It's 1937 Again!

[RedEarth]

It's 1937 Again!
David Leonhardt:

Betting That Cutting Spending Won’t Derail Recovery: The world’s rich countries are now conducting a dangerous experiment. They are repeating an economic policy out of the 1930s — starting to cut spending and raise taxes before a recovery is assured — and hoping today’s situation is different enough to assure a different outcome. In effect, policy makers are betting that the private sector can make up for the withdrawal of stimulus over the next couple of years. If they’re right, they will have made a head start on closing their enormous budget deficits. If they’re wrong, they may set off a vicious new cycle, in which public spending cuts weaken the world economy and beget new private spending cuts.

On Tuesday, pessimism seemed the better bet. Stocks fell around the world, over worries about economic growth. Longer term, it’s still impossible to know which prediction will turn out to be right. You can find good evidence to support either one.... ecent economic numbers have offered some reason for worry, and the coming fiscal tightening in this country won’t be much smaller than the 1930s version. From 1936 to 1938, when the Roosevelt administration believed that the Great Depression was largely over, tax increases and spending declines combined to equal 5 percent of gross domestic product. Back then, however, European governments were raising their spending in the run-up to World War II. This time, almost the entire world will be withdrawing its stimulus at once. From 2009 to 2011, the tightening in the United States will equal 4.6 percent of G.D.P., according to the International Monetary Fund. In Britain, even before taking into account the recently announced budget cuts, it was set to equal 2.5 percent. Worldwide, it will equal a little more than 2 percent of total output.

http://delong.typepad.com/sdj/2010/06/its-1937-again.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BradDelongsSemi-dailyJournal+%28Brad+DeLong%27s+Semi-Daily+Journal%29

[xchrom]

1. Reagan wins. Nt

[bemildred]

2. I was thinking more like 1932, but OK.

Things are never exactly the same, even when you think so.

[bahrbearian]

4. Yea 1937 is like,7 years from now

[bemildred]

5. Exactly, we haven't even bottomed out the first time yet.

That would be 2012 or so in current terms by my reckoning.

[dhpgetsit]

3. Does than mean I can have one of these?