What ended the Great Depression

[Avarice567]

[View:http://www.youtube.com/watch?v=gHntki_HkRw]

 

I notice in this video, about 20 minutes in or so, Stefan and Lawrence say that WW2 didn't end the Depression, but then what did?

[Magnus]

A 60% drop in government spending, and the reduction of America's manufacturing competition in Europe (due to bombing and such). 

[Magnus]

One important note -- the Depression did not end until a year or two after the war ended. Government economists and other miscreants claim that the Depression ended with the beginning of the war, but that is a lie.

The only thing that the start of the war itself accomplished was the employment of men and women as soldiers and war manufacturers. Government economists inappropriately count this war employment as though it's equivalent to productive employment, and count war production as though it's equivalent to productivity of goods that consumers actually want to buy. 

This is a serious conceptual error, because it ignores the fact that war production and employment are paid for entirely by debt and taxes, and produces no goods that are valuable to consumers, only bombs, bullets and tanks, instead of real wealth.

The reality is that war production is, economically, always a net loss, even when (like the USA) one's own country is not bombed and occupied. (Germany had it far worse, having its economy wrecked both by the forcible diversion of its productivity into war materiel, and having its cities bombed out, too.)

For the American consumer, the war made the economy worse. Prices immediately rose, so the government responded with price controls. As always, the price controls and diversion of productivity to war "goods" caused massive shortages of just about everything. Quality of life went down during the war, for most people. The government calls those years a "recovery," by their twisted rationale. 

The best thing that happened during that period was that Roosevelt and Hitler finally died, thus reducing their respective governments' levels of economic devastation. 

[zg7666]

World War II Did Not End the Great Depression

 

http://mises.org/Community/forums/t/23950.aspx

 

And some "mainstream": http://www.forbes.com/sites/billflax/2011/08/25/no-paul-krugman-wwii-did-not-end-the-great-depression/

[Hannibal]

If destroying stuff could end depressions, then all we need do anytime the economy is struggling is build a load of warships, and then build a load of other warships to blow up the first lot. Problem solved!  Who knew it was so easy ; )

[Metric]

No, don't you get it?  It takes 16 years of government spending and war to end a recession (unless it's 1920, which it isn't).  Just imagine how bad things would have gotten without the government.  Japan is right on track for an economic miracle any day now -- they've been doing everything right except the war, so it takes them a little longer.