The Three Rs: Relief, Recovery, Reform -- the New Deal Playbook from the 1930s

The Three Rs: Relief, Recovery, Reform:

The New Deal Playbook from the 1930s

Economics Without The B.S.**: 

[**  Double entendre intended.]


The playbook if from the New Deal -- the Three Rs: Relief, Recovery, Reform. The Trump Administration and Congress got the first one down -- Relief.

I think they are weak on Recovery. They are talking about resurrecting the old economy and getting us back to where we used to be. I don't think that will work.

I've heard very little from anyone on either side about Reform.

During Obama's Administration, the Relief was weak -- and we had a weak recovery. We had a $2 trillion hole in the economy from the Great Recession/Financial Crisis and it took years to get back just close to even, if we ever got there. FDR's New Deal economic growth from 1933 to 1938 (before the outbreak of WWII in Europe in 1939; and this includes the mini-depression of 18-months in 1937/1938) -- over 7% per year; Obama -- about 2.2% per year. We have Democrats today who don't follow the playbook of the greatest modern Democrat, and who formed the Modern Democratic Party, which did not exist as a nationally functioning party prior to his election in 1932.

We have learned nothing from the Great Depression.  When you have a massive economic collapse of a well-functioning (I said “well-functioning” not perfect) economy, somebody is going to take the loss.  Who do you want to take the loss? – the private sector of people/individuals, businesses large and small; or, the public sector, in particular, the federal government.

In the end everybody is going to take some loss, but it is the federal government that can weather the loss the best.  It is easier for the federal government to borrow money, extend credit, and print new money.  The debt that will pile up can be repaid over future decades with a good recovery that gets us back to higher levels of productivity.  Plus, the federal government has the ability to rollover that debt into the future.

We piled up a lot of debt when fighting World War II, the debt-to-GDP ratio was well over 100%, the highest in our history up to that time.  That debt was handled by very high levels of economic productivity and prosperity from 1947 to 1974, reducing the debt-to-GDP to around 40%.  We can do the same thing.  Make yourself more productive and we will get out of this like the Greatest Generation got past WWII and into some of the most productive years in American history.