>>From William F. Hixson's ~A Matter of Interest: Reexamining Money, Debt,
and Real Economic Growth~, 1991, pages 133-34:
"...What it took to sweep away the Great Depression--to create full
employment--was money creation and money spending on a grand scale, not
war. It was not the war per se that ended the depression. All that war
did was to provide an occasion acceptable to the power structure for the
requisite money creation and money spending. Only for the purpose of
fighting a war in Europe and the Pacific were those in the seats of
power in the United States willing to undertake the grand scale money
creation and spending necessary to the end the depression--grand scale
money creation and spending that they had long remained unwilling to
undertake to wage a war on unemployment, unused industrial capacity, ill
health, poor education, inadequate housing, and so on. It was contrary
to the prevailing ideology of the 1930s and 1940s for the government to
create and spend money to build houses for needy citizens in Peoria or
Des Moines but not contrary to that ideology to create and spend money
to blow away the houses of needy foreigners in Dresden or Hiroshima.
Readers may well ponder why so weird an ideology prevailed, but
prevailed it did--and to a very disquieting extent it still does.
"The really important lesson of what happened between 1939 and 1946 is
completely lost when economists repeatedly make statements that imply,
or at least leave the reader free to infer, that the war was a necessary
condition if the depression was to end. Even the slightest implication
that full employment could not have been achieved as easily without
World War II as with it reveals a basic misunderstanding. It was as
fully within the power of the government to end the Great Depression by
1933 as by 1943 if only the ideology and the level of understanding of
sound economic principles had been different. The government could have
stimulated the economy to a new all-time high, almost at will, anytime
between 1929 and 1943. It could have done this by bringing about the
creation of a sufficiently large amount of money followed by the
spending of the newly created money for any purpose whatever.
"...There is no way to overemphasize the fact that all the deprivation
and suffering from 1929 to 1943, brought on by the normal functioning of
a laissez-faire system, could have been prevented by prompt and decisive
moves by a federal government that fully understood the problem and the
solution. The problem was the disappearance of the nation's money
supply due to bankruptcies due, in turn, primarily to over-indebtedness
to commercial banks. The proper solution was money creation and
spending by the federal government. False theories, arising out of
ignorance, avarice, and fear, forestalled a fitting solution to the
problem..."
Regards,
Tom Walker
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