Julie Borowski, a young libertarian, wrote this nice succinct article about 5 common myths about the New Deal. See the article for yourself here.
The five myths outlined in the article:
1. Myth: The free market caused the Great Depression
Truth: The Great Depression was caused by an out-of control Fed (money supply increased by 60% between 1921 and 1929. Ben Bernanke, Milton Friedman, and others have recognized this.
2. Myth: Herbert Hoover was a do-nothing laissez-faire President
Truth: Hoover, President during the crash and up until 1933, doubled government spending in real terms in 4 years, prohibited businesses from cutting wages, launched huge public works projects (Hoover Dam & San Francisco Bay Bridge), increased the top tax rate from 25% to 63%, and passed the Smoot-Hawley tariff into law creating a trade war.
3. Myth: The Fed's tight monetary policy caused the Great Depression
Truth: The Fed's "expansionary" monetary policy caused the great depression. A policy similar to one we see today with interest rates being held at 0% until at least 2015 and an indefinite infusion of 40b in cash to wall Street each month to buy mortgages.
4. Myth: FDR's New Deal ended the Great Depression
Truth: FDR's New Deal made a significant depression "Great." In 1931, unemployment was at 16.3%, in 1939, after two terms as President, the unemployment rate was 17.2%. Read "New Deal or Raw Deal" by Burton Folsom Jr., you can review it here.
5. Myth: WWII ended the Great Depression
Truth: Life was not better during WWII, many commodities were banned, production of new cars was banned, men went overseas to fight in a war unmatched by any in the modern era. But, between 1944 and 1948, the government cut spending by 75%, and the economy grew. Unemployment was at about 3.5% during this time.
Make sure to check out Julie's full article here!
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