Friday, April 20, 2012
During the "Great Depression" of the 1930s, the only institution that had money to spend in America. Was the Federal Government, not because they built up great surplus's because of great Fiscal Policy. And obviously not because of the "Great Depression". But because the Feds control the Federal Currency, the American Dollar. And are the only institution that has the authority and can afford. To borrow billions if not trillions of dollars to spend, without going out of business . They can borrow money from other countries, up to a certain point. That their Tax Payers get stuck paying the bill for, like with Interest Rates and in taxes. And this is how a lot of the New Deal was financed, not all of it. The FDIC, Social Security and Unemployment Insurance are all Self Financed. But the new Infrastructure Investment that came because of the New Deal. Was paid for through borrowing, the theory being that when the Private Sector. Doesn't have money to spend, the Public Sector must spend. In order to make up the difference.
The New Deal was clearly a collection of Keynes programs, designed to invest billions of dollars. In the American Economy, to make up for the lack of Consumer Spending in the Private Sector. Because a lot of people, companies and banks were broke and going out of business. So the FDR Administration stepped up with the New Deal, to try to fill that void. To fill the huge hole and deficit of Consumer Spending left by the "Great Depression". Same thing with the American Recovery Act of 2009 by the Obama Administration. Roughly 800B$ in State Aid, Infrastructure Investment and new Tax Cuts. Designed to stop the hole from getting even bigger by the "Great Recession". And the American Economy was technically out of Recession by the summer of 2009. Even though the damage left by the "Great Recession, was still left in place.
Keynes Economics didn't get America out of the "Great Depression" and "Great Recession". As far as the economy moving back to Full Recovery and getting back to where they were. Before these two Economic Crisis's but what they did do. Was to stop digging, plugging the hole, so things wouldn't get any worse. And buying America time to recover and get past these Economic Crisis's. Which is what happened in the 1940s and what's happening now.