Avogadro
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| Joined: 14 Nov 2010 |
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| 06 Feb 2012 07:12 PM |
| "When this war comes to an end, more than one out of every two workers will depend directly or indirectly upon military orders. We shall have some 10 million service men to throw on the labor market. We shall have to face a difficult reconversion period during which current goods cannot be produced and layoffs may be great. Nor will the technical necessity for reconversion necessarily generate much investment outlay in the critical period under discussion whatever its later potentialities. The final conclusion to be drawn from our experience at the end of the last war is inescapable–were the war to end suddenly within the next 6 months, were we again planning to wind up our war effort in the greatest haste, to demobilize our armed forces, to liquidate price controls, to shift from astronomical deficits to even the large deficits of the thirties–then there would be ushered in the greatest period of unemployment and industrial dislocation which any economy has ever faced." |
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Avogadro
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| Joined: 14 Nov 2010 |
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| 06 Feb 2012 07:20 PM |
| But spending didn't reach World War II levels again until 1968! And the economy still grew unbelievably fast, without government spending. |
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Twigs180
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| Joined: 10 Mar 2008 |
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| 06 Feb 2012 07:29 PM |
| WW2 artificially propped up the US economy, as Keynesian economics usually does. Its not till 1947ish till we see the tracks to recovery start rolling. |
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Avogadro
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| Joined: 14 Nov 2010 |
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| 06 Feb 2012 07:31 PM |
That can't account for this big of a drop in spending: http://galens.typepad.com/.a/6a0112796fbf2128a401156f0530d7970c-800wi |
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Twigs180
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| Joined: 10 Mar 2008 |
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| 06 Feb 2012 07:37 PM |
Arms Race, Space Race, US GDP grown by WW2 and Europe being in shambles, making usa take up the burden of production.
Uh, no.
Arms Race - 1949, 4 years after the war, Russia detonates first nuke. It is not till the end of the 50s do we see an arms race which was provided for in large part by a booming surplus.
US GDP grown by WW2 - And this deals with a horrible economy how?
Europe being in shambles - You do realize that America only had one regime to rebuild and that was Germany.
making the usa takeup the burden of production - Too bad the US was already the prime producer during these times. |
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| 06 Feb 2012 08:21 PM |
| While I don't necessarily support all of Keynes' ideas, the logical answer to your question would be that the economy grew. During WW2, outrageous government spending apparently propped the economy back up. Keynes never intended for spending to occur perpetually. |
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Avogadro
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| Joined: 14 Nov 2010 |
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| 06 Feb 2012 08:28 PM |
the logical answer to your question would be that the economy grew. ___ That's not an answer... that's what I implied in the title. |
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