The State and Federal Governments’ Coronavirus Response Will Dwarf Economic Damage Done by FDR

depression-1During the 1930s, FDR managed to prolong the depression he inherited for over a decade by unleashing a vast array of wrongheaded economic interventions on an economy trying to correct itself from the malinvestments that occurred during the 1920s.

Whenever a financial bubble pops, prices fall from their artificially high levels, seeking their true, market level. This is the market’s way of liquidating the malinvestments and imprudent debt that resulted from prior central bank monetary inflation, which artificially raised prices and lowered the cost of borrowing and investing.

Many of FDR’s New Deal interventions proceeded from the economically idiotic belief that preventing prices from falling would help. So, for example, he used taxpayer funds to pay farmers to produce less crops at the same time many were going hungry. By lowering the supply of crops, he hoped to raise their prices.

But he never ordered people to produce nothing at all.

Today, the federal and state governments are doing just that, albeit for supposed public health reasons rather than economic ones. State governments are in many cases ordering most of their populations to stop producing anything whatsoever, while the federal government promises to reimburse their losses.

Reimburse them with what money, you ask? Good question.

Regardless, the economic devastation that will result from this economy-wide shutdown will dwarf the damage FDR did during the so-called “Great Depression.” If simply limiting production caused a decade-long crisis (and it really didn’t end until after WWII), ceasing production altogether will obviously be worse. How much worse depends upon how long the insanity lasts.

As far as that is concerned, never underestimate a government.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

3 thoughts on “The State and Federal Governments’ Coronavirus Response Will Dwarf Economic Damage Done by FDR

  1. Anna

    Its been a while now.. since we last communicated.. meaning me and you Tom…LOL we met while blogging.. forget the name of the website. before you started your venture in writing the books.. It was fun.. I’m so glad you have not lost your sanity and sense of right and wrong.. but after all these yrs.. what.. at least 25.. very little has changed and then we get hit with this new insanity.. My question Tom why now? with all the other past viruses that have come along why does this one have the power to shut down the Nation.. OK the way its transmitted I get it.. but its not worse than the common flu.. In fact there are more numbers that have been infected and have died from the flu.. how about the number of women dying during birthing or the babies dying at birth,,, how about the number of fatal accidents.. should we have shut down the highways because people die in accidents.. yea WTF.. sorry just had to say it.. I love how you use insanity.. and can we expect more from our government.. you betcha.. wow.. why did I ever come to this Planet…LOL

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