Canaries in the coal mine

By Chrissy the Hyphenated

Click graphic to embiggen for easier reading.

I was astonished to learn the federal government was borrowing a MUCH larger portion of its operating expenses in the 1930s than it is today. I was taught that FDR got us out of the Great Depression. Based on that, I’d conclude that Democrats are right, deficit spending to “prime the pump” is a good thing and we should tax, spend and grow government even bigger. Screw S&P. Run that old federal debt right up to 100% of the GDP. Or more!

But wait. Lately, I’ve been reading that FDR’s policies actually extended the Depression by many years and that it was only World War II that finally lifted us out of the prolonged economic slump. So maybe borrowing and spending is not such a great idea, especially looking at what’s happened to Greece and other places that ignored their red ink.

E.g., a city in Rhode Island recently declared bankruptcy. All the government employees got laid off and all their benefits-cushy union contracts have been canceled. Is California next? Is New York?  Should we not listen to the canaries in the coal mine?

Check out this report:

Supply-Side Tax Cuts and the Truth about the Reagan Economic Record

by William A. Niskanen and Stephen Moore

ABSTRACT: On 8 of the 10 key economic variables examined, the American economy performed better during the Reagan years than during the pre- and post-Reagan years (including Clinton’s). The rich did NOT get richer, the poor did NOT get poorer, the Reagan tax cuts did NOT cause the deficit to explode.

Chrissy’s Site Bites: http://news.webshots.com/photo/2546853860056011884hwgDRI

SOURCES:

http://theaffordablemortgagedepression.com/2010/07/13/setting-the-record-straight-on-purported-excess-economic-capacity-and-hoovers-fiscal-restraint.aspx

http://www.landandfreedom.org/ushistory/us19.h