Korean Job Discussion Forums

[Pluto]

[MollyBloom]

[bacasper]

It was the gearing up for World War II that finally lifted the US out of The Great Depression, wasn't it?

[MollyBloom]

[visitorq]

[mises]

No. The Great Depression was not brought to an end by the War. The idea that the GD was ended by WW2 is pushed by Keynesian to justify their love of massive public works projects as "stimulus". The GD was a complicated event. It makes no sense to say "war did it" just because that's easiest.

The Great Depression was made more serious by Obam, er, Hoover and the others. It probably wouldn't have been a "Great" event if not for them.

[bacasper]

Well, then what got us out?

[mises]

Lots of different explanations are offered by economic historians. Virtually all are a product of an individual pushing a particular ideology. I honestly don't know what ultimately did it.

[bacasper]

Surely some of these economic historians cite the war.

And if you don't know what got us out, how can you be sure it was not the war?

[mises]

The Keynesian true believers do say it was the war. Paul Krugman used it as a justification for the stimulus.

But how could the war have done that? Clearly, it lessened unemployment and increased aggregate production during the war, but like China's current stimulus binge, these end. The question must focus towards the post-war period. Ben Bernanke thinks it was monetary loosening. That's probably the best answer. Which is why he is loosening now because he sees this depression as similar in structure to the Great Depression. The Great Depression and our depression are different in structure because the GD was caused by monetary tightening which constricted aggregate demand and ours was caused by a massive credit expansion which borrowed future demand and we will now return to produced demand. If that makes sense.

[Pluto]

Well, I wouldn't call Hazlitt's Economics in One Lesson sophomoric. ( I linked the cliff notes, if you want to read the book, here it is) The work challenges its readers to search beyond what we and look for what is unseen. There is popular fallacy that claims WWII got us out of the Depression. There are many reasons for how the Depression came to a conclusion. If it was due to the War, then it was due to the FDR administration leaving the business community alone to build the war machine. Also, there was rationing of everything from apples to cigarettes happening during the War. Hazlitt separates monetary wealth from real wealth. People made more money because there was more of it, it was printed into existence. Real wealth such as houses, factories and labor were either destroyed or diverted to support the War machine. After the War, peoples energies went into rebuilding houses, roads, bridges and factories; they weren't continuing to be built. I don't believe it was WW2 that got us out of the depression nor do I believe an economy can be built by killing people and breaking stuff.