How to avoid the next depression | Bleader

How to avoid the next depression

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I was unfair to Senator John Ensign of Nevada. I intimated that remarks he made last Sunday on Meet the Press were lifted from a page-one article a couple days earlier in the New York Times. The title of the article: "Japan's Big-Works Stimulus Is Lesson for U.S." I've since come across the text of a speech Ensign made on the Senate floor against the Obama stimulus bill on September 3, and the text reveals that the Japanese example was already on the senator's mind when the Times article appeared. But reading the Times does seem to have freshened the senator's language.

Ensign to the Senate: "We know now that the policies of the New Deal actually prolonged our nation’s financial hardships.  More recently, we have learned from Japan’s failed efforts to spend its way out of a recession.  That country passed stimulus bills for 10 years during the 1990s.  They wasted money on unnecessary projects while letting insolvent banks be supported with government money.  What did that get them?  Unmanageable and debilitating debt and a decade of rising unemployment. We cannot afford to ignore the lessons of history."

Ensign on Meet the Press: Remember, Japan, during the 1990s, they acted. They continued to act and they had six different stimulus bills, none of which brought their economy out of the severe recession that it was in. As a matter of fact, it's called the lost decade because they just never grew out of it. And the problem is they didn't get it right. They built all kinds of bridges to nowhere, roads to nowhere." 

The phrases in italics were in the Times.

If the New Deal was a bust, how did Americans finally climb out of the Depression? We all know the answer to that one, and Ensign repeated it.

Ensign to the Senate: "When Franklin Roosevelt took office in 1932, he created great momentum by earning the confidence of the American people.  But his New Deal sank this nation into an even deeper economic depression. In the late 1930s, there was a 'Depression within the Depression.' The stock market did not return to 1929 levels for 25 years. And while World War II pulled us out of the Great Depression, there were still tremendous sacrifices being made by all Americans."

Ensign's strategy for saving the economy? In his Senate speech he mentioned "tax relief" nine times. 

Was World War II history's biggest tax cut? Under the impression it was history's biggest government spending program I was just about to suggest a solution to our present economic difficulties. As the world plunges helplessly into the inky vortex of global destitution, it's time for leaders of the world's great powers to assemble and agree to hold another world war. I don't think it's necessary to kill so many people this time, but we could all build a lot of ships and planes and guns -- the opposition to government spending would melt away if it buys guns. Then we could sail the ships and fly the planes and fire the guns and march vast armies in and out of various countries for a few years -- and as soon as the global economy is back on its feet we'll call it off. 

Some say war is the moral equivalent of deficit spending.

But I'm keeping this idea in my hip pocket until I do more research.

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