Dr Wright
In the high school where I work I noticed pictures on the wall in a class room of moments in history. One picture says the American Revolution ended at Yorktown (somewhat untrue) and there was another that stated the Great Depression ended with FDR's social programs but I have read that World War II had an impact on the recovery, since you have wrote of the causes of it and other problems later in history could you comment on the recovery from the depression?.... signed (your cousin) DP
DP,
World War II rapidly brought the economy to full employment and beyond. It did not, repeat did not, bring the U.S. economy out of the Depression. FDR's social programs didn't either. What did the trick was loosening the gold standard (1 oz. gold to $35 from $20), which allowed the Fed to reflate the money supply, which lowered REAL (inflation adjusted) wages and interest rates, both of which had become far too high due to the deflation associated with the infamous bank panics and the stock market crash and subsequent decline in aggregate demand. 2H 1933 through 1936 were periods of strong growth (increases in per capita GDP). Unemployment decreased as well but more slowly. (As our beloved president recently noted, employment is a lagging indicator.) The unemployment rate would have been back near its normal low level by 1939, and certainly by 1941, even without the war had it not been for the so-called Roosevelt Recession of 1937-38, when FDR tried to balance the budget, in retrospect prematurely, and the Fed capriciously raised banks' reserve requirements for reasons only a central banker could "understand."
For more info., see a cute little volume I edited called Bailouts: Public Money, Private Profits due out from Columbia UP/SSRC shortly. It's only like 12 bucks on Amazon and my part of it is sort of a prequel to my Fubarnomics due out from Prometheus early next year.
