The American Freedom Network

Don’t Tell John Boy, but the Depression is Back

Those of us who grew up watching The Waltons have had that eerie, ‘deja vu all over again‘ kind of feeling of late.  The financial sector is imploding, with the worst likely still to come.  (Think student loans made to the long-term unemployed, car loans to the same group, et cetera, and you may well agree with the foregoing.) The carnage has helped Michigan hang on to its’ national lead in unemployment, now at 12%.  (Remember, the long-term out-of-work, the  part-timers who want full-time work, and the underemployed are not counted in that figure.)  The rest of America isn’t looking rosy, either.
Ron Paul, olne of the few voices to warn, insistently, that we were heading for the cliff with sub-prime mortgage loans, derivatives, and the like, widely derided for predicting that the day of reckoning would come soon when he ran for President, is saying that this could be a 15-year depression, such as japan has experienced since their stock market/real estate meltdown in the late 1980s.  He correctly points out that no one remembers the Depression of 1920-1, because it ended quickly.  Why?  Because President Warren Harding and Treasury Secretary Andrew Mellon did the right thing to get us out of the mess Woodrow Wilson left them:  They cut taxes and spending by 40%, did not use ’stimulus’ to try to halt the onset of the necessary correction, and things righted themselves as the economy cleared out malinvestment efficiently.  Japan, like the USA in the 1930s, tried to use currency manipulation to mitigate the crash and to stimulate recovery.  Distortions to the price mechanism, as the Austrian economists have taught,  lead to more malinvestment, and the cycle of recovery is delayed.  UCLA economists studying the New Deal concluded in 2004 that FDR’s policies delayed recovery, stretching out the Depression until 1943, by which time, Lend-Lease and round-the-clock war production put the country back to work.  (Having all major competitors either at war with us, under siege, or bombed to rubble also helped our competitive position…)  Without the New Deal, the Depression, they conclude, would have ended in 1936.  (England recovered by 1936, giving credence to the UCLA researchers’ assertion, as the governments of Stanley Baldwin and Nevelle Chamberlain close to follow the path of economic common sense and avoided what befell us.)  In other words, without the New Deal, The Waltons would not have been on TV for so many years.
Fast forward to 2008-9, and what do we have?  TARP bailouts, multi-trillion dollar credit expansion, exploding deficits and stimulus.  History derides Warren Harding and Neville Chamberlain, as pundits do Ron Paul.  That the former were successful and that the latter has been proven right, so far, by events, means little, as the religion of the Left admits of no other gods but those whom the votaries of the State adore.  That the rest of us need not heed them should need no further amplification.
(For an intelligent discussion of the accomplishments of the Harding Administration, which included signing a major arms-control treaty (Washington Naval conference of 1922), balanced budgets, and other things rarely seen in our age, Paul Johnson’s Modern Times provides an honest recounting.)
Since so much bad policy is already behind us, it may be too late to avoid a prolonged depression, this one, like that of Germany in the early 1920s, hyperinflationary, as well.   But we should not despair, as the strong will survive, and truth will be a light in the coming darkness.  To spread the truth, especially to those young enough to have many years on the other side of the abyss, should be the calling of all kindred spirits, each to the best of his or her ability.