Keynes' Open Letter to Roosevelt

This is "An open letter to President Roosevelt" that appeared in the New York Times on December 31, 1933:

Mr President: spend, spend, spend, Comment is Free: The following is an abridged text of an open letter [pdf] by John Maynard Keynes to the US president.

Dear Mr President,

You have made yourself the trustee for those in every country who seek to mend the evils of our condition by reasoned experiment within the framework of the existing social system. If you fail, rational change will be gravely prejudiced throughout the world, leaving orthodoxy and revolution to fight it out. But if you succeed, new and bolder methods will be tried everywhere, and we may date the first chapter of a new economic era from your accession to office. This is a sufficient reason why I should venture to lay my reflections before you, though under the disadvantages of distance and partial knowledge. ...

You are engaged on a double task, recovery and reform - recovery from the slump and the passage of those business and social reforms which are long overdue. For the first, speed and quick results are essential. The second may be urgent too; but haste will be injurious, and wisdom of long-range purpose is more necessary than immediate achievement. It will be through raising high the prestige of your administration by success in short-range recovery, that you will have the driving force to accomplish long-range reform. On the other hand, even wise and necessary reform may, in some respects, impede and complicate recovery. For it will upset the confidence of the business world and weaken their existing motives to action, before you have had time to put other motives in their place. ...

My second reflection relates to the technique of recovery itself. The object of recovery is to increase the national output and put more men to work. In the economic system of the modern world, output is primarily produced for sale; and the volume of output depends on the amount of purchasing power, compared with the prime cost of production, which is expected to come on the market. Broadly speaking, therefore, an increase of output depends on the amount of purchasing power, compared with the prime cost of production, which is expected to come on the market. Broadly speaking, therefore, an increase of output cannot occur unless by the operation of one or other of three factors. Individuals must be induced to spend more out of their existing incomes; or the business world must be induced, either by increased confidence in the prospects or by a lower rate of interest, to create additional current incomes in the hands of their employees...; or public authority must be called in aid to create additional current incomes through the expenditure of borrowed or printed money. In bad times the first factor cannot be expected to work on a sufficient scale. The second factor will come in as the second wave of attack on the slump after the tide has been turned by the expenditures of public authority. It is, therefore, only from the third factor that we can expect the initial major impulse.

Now there are indications that two technical fallacies may have affected the policy of your administration. The first relates to the part played in recovery by rising prices. Rising prices are to be welcomed because they are usually a symptom of rising output and employment. When more purchasing power is spent, one expects rising output at rising prices. Since there cannot be rising output without rising prices, it is essential to ensure that the recovery shall not be held back by the insufficiency of the supply of money to support the increased monetary turn-over. But there is much less to be said in favour of rising prices, if they are brought about at the expense of rising output. Some debtors may be helped, but the national recovery as a whole will be retarded. Thus rising prices caused by deliberately increasing prime costs or by restricting output have a vastly inferior value to rising prices which are the natural result of an increase in the nation's purchasing power.

The set-back which American recovery experienced this autumn was the predictable consequence of the failure of your administration to organise any material increase in new loan expenditure during your first six months of office. The position six months hence will entirely depend on whether you have been laying the foundations for larger expenditures in the near future.

I am not surprised that so little has been spent up-to-date. Our own experience has shown how difficult it is to improvise useful loan-expenditures at short notice. There are many obstacle to be patiently overcome, if waste, inefficiency and corruption are to be avoided. There are many factors, which I need not stop to enumerate, which render especially difficult in the United States the rapid improvisation of a vast programme of public works. But the risks of less speed must be weighed against those of more haste.

The other set of fallacies, of which I fear the influence, arises out of a crude economic doctrine commonly known as the quantity theory of money. Rising output and rising incomes will suffer a set-back sooner or later if the quantity of money is rigidly fixed. Some people seem to infer from this that output and income can be raised by increasing the quantity of money. But this is like trying to get fat by buying a larger belt. In the United States to-day your belt is plenty big enough for your belly. It is a most misleading thing to stress the quantity of money, which is only a limiting factor, rather than the volume of expenditure, which is the operative factor. ...

If you were to ask me what I would suggest in concrete terms for the immediate future, I would reply thus.

In the field of domestic policy, I put in the forefront, for the reasons given above, a large volume of loan-expenditures under government auspices. It is beyond my province to choose particular objects of expenditure. But preference should be given to those which can be made to mature quickly on a large scale, as for example the rehabilitation of the physical condition of the railroads. The object is to start the ball rolling. The United States is ready to roll towards prosperity, if a good hard shove can be given in the next six months.

I put in the second place the maintenance of cheap and abundant credit and in particular the reduction of the long-term rates of interest. ... I see no reason why you should not reduce the rate of interest on your long-term government bonds to 2.5% or less with favourable repercussions on the whole bond market, if only the Federal Reserve System would replace its present holdings of short-dated Treasury issues by purchasing long-dated issues in exchange. Such a policy might become effective in the course of a few months, and I attach great importance to it.

With these adaptations or enlargements of your existing policies, I should expect a successful outcome with great confidence. How much that would mean, not only to the material prosperity of the United States and the whole World, but in comfort to men's minds through a restoration of their faith in the wisdom and the power of government!

With great respect, Your obedient servant

JM Keynes

Comments

[Travers]

Good grief! Keynes basically said:

* Don't contract the money supply (Friedman, Bernanke agree)
* Don't cause runaway inflation either
* Spend, but make sure it can be spent quickly and not on infrastructure that takes a long time to come to fruition.
* Decrease interest rates
* Don't get too regulatory: "For it will upset the confidence of the business world and weaken their existing motives to action, before you have had time to put other motives in their place. ..."

I keep wondering why right-wingers treat Keynes as a communist, when in fact, many "centrist" economists and even right-of-centre economists argue the same thing.

We truly are all Keynesians now...

[anne]

http://newdeal.feri.org/misc/keynes2.htm

December 16, 1933

18, Norham Gardens
Oxford, England

In response to the New York Times' request for his views on the American outlook, Keynes has written "An Open Letter to President Roosevelt," which is scheduled to appear in the Sunday issue of December 31st and is to be syndicated in other parts of the United States.

So that you may see what he has to say before it is published, Keynes this morning sent me the enclosed copy of his article, which I hasten to get off directly to you through Miss LeHand (without forwarding it through the pouch) in the hope that it may catch the Bremen, which leaves tonight.

Yesterday's Times carried illuminating extracts from Wallace's Annual Report. What a good Secretary of Agriculture you have!

With warm regards,

Faithfully yours,

Felix Frankfurter

Hon. Franklin D. Roosevelt
Enc.

[anne]

http://newdeal.feri.org/misc/keynes2.htm

December 16, 1933

An Open Letter to President Roosevelt

Dear Mr. President,

You have made yourself the Trustee for those in every country who seek to mend the evils of our condition by reasoned experiment within the framework of the existing social system. If you fail, rational change will be gravely prejudiced throughout the world, leaving orthodoxy and revolution to fight it out....

[Full text link.]

[anne]

http://edgeofthewest.wordpress.com/2008/11/20/keynes-to-fdr-february-1-1938/

November 20, 2008

In New Deal Denialist Truth Squadding
By Eric Rauchway

February 1, 1938

John Maynard Keynes to Franklin Delano Roosevelt

Because a number of people have asked, and the relevant section—the start of the letter—doesn't seem to be on the Internet elsewhere, I provide here the opening of Keynes's letter to Roosevelt, with some interpolation/translation and historical detail.

"… the present recession"

—by which he means, the downturn of late 1937-1938, not the Depression—

"is partly due to an 'error of optimism' which led to an overestimation of future demand, when orders were being placed in the first half of this year. If this were all, there would not be too much to worry about. It would only need time to effect a readjustment….

"But I am quite sure that this is not all. There is a much more troublesome underlying influence. The recovery was mainly due to the following factors:—

(i) the solution of the credit and insolvency problems, and the establishment of easy short-term money;
(ii) the creation of an adequate system of relief for the unemployed;
(iii) public works and other investments aided by Government funds or guarantees;
(iv) investment in the instrumental goods required to supply the increased demand for consumption goods;
(v) the momentum of the recovery thus initiated.

"Now of these (i) was a prior condition of recovery, since it is no use creating a demand for credit, if there is no supply."

This is the start of what teachers call the "praise sandwich"—we'll say something nice, before we explain why you get a D. So let's begin: good for you, Mr. President: the bank holiday, revaluing and stabilizing the currency, deposit insurance, recapitalizing the banks with the Reconstruction Finance Corporation—all that was swell. *

"But an increased supply will not by itself create an adequate demand."

For example, notice how people still aren't borrowing from banks, which still aren't lending? That means you still have work to do.

"The influence of (ii) evaporates as unemployment improves, so that there is a dead point beyond which this factor cannot carry the economic system."

Good for you too, for not letting people starve: but relief is not recovery.

"Recourse to (iii) has been greatly curtailed in the past year."

I use the passive voice here to spare your feelings, but why oh why did you cut back on the Works Progress Administration and the Public Works Administration, seeking a balanced budget, when the recovery had barely begun?

"(iv) and (v) are functions of the forward movement and cease—indeed (v) is reversed—as soon as the position fails to improve further."

You see, the flywheel of government spending had only just barely engaged the gears of the economy when you timidly pushed the clutch back in, so of course you started immediately to slow down.

"The benefit from the momentum of recovery as such is at the same time the most important and the most dangerous factor in the upward movement. It requires for its continuance, not merely the maintenance of recovery, but always further recovery. Thus it always flatters the early stages and steps from under just when support is most needed."

You need the government to spend more to get over that initial inertia and let the economy begin to run smoothly of its own accord.

"It was largely, I think, a failure to allow for this which caused the 'error of optimism' last year.

"Unless, therefore, the above factors were supplemented by others in due course, the present slump could have been predicted with absolute certainty."

I'm trying very politely not to say that a monkey could have told you not to cut back on government spending at just that moment. "Have you perhaps a monkey to advise you?" is the kind of thing I am avoiding saying.

"It is true that the existing policies will prevent the slump from proceeding to such a disastrous degree as last time."

Congratulations, you have not made quite such a mess of things as Herbert "almost twenty-five percent unemployment!" Hoover. Yet.

"But they will not by themselves—at any rate, not without a large-scale recourse to (iii)—"

Remember (iii)? (iii) was "public works and other investments aided by Government funds or guarantees." You need more of that. On a large scale. Otherwise, "error of optimism" –> catastrophe.

"—maintain prosperity at a reasonable level."

The letter goes on at some length to make further recommendations, and toward the end gets on to being nice to FDR again, letting him know that he can lead the markets with the often-quoted comparison of businessmen to "domestic animals by nature, even though they have been badly brought up and not trained as you would wish."

* RFC
WPA
PWA

[not Ebert]

to trans/time the start:

Dear Mr President, Hu Jintao

[anne]

http://edgeofthewest.wordpress.com/2008/11/07/when-is-it-lying/

November 7, 2008

When is it lying?
By Eric Rauchway

Megan McArdle writes,

Alex Tabarrok takes Eric Rauchway to the woodshed and spanks him so hard my butt hurts. As a general rule, it is a bad idea to title an exceptionally misleading and/or ignorant post “Stop lying”....

[Notice the attacks and the nature of the attacks on a scholar who would try, with meticulous attention to detail and as much clarity in sourcing, to properly describe the New Deal period.]

[Cycle]

Counter cyclical spending. If we don't pay down some of the public debt after this crises is over, we may reduce/eliminate the possibility of borrowing/spending our way out of future crises.

[anne]

http://www.democracynow.org/2008/11/26/headlines#12

November 26, 2008

Number of Americans on Food Stamps Set To Top 30 Million
By Amy Goodman

The Washington Post reports the number of Americans on food stamps is poised to exceed 30 million for the first time ever this month. * Anti-hunger activists say the demand for food stamps has been fueled by rising unemployment and food prices. Food pantries and other charitable organizations are also reporting an increase in demand from those in need. In Washington DC calls to the Capital Area Food Bank’s hunger hotline have jumped 250 percent.

* http://www.washingtonpost.com/wp-dyn/content/article/2008/11/25/AR2008112502553.html

[anne]

http://www.census.gov/hhes/www/poverty/histpov/hstpov2.html

August 26, 2008

Poverty Rate: 1959 to 2007

2007..... 12.5
2006..... 12.3
2005..... 12.6

2004..... 12.7
2003..... 12.5
2002..... 12.1
2001..... 11.7 Bush II
2000..... 11.3

1999..... 11.9
1998..... 12.7
1997..... 13.3
1996..... 13.7
1995..... 13.8

1994..... 14.5
1993..... 15.1 Clinton
1992..... 14.8
1991..... 14.2
1990..... 13.5

1989..... 12.8 Bush I
1988..... 13.0
1987..... 13.4
1986..... 13.6
1985..... 14.0

1984..... 14.4
1983..... 15.2
1982..... 15.0
1981..... 14.0 Reagan
1980..... 13.0

1979..... 11.7
1978..... 11.4
1977..... 11.6 Carter
1976..... 11.8
1975..... 12.3

1974..... 11.2 Ford
1973..... 11.1 * Low
1972..... 11.9
1971..... 12.5
1970..... 12.6

1969..... 12.1 Nixon
1968..... 12.8
1967..... 14.2
1966..... 14.7
1965..... 17.3

1964..... 19.0
1963..... 19.5 Johnson
1962..... 21.0
1961..... 21.9 Kennedy
1960..... 22.2

1959..... 22.4 * High

1953..... Eisenhower

[Increased food stamp use is the surest sign of a growing poverty rate. The New York Times is reporting though the tradition of free turkeys for Thanksgiving is fading away. *

* http://www.nytimes.com/2008/11/26/nyregion/26turkey.html]

[anne]

http://economistsview.typepad.com/economistsview/2007/01/the_new_deal_an.html

January 10, 2007

The New Deal and the Great Depression

Rates of Unemployment

1929 ( 3.2%) Hoover era begins, March
1930 ( 8.7)
1931 (15.9)
1932 (23.6)
1933 (24.9) (20.9%) Roosevelt era begins, March
1934 (21.7) (16.2)
1935 (20.1) (14.4)
1936 (16.9) (10.0)
1937 (14.3) ( 9.2) Recession begins, May
1938 (19.0) (12.5) Recession ends, June
1939 (17.2) (11.3)
1940 (14.6) ( 9.3)
1941 ( 9.9) ( 6.5)

Numbers in later brackets correct for employment in New Deal programs. *

* http://edgeofthewest.wordpress.com/2008/10/10/very-short-reading-list-unemployment-in-the-1930s/

Thomas Geraghty
Economic History
University of North Carolina

[anne]

The problem for New Deal success denialists, is simply that the data looked at fairly shows the continual progress the experimental reforms of Franklin Roosevelt brought. The current intent is especially to undermine an attempt to significantly increase sorely needed infrastructure spending, forgetting about the astonishing success of the Tennessee Valley Authority and other such projects through the Roosevelt years.

[Cycle]

Inflation can temporarily prop up the economy by tricking producers into increasing output (they mistake currency depreciation for demand). However, this money illusion effect is temporary. The long run Phillips curve is vertical. If inflation isn't wrung out of the system after the economy recovers, there is no dry powder to use during the next recession. Further inflation after the money illusion wanes just leads to stagnation (wage/price spiral, producers no longer trust price signals so they stop expanding production).

Inflation also permanently extracts purchasing power from inflation vulnerable entities (like fixed income retirees), so it creates a humanitarian crises. Inflation should never be allowed to become a long run policy.

[Inflation is the Enemy]

"..fueled by...food prices."

Yes, exactly. Rising food prices are causing hunger. Rising med prices are causing people to skip their meds. Rising housing costs (heat, tax, maintenance) are making it hard for people to find a warm place to sleep. Inflation hurts inflation vulnerable entities. This is not being adequately addressed. Their is no attempt to COLA adjust PBGC pensions, minimum wages, etc... Real people are being greatly harmed by rising prices, and few care.

[anne]

http://www.usinflationcalculator.com/inflation/historical-inflation-rates/

2008

Inflation Rate, 1929-1945
(Consumer Price Index)

1929 ( 0.0%) Hoover era, contraction begins

1930 (- 2.3)
1931 (- 9.0)
1932 (- 9.9)
1933 (- 5.1) Roosevelt era, contraction ends
1934 ( 3.1)

1935 ( 2.2)
1936 ( 1.5)
1937 ( 3.6) Recession begins, May
1938 (- 2.1) Recession ends, June
1939 (- 1.4)

1940 ( 0.7)
1941 ( 5.0)
1942 ( 10.9)
1943 ( 6.1)
1944 ( 1.7)

1945 ( 2.3)

[anne]

http://www.huppi.com/kangaroo/Timeline.htm

1997

The New Deal and the Great Depression

Government Receipts & Spending

(%GDP)

1929 Hoover era, contraction begins
1930 ( 4.2) ( 3.4)
1931 ( 3.7) ( 4.3)
1932 ( 2.9) ( 7.0)
1933 ( 3.5) ( 8.1) Roosevelt era, contraction ends
1934 ( 4.9) (10.8)
1935 ( 5.3) ( 9.3)
1936 ( 5.1) (10.6)
1937 ( 6.2) ( 8.7) Recession begins, May
1938 ( 7.7) ( 7.8) Recession ends, June
1939 ( 7.2) (10.4)
1940 ( 6.9) ( 9.9)
1941 ( 7.7) (12.1)
1942 (10.3) (24.8)
1943 (13.7) (44.8)
1944 (21.7) (45.3)
1945 (21.3) (43.7)

[anne]

Federal budgeting began 2 years before Calvin Coolidge became President, with the proposed budget of 1929 being the final Coolidge budget and 8th in all. Coolidge had complete agreement from Congress as President and was able to present budgets both immediately balanced and allowing for a paying down of World War debt. Though the economy was generally slowing in 1929, beginning a recession, the surplus was retained under Hoover and continued through 1930 as recession became ever more noticeably serious.

Though the early Roosevelt budgets were not massively deficit budgets by later standards, nonetheless there were significants deficits and from the beginning there was stimulative spending under Roosevelt till 1937-1938 and from 1939 on. The TVA began after all in 1933; we can easily forget by the way how much emphasis Roosevelt placed on rural development.

[anne]

Looking to Depression unemployment numbers including and not including workers in New Deal programs, the continual difference of several percentage points is found from 1993 on, but what can easily be forgotten is that these several percentage points amounts to about 3.5 million workers as New Deal programs took full effect and was made clear by Michael Darby in 1975. * Since there continues to be an argument over the efficacy of New Deal spending programs in creating jobs, even among analysts sympathetic to Roosevelt's experiments, emphasis on what it meant to employ an additional 3.5 million workers in New Deal programs should not be somehow overlooked.

* http://papers.ssrn.com/sol3/papers.cfm?abstract_id=259399

[anne]

Three and a half million additional people working, additional jobs created by New Deal programs, for a population of about 127 million, was a most important help, and relates directly to the fiscal stimulus from the programs developed. Results of the work created, from the Tennessee Valley Authority projects to school on school, to conservation projects that took us from the Dust Bowl, are easily found when we care to look.

So, I do not in the least care to have the impression left that there was no real fiscal stimulus during the New Deal before the World War. There was. Similarly, even Paul Krugman recently choose not to emphasize what was accomplished by the Great Society domestically, while the degree of long term poverty reduction was dramatic and astonishing by standards ever since.

[anne]

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=259399

May, 1975

Three-And-A-Half Million U.S. Employees Have Been Mislaid: Or, An Explanation of Unemployment, 1934-1941
By Michael R. Darby

Abstract:

A major conceptual error in the standard Bureau of Labor Statistics and Lebergott unemployment estimates for 1933-1943 is reported. * Emergency workers (employees of federal contracyclical programs such as WPA) were counted as unemployed on a normal-jobs-to-be-created instead of job-seekers unemployment definition. For 1934-1941, the corrected unemployment levels are reduced by two to three-and-a half million people and the rates by 4 to 7 percentage points. The corrected data show strong movement toward the natural unemployment rate after 1933 and are very well explained by an anticipations-search model using annual full-time earnings.

* http://www.amazon.com/Manpower-economic-growth-American-Economics/dp/B0006D6B0E/ref=sr_1_3?ie=UTF8&s=books&qid=1227561179&sr=1-3

[anne]

http://krugman.blogs.nytimes.com/2008/11/26/the-great-slump/

November 26, 2008

The Great Slump
By Paul Krugman

Yay! Project Gutenberg has made John Maynard Keynes’s essay "The Great Slump of 1930" * available as a free ebook.

This essay comes from Keynes pre-General Theory; he was groping toward an integrated framework for thinking about depressed economies, and not quite there yet. But its observations on the crisis at hand remain stunningly insightful, and fit current events all too well.

"This is a nightmare, which will pass away with the morning. For the resources of nature and men’s devices are just as fertile and productive as they were. The rate of our progress towards solving the material problems of life is not less rapid. We are as capable as before of affording for everyone a high standard of life—high, I mean, compared with, say, twenty years ago—and will soon learn to afford a standard higher still. We were not previously deceived. But to-day we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time—perhaps for a long time."

* http://www.gutenberg.ca/ebooks/keynes-slump/keynes-slump-00-h.html

[anne]

http://krugman.blogs.nytimes.com/2008/11/26/about-that-advisory-board/

November 26, 2008

About that Advisory Board
By Paul Krugman

[Paul Volker and tiger] Too big to fail?

A thought I’ve had: there have been some complaints from movement progressives about the centrism/orthodoxy of Obama’s economics appointments. To some extent this was unavoidable, I think: someone like the Treasury secretary has to be an experienced hand who can deal with Wall Street, and I haven’t heard anyone proposing particular individuals with clearer progressive credentials to hold that position. (And for those of you wondering about yours truly — I’m temperamentally unsuited, have never had any desire for the job, and probably have more influence as an outside gadfly than I ever could in DC.)

But the Obama administration’s new economics advisory board would seem like a very good place to give progressive economists a voice. There are a number of excellent people whom Obama might not want to put in line positions but would be very much worth bringing in to offer well-informed alternative views. At the risk of insulting those I forgot to mention, I would think immediately of James Galbraith, Larry Mishel, Dean Baker, Jared Bernstein.

Let’s see whether progressives do in fact get a seat at this particular table.

[Patricia Shannon - finding "lost" comments]

I too wondered what was happening to a bunch of comments.
I finally noticed that when a page of comments gets longer than some amount, typepad is separating them onto different pages. You have to click the "Next" link (which I see they are in the process of refining the exact wording of), right above the place where you can enter a new comment.

They need a "Last" link, so we can quickly skip over all the comments we've already read.

What I have done is copy the wording of the "Next" link, so I can quickly find it. Yesterday, I think it was "Next »" Today it is "Next Comments »"

[anne]

I have heard no explanation from Paul Volcker * of the evident failure of Federal Reserve to try to work with President Carter or Reagan on job protection even while finding a need to dramatically increase short term interest rates to limit inflation. A fair amount of what had been painstakingly gained in poverty reduction through the Great Society, was lost during the years Volcker chaired the Federal Reserve.

So far, I have no sense of advocates for ordinary workers or for the poor have a place among Obama advisers. Robert Reich definitely does not count.

http://www.nytimes.com/2008/11/27/us/politics/27transition.html?hp=&pagewanted=print

November 26, 2007

Obama Picks Volcker to Head New Economic Panel
By JEFF ZELENY

Paul Volcker, former chairman of the Federal Reserve, has agreed to lead a new White House economic advisory committee, President-elect Barack Obama said.

[anne]

Patricia, thank you.

[Patricia Shannon]

I don't know offhand what post Greenspan held, under what president, but I remember being very angry at him when he raised interest rates in order to raise unemployment, in order to reduce inflation. Oh, I do remember he served under Bush I, because he's in a song I wrote about some experiences I had then.

Surplus Goods
copyright Patricia M. Shannon 1996

Won't you please give me a job,
I've been out of work so long,
I have used up all my savings
and they foreclosed on my home.
I had paid ahead by four years,
but it didn't count at all;
the mortgage company now does own it,
well there ought to be a law.

I was never a big spender,
I paid off loans ahead of time,
I did just what they told me,
saving for when I retired.
I have gone on few vacations,
and at K-Mart I did shop.
Might as well have been a spendthrift,
'cause my credit is all shot.

I went at least for six months
without a single interview,
made worse by new age so-called friends who said,
"You never should be blue."
There's a special place in hell
where there will be sent
George Bush and Alan Greenspan
and Redstone Federal Credit Union president.

"You have too much experience,"
that is what they say.
They want somebody younger,
who won't expect much pay.
Well, I've always tried to work hard,
and to do the best I could.
Now they tell me I'm not needed.
I'm just worn-out, surplus goods.

[Patricia Shannon - multi-page comment sections]

Anne, I'm glad you saw my comment about the "lost" comments ;) I put it in a couple of places where you had left some comments.

What I've been doing with "The Citigroup Bailout", for which people are still posting comments I find interesting and/or informative, is once I've gotten to the last page, I keep tab open, and refresh (Ctrl+r) it occasionally, to see any new comments. That way I get the newest version of the same page. I look at other topics in a different tab (Ctrl+t).

[anne]

Alan Greenspan became Fed chair in 1987, after Volker and was committed to the same monetary philosophy. Even the philosophy to deregulation was the same for Volcker and Greenspan, though that is little commented on. Volcker was Fed chair through the deregulation of the Saving and Loan Banks with sadly unfortunate results that have been strangely ignored in looking to the nature of Volker's thinking. Greenspan remained Fed chair till 2006.

[anne]

There were clear warnings of a financial system prone to shocks from at least the middle of the 1980s, but somehow the warnings were never considered significant enough to question the philosophy of deregulation that increasingly took hold from the 1980s.

There was the Saving and Loan failures, the commercial bank failures, the stock market shock of 1987, the junk bond market failures, the bond market derivatives shock of 1994, the hedge fund-bond market freeze of 1998, among other problems. But no problem was considered important enough to question increased deregulation through the 2000s.

[Patricia Shannon - multi-page comment sections]

Well, as long as the ultra-rich are benefitting, there is no problem, right?

[anne]

What is interesting is to notice the difference in philosophy on employment:

http://krugman.blogs.nytimes.com/2008/07/29/look-whos-talking-2/

July 29, 2008

Look Who's Talking
By Paul Krugman

Annual rates of employment growth, by president:

Johnson 3.8% *
Carter 3.0
Kennedy 2.6
Clinton 2.3

Nixon 2.1%
Reagan 2.0
Ford 1.6
Eisenhower 0.8
Bush I 0.6
Bush II 0.4

There's something happening here.

* Approximations.

[anne]

What is interesting is to notice the difference in philosophy on employment. Since Eisenhower, Democratic Presidents have been far more successful in protecting or creating jobs than Republicans. Bush's Presidency will show a failure to protect jobs most dramatically, but the years of Reagan, considered boom years, show much the same even though there has been an increasing budget deficit through the Bush years where there was a deficit decline and surplus with Clinton. Even war spending had a muted employment effect under Bush. There was no reason the Volcker could not have worked with Reagan to lessen the ordinary worker or lower income household effect of lessening inflation, but there is no reason to believe Volcker ever tried or that Reagan cared to try.

[Patricia Shannon - multi-page comment sections]

If I believed in such things, I would have considered Reagan a manifestation of the Anti-Christ. Same thing about the current Bush.

[David Zatz]

Are you taking the differences in the way unemployment figures were calculated (especially starting with Reagan) when providing those numbers for multiple years?