OK, so what was I talking about?
Oh yeah, the New Deal, and crippling national debt, and the loooong, slow, agonizing death of the American Spirit.
Proof that the road to hell is paved with good intentions.
Roosevelt adopted the Keynesian model of fiscal policy, which was to run deficits during hard times, for fear that the private sector would not invest enough to bring the country out of a recession. He also followed Great Britain’s lead in abandoning the gold standard in 1933, and forced citizens to sell all but the most trivial amounts of privately held gold to the government. After that number, he raised the price of gold from $20.67 to $35.00 and cut the value of the dollar nearly in half. In the midst of such devastatingly bad decisions, FDR instituted Social Security and what would later become our modern welfare system, and lowered taxes. Contrary to where you might think things are going, these were not in and of themselves bad ideas, and did much to help the economy, although not in the way the Keynesian economists had hoped. Instead of funneling the new income afforded to them through social programs (in combination with a sharp downturn in unemployment) back into the economy, people started to pay back the debts they had been accruing over the years.
Things actually looked bright for a while, until a sudden backslide in 1937 caused unemployment to rise again, and production and profits to waste away. Roosevelt’s answer to this was to nearly abandon any attempt to balance the national budget and instead spend money we didn’t have like there was no tomorrow.Government spending tripled between 1930 to 1940, as did the national debt, from 16 billion to 72 billion.
Though employment was slowly improving even after 1937’s nosedive, numbers would not significantly improve until the advent of World War II and the subsequent drive to provide supplies, men and services to support the war effort. At the height of the big deuce, unemployment dropped to about 3%, and have never risen above 8% to this day Even though the economy seemed to be getting better, the damage from FDR’s deficit spending practices had been done. Though most of the New Deal was rallied against and done away with by the advent of the war, the powers of the federal government were greatly enhanced, and our long slide towards becoming a socialist state had begun.
Did he just say “socialist state”, referring to the United States?
What would you call it?
I began this series intent on filling you in on the decline of the American Spirit , and believe me, this history lesson is leading somewhere. In my next post, “The Land of the Free” keeps taking and giving it away…