On Jan 26, 2009, at 11:32 AM, farmelantj at juno.com wrote:
> Isn't one reason why the US economy worsened
> again from 1936-1938 because FDR tried to
> return to a more orthodox fiscal policy,
> involving attempts to balance the budget?
>
> Wasn't FDR's problem, that he wasn't Keynesian
> enough at the time?
Yes. There were both fiscal and monetary tightenings in 1936-37.
According to some rough and unofficial estimates available from the NBER
<http://www.nber.org/databases/macrohistory/data/08/m08292a.db>
the U.S. unemployment rate peaked at 25.6% in May 1933 (two months after FDR took office). It fell steadily to 11.2% in May 1937, and then rose into a secondary peak of 20.0% in June 1938. It then started falling again, to 10.9% in December 1940 and 3.6% in December 1941, the month when the U.S. entered the war. By June 1942 it was 0.2%. Nothing like war to turn even the most bourgeois government seriously Keynesian.
Doug