Great Myths of the First Great Depression

PHASE ONE: The Boom (The Roaring Twenties)
THE MYTH: ³The Great Moderation!´
1. 2. 3. 4. The problem goes back to the war « the Napoleonic War. What prosperity looks like«the nineteenth-century version What Hoover and FDR learned in their war What Churchill and Strong learned after theirs.

PHASE TWO: The Crash (1929-1932)
THE MYTH: ³Herbert Hoover was a laissez-faire liquidationist ´ THE MYTH: ³The Fed were dithering do -nothings´ THE MYTH: ³The Problem was Overproduction and Underconsumption´
Hoover¶s four-step programme for success: 1. Follow the ³New Economics´ and prop up wages 2. Cripple international trade 3. Tax more, and spend even more 4. New Deal-lite

PHASE THREE: Dr New Deal (1932 to 1936)
THE MYTH: ³Franklin Roosevelt¶s New Deal saved America from the failure of free-market capitalism.´ THE MYTH: ³Government programmes helped lower unemployment by putting many Americans to work´
Dr New Deal¶s Prescription for success: 1. Follow Mussolini and prop up big corporations 2. The National Run Around& the Alphabet Agencies 3. Tax even more, and spend even more 4. New Deal in full!

PHASE FOUR: The Depression within a Depression (1937 to 1938)
THE MYTH: ³Michael Joseph Savage helped lower unemployment by putting many NZers to work´ THE MYTH: ³Thank God for FDR and Mickey Savage!´
Dr New Deal¶s Prescription to really kill off the patient: 1. The Wagner Act and the Alphabet Agencies

2. The Supreme Court and the Court Packing Saga: ³and then the only rabbit left was spending«´ 3. Regime Uncertainty 4. Green shoots?

PHASE FIVE: Dr Win the War (1940 to 1945)
THE MYTH: ³It was the war what saved us!´ THE MYTH: ³«the economy was producing more guns and more butter « Americans never had it so good.´
1. 22 percent of US workforce, 12 million men, in the military--most of them risking death 2. Plenty of guns, no butter. 3. Forced savings

PHASE SIX: A Miracle at Last! (1946 to 1949)
³It was no miracle to herd 12 million men into the armed forces and to attract millions of men and women to work in munitions plants during the war. The real miracle was to reallocate a third of the total labor force to serving private consumers and investors in just two years. That event, whose reality is unambiguous, is unique in U.S. economic history. [And this is the miracle that really needs explaining.]´ - Robert Higgs

   ³Great Myths of the Great Depression ,´ by Larry Reed
online at

³James Mill on the Overconsumption and Underproduction Fallacies ,´ intr. by George Reisman,
online at

³Herbert Hoover¶s Depression ,´ by Murray Rothbard
online at

³The Dangerous Return to Keynesian Economics ,´ by Steven Kates
online (with foot notes) at -dangerous-return-to-keynesianeconomics 

³Regime Uncertainty: Why the Great Depression Lasted So Long, and why Prosperity Resumed after the War ,´ by Robert Higgs
online at 

³Wartime Prosperity? A Reassessment of the U.S. Economy in the 1940s ,´ by Robert Higgs
online at 

³Keynes & Space Aliens ,´ by Clifford Theis
online at -and-Space-Aliens

³From Central Planning to the Market: American Transition, 1945 1947 ,´ by Robert Higgs
online at publications/article.asp?id=109

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