On Nov 14, 2008, at 9:06 AM, Michael Pollak wrote:
> So for us, the mere fact of a liquidity trap and frozen markets
> could possibly provoke and legitimate as much public spending as 3
> years of depression did for him.
Actually he didn't do much deficit spending. The deficit in 1932 was 4.0% of GDP. It rose to 4.5% in 1933, and 5.9% in 1934. It was just 2.5% in 1937, and 0.1% in 1938 (which no doubt contributed to the "recession" of 1937-38). To put that in perspective, the deficit was 6.0% in 1983. It wasn't until WW2 that they got serious - 14.2% in 1942, and 30.3% in 1943.
Doug