This is a real-life economic experiment, one last chance to prove that Herbert Hoover was right after all and Franklin Roosevelt and Keynes wrong.
So, what was it that Herbet Hoover actually did in those years?
Oh my, you mean Herbert Hoover did exactly what Keynes would have recommended? As the recession/depression hit you mean he began running, by the standards of the time, vast budget deficits? Do not forget that at this time federal spending was 3-4% of GDP in total, so a deficit of 3% really is a large number.
And when did Frankie Roosev get into power? Why, I believe it was 4 th March 1933.
Hmm, wait a minute, maybe Hoover still cut spending but the fall in taxes is what increased the deficit?
Nope, he doubled federal government spending. That\’s how the deficit went from a surplus to 3 % of GDP.
So, Herbert Hoover reacted to the Depression by doubling/tripling government spending and financing this with a deficit.
D\’ye know, I have this feeling that the current economic policy (whatever you might think about it) is actually an attempt to prove Hoover wrong, not right.