Saturday, November 8, 2008

David Friedman: FDR Prolonged the Great Depression, and Obama May Do It This Time

Writes Friedman:

...the account I think more nearly accurate holds that the continuation of the Depression was more nearly because of the New Deal than in spite of it. A decade earlier, what looked as though it should have been the beginning of a great depression was met with no substantial government intervention and the effects were over in a year or so. This time Roosevelt intervened on a massive scale, following a similar but smaller intervention by his predecessor, and the depression was still going eight years later when the attack on Pearl Harbor pulled the U.S. into the war.

It could happen again. One can imagine a future in which President Obama, supported by Democratic majorities in both houses, engages in massive interventions in the economy following the massive interventions already under way and the result is a serious economic downturn prolonged for years, perhaps for two terms.

I think David is an optimist. If the country gets out of 8 years of Obama in any shape to easily rebel against oppressive back-to-back Obama interventions and accompanied crackdowns on liberties, I will be amazed. The Great Depression could very well look like a cakewalk compared to what Obama may leave us.

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