Hjalmar Schacht, an influential German economist, banker, and politician, once said, “The economy is a very sensitive organism.” The American economy was and still is extremely fragile. There were many factors that crippled the economy and forced this country into the worst economic slump in the history of the world. The American economy suffered immensely during the Great Depression in which the United States GDP fell by almost 50%. The United States was in shambles and the diligent efforts of Herbert Hoover and Franklin Delano Roosevelt to revive the economy were fruitless. The United States reaped tremendous economic benefits from their involvement in World War 2 which is shown by the effects of WW2 kickstarting the United State’s economy
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Lee E. Ohanian, the vice chair of the University of California Los Angeles’s Department of Economics, and Harold L. Cole, a professor of Economics at UCLA, have researched data collected in 1929 by the Conference Board and the Bureau of Labor Statistics to prove that Roosevelt’s New Deal inadvertently helped the Great Depression last 7 years long than it should have. He enacted a ludicrous law that allowed workers to have wages that were 25% higher than they should have been given the state of the economy. The National Industrial Recovery Act, one of FDR’s major policies, gave various industries the opportunity to enter into agreements that would force them to raise wages by significant amounts but they would be immune from antitrust law and prosecution. Antitrust cases almost halved between 1920 and 1938. Around 80% of private companies in the United States entered these agreements. This act allowed companies to price goods and services significantly higher than they should have been which mean that although blue collar had higher wages, they still stayed in poverty. Ohanian and Cole have calculated that this act contributed to 60% of the New Deal’s failure in reviving the economy. Ohanian’s views on Roosevelt’s policies was "High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns. As we've seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market's self-correcting forces." “By 1938 he had lost his working majority in Congress, and a conservative coalition was back, stifling the New Deal programs. When the economy had begun to bounce back, FDR pulled back on government spending to balance the budget, which contributed to the recession of
Lee E. Ohanian, the vice chair of the University of California Los Angeles’s Department of Economics, and Harold L. Cole, a professor of Economics at UCLA, have researched data collected in 1929 by the Conference Board and the Bureau of Labor Statistics to prove that Roosevelt’s New Deal inadvertently helped the Great Depression last 7 years long than it should have. He enacted a ludicrous law that allowed workers to have wages that were 25% higher than they should have been given the state of the economy. The National Industrial Recovery Act, one of FDR’s major policies, gave various industries the opportunity to enter into agreements that would force them to raise wages by significant amounts but they would be immune from antitrust law and prosecution. Antitrust cases almost halved between 1920 and 1938. Around 80% of private companies in the United States entered these agreements. This act allowed companies to price goods and services significantly higher than they should have been which mean that although blue collar had higher wages, they still stayed in poverty. Ohanian and Cole have calculated that this act contributed to 60% of the New Deal’s failure in reviving the economy. Ohanian’s views on Roosevelt’s policies was "High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns. As we've seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market's self-correcting forces." “By 1938 he had lost his working majority in Congress, and a conservative coalition was back, stifling the New Deal programs. When the economy had begun to bounce back, FDR pulled back on government spending to balance the budget, which contributed to the recession of