexibility and initiative of a private enterprise.” On May 18, 1933, Congress passed the TVA Act  http://www.tva.com/abouttva/history.htm

These are two examples of the programs that were funded by the government during the “Great Depression” some would argue though that   not have been successful without the US becoming involved in WWII.
Parallel today and the massive spending the Government is doing to get jobs going again and the two war efforts that has cost and will continue to cost Billions of dollars. Why isn’t it working? Here are my thoughts, back then the US made everything we needed and wanted, and when a dollar was spent it stayed in the US and created more jobs here. This created an upward spiral and we became a very prospering nation again.

Today only a fraction of a dollar spent stays here because we are so greedy we want cheap goods while demanding high wages and maximum return on investments. It is not the government’s fault or the large corporation’s but yours and mine. It is up to us to fix it by STOP buying things made in China, India, Mexico and other countries that do not pay wages that we would want to live on. We need to shop at the Mom and Pop stores, not the huge stores that buy direct from those nations. We need to seek out and buy what is made right here in the USA and be ready to pay a higher price.

Increasing the taxes on those that make high wages will only go to stifle the spending they do and reduce the willingness to invest in jobs right here and employ you and me.
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Avatar universal
So in a nutshell, it depends on who you listen to. But if you believe that things are not working as implemented, and only a war will straighten things out then, I have one more question.


Who shall we declare war on? The Muslims?
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Avatar universal
The Great Depression was a period of worldwide economic depression that lasted from 1929 until approximately 1939. The starting point of the Great Depression is usually listed as October 29, 1929, commonly called Black Tuesday. This was the date when the stock market fell dramatically 12.8%. This was after two previous stock market crashes on Black Tuesday (October 24), and Black Monday (October 28). The Dow Jones Industrial Average would eventually bottom out by July, 1932 with a loss of approximately 89% of its value. However, the actual causes of the Great Depression are much more complicated than just the stock market crash. In fact, historians and economists do not always agree about the exact causes of the depression.
Throughout 1930, consumer spending continued to decline which meant businesses cut jobs thereby increasing unemployment. Further, a severe drought across America meant that agricultural jobs were reduced. Countries across the globe were affected and many protectionist polices were created thereby increasing the problems on a global scale.

Franklin Roosevelt and His New Deal
Herbert Hoover was president at the beginning of the Great Depression. He tried to institute reforms to help stimulate the economy but they had little to no effect. By 1933, unemployment in the United States was at a staggering 25%. Franklin Roosevelt became president on March 4, 1933 and immediately instituted the first New Deal. This was a comprehensive group of short-term recovery programs. It not only included economic aid and work assistance programs but also the end of the gold standard and of prohibition. This as then followed by the Second New Deal programs which included more long term assistance such as the Federal Deposit Insurance Corporation (FDIC), the Social Security System, the Federal Housing Administration (FHA), Fannie Mae, the Tennessee Valley Authority (TVA), and the Security and Exchange Commission (SEC). However, there is still question today about the effectiveness of many of these programs as a recession occurred in 1937-38. During these years, unemployment rose again. Some blame the New Deal programs as being hostile towards businesses. Others state that the New Deal, while not ending the Great Depression, at least helped the economy by increasing regulation and preventing further decay.
In 1940, unemployment was still at 14%. However, with America's entry into World War II and subsequent mobilization, unemployment rates dropped to 2% by 1943. While some argue that the war itself did not end the Great Depression, others point to the increase in government spending and increased job opportunities as reasons why it was a large part of the national economic recovery.
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Avatar universal
Your right, people can speculate, which is exactly what has been going on and still does to this day. What I would like to know is what you would see as having been a solution. What do you think the pres should have done and what in your opinion would have been the outcome. Keep in mind that we had a surplus under Clinton and take it from there. Recession, two unfunded wars, and the tax cuts under bush all being in place 2 years ago.


Me, I can handle a depression if need be as I am old enuff to know what to do to survive. I would be very interested in your solutions. How would you have kept all those jobs from going overseas for starters.
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684676 tn?1503186663
people can speculate all they want, but there is alot of ways it could of gone, for instance Gm might of been taken over by penske and other investors, do you think it was a fair bankruptcy when the bondholders got a few cents on the dollar and the union walked with the majority of holdings, when it was the legacy costs that drove them into the ground, albiet poor management descisions.

and whose to say 8 million more would be out of work, sounds like not just repubs listening to doom & gloom scare tactics........
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Avatar universal
So, say we didnt do the stimulus or the tarp, let the auto dealers crash, not bail out the big banks, or the mortgages what would have happened. Now seriously, looking back I wish we had let it all fall where it may but realistically what do you think would have happened eh? We would not be in a recession right now, but rather a depression. 8 million more people at least would have been out of work instead of what we have now. Is that really a better scenario ya think?

And if your hearing the whining now, just imagine what it could have been, or still could be.
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684676 tn?1503186663
The New Deal Didn’t Work the First Time, Let’s Try it Again
http://geekpolitics.com/the-new-deal-didnt-work-the-first-time-lets-try-it-again/

spending your way out of a recession will never work!

dec. 7th 2008  


Obama is planning a new public works project similar to that of FDR’s New Deal. He has apparently done a good job studying the history of how the New Deal was implemented. He wants to raise taxes on the rich to create jobs that are out of the scope of what the federal government is supposed to do.

Creating jobs sounds like a great idea. The problem is the government doesn’t have the money to be able do this without raising taxes or continuing to go deeper into debt. Raising taxes will not help the economy, and going deeper into debt to China is also a really bad idea.

The other problem is that the government is really inefficient. At everything. They will take your tax money and create lots of inefficient jobs. This is exactly what happened during the Great Depression. This is what extended it.

For the last few months we have had bad companies taking handouts from Washington. Now we are going to have congressmen trying to bring home the pork to their districts. They will vote for these things, create jobs in their districts, and make the recession worse. However, since the congressman in Ohio is taking federal money from taxpayers in Tennessee for his district, his district is happy with him. He will get re-elected because of this. He will continue to vote with Obama because of this. However, does this help the country as a whole, taking money from people in one place and giving it people in another while the government wastes some of it on the way?

What is going on here is that Obama hasn’t learned from history. The New Deal did not work. Don’t trust my opinion? How about Henry Morganthau, Secretary of Treasury for FDR. He said this in 1939:

    We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and now if I am wrong somebody else can have my job. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot.

Transferring money from one person to another doesn’t create jobs. It doesn’t create more money. It just changes who has the money. Henry Hazlitt described it as the broken window fallacy:

    Let’s say that we have a nice suburban area sort of like we have here in Washington, DC, out in Chevy Chase. And we have some guy there who has a nice picture window, and some kid goes by, a hoodlum, and throws a rock through that window, breaks it. And let’s say that it costs $500 to replace that window. Well, our first reaction might be: What a horrible thing. Let’s catch the perpetrator.” But what if somebody else came up and said, “Wait a minute. The window’s been broken, some time has elapsed, we haven’t caught the guy, but maybe we shouldn’t catch him to throw him in jail. Maybe we should catch him to pat him on the back. Because I’ve observed what’s happened in that house and what’s happened is this: He broke the window, but the guy who had the window broken called up the glassmaker and the glassmaker put the window in and installed it for $500. Then the glassmaker took that $500 and bought a DVD player. He also bought a couple DVDs. And then he bought a reclining chair to sit back and watch the movies, all with that $500. So that broken window has generated business and now we have more DVD sales, more reclining chair sales, and it’s generated business all around town. So isn’t this a good thing?”

    Where’s the problem with this argument? The valid point here is that the guy whose window was broken also might have wanted to buy a DVD player and a reclining chair. Or he might have wanted to buy a suit of clothes and some insurance. So that guy, and the tailor, is out $500 because instead of buying a suit and a shirt, he now had to pay for the window. You never generated real business because the guy who had the window broken is out $500 and the guy who had replaced the window is up $500, but the guy who had the window broken would have also been spending $500. So there’s really no net gain.

This gets worse when the government is in the middle. When the money goes into the government before it changes hands, there is less money coming out on the other end.

If Obama can’t learn from history, we are doomed to repeat it. When FDR took office in 1933 unemployment was over 24%. In 1939, it was 17.2%. In 1943 it was 1.9%. In FDR’s seventh year in office, unemployment was still over 17%. That doesn’t really seem to me like something that worked really well. World War II on the other hand did get us out of the Depression. It made unemployment go away. The New Deal did not. I certainly do not want another world war. Obama’s New Deal is also something I could do without.

Now 2 years later do you really think we are better off than if we would of been true capitalists and saw what rose out of the embers............

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