Posted Jun 7, 2019 by Martin Armstrong
I appreciate all you share. I watched a series on the Great Depression and they talk about how socialism saved capitalism. If true, is this part of a healthy cycle between the two? Could anything have been done to prevent the Great Depression?
ANSWER: It was not socialism that saved capitalism, it was a shift in the understanding of money itself. George Warren convinced Roosevelt to devalue the dollar and end AUSTERITY, as Germany imposes on Europe today, which reversed the economy.
The Dust Bowl was the primary cause of the rise in unemployment to 25%. In 1900, 41% of the civil workforce was in agriculture. The invention of the combustion engine began to displace jobs as the internet has done recently. Tractors replaced workers in fields, so there was a huge transition in the labor force. Then the Dust Bowl took place and that created the hobos.
There was nothing the government could have done to prevent the Great Depression. The best that one can hope for is to understand the business cycle and prepare for the downturns. In that manner, it becomes more like Joseph warning the Pharaoh of 7 years of plenty to be followed by 7 years of drought. If we accept that the business cycle is complex and not a single source that can be controlled, then we will live with the cycle and understand it.
FDR’s programs came in 1935. The economy had already bottomed and turned up from July 1932. I find the argument that socialism saved capitalism as self-serving for the socialists, but the timeline does not agree.