The period of 1925 to 1940 saw the political and economic landscape of the United States broken by the Great Depression. On October 24th, 1929 millions would rush to banks and markets to pull their capital from the impending crash in an event known as Black Thursday. The shockwave caused by this crash launched the Great Depression, a period of history that affected every sector of American life and still influences political policy today. Three main ideas attempt to explain the cause and length of the Great Depression by assigning blame to either the Federal Reserve, the Presidency, or the private business center. It is the opinion of Milton Freedman that the popular view surrounding the cause of the Great Depression is incorrect. According
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In the early 1920’s the government doubled the amount of money in the economy, making it easier to acquire loans and lowering interest rates. This instigated the economic boom known as the roaring twenties. Later in the roaring twenties, the government pulled about a third of the money out of the economy, essentially destroying investment prospects and causing the collapse of the stock market. Chesterton then suggests that this fault of government was elongated by the way in which it attempted to fix it. The policies of Hoover, who double income tax, and Roosevelt, who initiated the New Deal, crippled the free market’s ability to recover. Chesterton especially rails against the policies of Roosevelt, who slashed the value of the dollar by half, doubled the debt and raised unemployment. Using this debt, Roosevelt paid workers through the Civil Works Administration and the Works Progress Administration to do “silly things”, keeping capital and labor away from industry, where it was no badly needed. Eventually, the Supreme Court overturned his laws and opened up the United States for international trade during the economically critical period of World War II. In Chesterton’s opinion, it is the decrease in regulation and government policy that finally allows the economy to recover in the …show more content…
He begins by explaining the role that Keynesian economics played in the policies of Franklin Roosevelt. Keynesian economics center around the principle that the private market’s negative decisions make it necessary for government to intervene and raise the gross domestic product. Politically, an application of this philosophy was to “prime the pump” of the economy by pouring government money into it. The narrator argues that many of Roosevelt’s early policy follows these principles, such as the 250,000 men enlisted on government dollar to work in the west. However, Keynes accuses Roosevelt of being selective as to where he applied the philosophy, and blamed the recession of 1937 on this incomplete devotion to priming the pump. According to the narrator, the end of the Great Depression only comes after the implementation of more intervening policy in the economy of World War
In the early 1920’s the government doubled the amount of money in the economy, making it easier to acquire loans and lowering interest rates. This instigated the economic boom known as the roaring twenties. Later in the roaring twenties, the government pulled about a third of the money out of the economy, essentially destroying investment prospects and causing the collapse of the stock market. Chesterton then suggests that this fault of government was elongated by the way in which it attempted to fix it. The policies of Hoover, who double income tax, and Roosevelt, who initiated the New Deal, crippled the free market’s ability to recover. Chesterton especially rails against the policies of Roosevelt, who slashed the value of the dollar by half, doubled the debt and raised unemployment. Using this debt, Roosevelt paid workers through the Civil Works Administration and the Works Progress Administration to do “silly things”, keeping capital and labor away from industry, where it was no badly needed. Eventually, the Supreme Court overturned his laws and opened up the United States for international trade during the economically critical period of World War II. In Chesterton’s opinion, it is the decrease in regulation and government policy that finally allows the economy to recover in the …show more content…
He begins by explaining the role that Keynesian economics played in the policies of Franklin Roosevelt. Keynesian economics center around the principle that the private market’s negative decisions make it necessary for government to intervene and raise the gross domestic product. Politically, an application of this philosophy was to “prime the pump” of the economy by pouring government money into it. The narrator argues that many of Roosevelt’s early policy follows these principles, such as the 250,000 men enlisted on government dollar to work in the west. However, Keynes accuses Roosevelt of being selective as to where he applied the philosophy, and blamed the recession of 1937 on this incomplete devotion to priming the pump. According to the narrator, the end of the Great Depression only comes after the implementation of more intervening policy in the economy of World War