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The Politically Incorrect Guide to the Great Depression and the New Deal

Publisher: Regnery Publishing • 2009 • 272 pages
4.33 out of 5 • View Ratings Details • 9 Ratings

If you’re a typical American, you learned that the 1920s were a time of unregulated capitalism that led to the stock market Crash of 1929 and the Great Depression of the 1930s. You learned that Herbert Hoover was a laissez-faire ideologue who did nothing to alleviate the crisis — even as citizens starved and were forced to live in “Hoovervilles.” And you learned that the interventionist policies and massive spending programs of Franklin D. Roosevelt’s New Deal gradually lifted us out of the Depression, until World War II brought it to a definitive end. The only trouble with this official narrative — taught in every history text, and proclaimed as gospel by the media — is that every element of it is false. Worse, it is dangerous, because it is being used to justify a “New New Deal” in response to today’s economic crisis that could lead to a second Great Depression even deeper and longer than the first.

Now, in “The Politically Incorrect Guide™ to the Great Depression and the New Deal,” economist Robert Murphy fact-checks the myths, shows why they’re wrong, and delves deep into history to set the record straight. His “politically incorrect” conclusion? It was government, not free markets, that caused the Great Depression — and the New Deal only made it worse. The real “lessons of the Great Depression”: not what you’ve been taught.

In The Politically Correct Guide to the Great Depression and the New Deal, Robert Murphy reveals:

  • The Crash of ’29: not caused by capitalism, but by the newly created Federal Reserve’s easy money policy, which fueled a speculative investment boom during the Roaring Twenties that inevitably went bust (sound familiar?)
  • The myth that, after the Crash, the Federal Reserve sat idly back and allowed the economy to implode — and how it is continuing to drive misguided policies today
  • The myth of the “laissez-faire” Herbert Hoover — who created the Great Depression precisely because he abandoned the laissez-faire approach that all earlier presidents had followed when faced with similar circumstances
  • The “forgotten Depression” of 1921-1922: worse, initially, than its 1930s successor — yet it was basically over within 18 months, because government did not intervene
  • How many of the “revolutionary” policies of the New Deal were in fact inaugurated under Hoover
  • How, in the 1932 presidential race, Franklin Roosevelt railed against Hoover’s “reckless and extravagant” spending
  • How the bank runs of the 1930s were caused by prior government intervention in the banking system — and how, in creating the FDIC, all the government did was to put taxpayers on the hook for potential liabilities that no private insurer would ever dream of assuming
  • The biggest myth of all: that the New Deal “got us out” of the Great Depression — when in fact the economy recuperated far more slowly under FDR than it did in any other slump in American history (until, perhaps, today’s)
  • How government efforts — first under Hoover and then under FDR — to prop up wages despite falling prices led to a full decade of double-digit unemployment
  • How uncertainty caused by FDR’s arbitrary, punitive and ever-changing policies toward businessmen and investors caused a “capital strike” resulting in net investment of less than zero for much of the Depression
  • The myth of “wartime prosperity”: how the few ways World War II helped America’s economy were swamped by the ways in which it was a huge burden
  • How, like Herbert Hoover, George W. Bush made laissez-faire economics the fall-guy for a stark economic downturn and provided the rationale for liberal, statist policies that could make for a prolonged depression
  • Is Barack Obama the new FDR? Why the answer could very well be yes — and why that could spell disaster for America

“Today’s central planners cower from the truth about the Great Depression and the New Deal like Dracula before a crucifix. Robert Murphy eviscerates the fantasy version of these episodes that is used to justify destructive and idiotic policies today. You almost feel sorry for the propagandists while reading this book. Almost.”— Thomas E. Woods, Ph.D., author of the New York Times bestseller Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse

“Provides defenders of liberty the intellectual arsenal they need to counter the myth that capitalism caused, and government cured the Great Depression, and therefore a ‘New New Deal’ will solve our current economic problems. Building upon the foundation laid out in his indispensable The Politically Incorrect Guide to Capitalism, Murphy shows how the Great Depression was caused by government interference in the market — particularly the Federal Reserve’s inflationary policies. Murphy also details how the tax-spend-regulate-inflate policies of both the Hoover and Roosevelt administrations only prolonged and deepened the Depression. Read this book and understand why massively increasing government is not change we can believe in.”— Congressman Ron Paul (R-TX)

“A clear, compelling account of an era that even most economists get wrong. Now that many people are clamoring for a rerun of the New Deal, you owe it to yourself to find out what such a sequel would entail. Murphy’s book is the best place to begin your quest.” — Robert Higgs, Senior Fellow in Political Economy, The Independent Institute “Thorough and impressive. . .Murphy employs sound economics and key historical sources to show convincingly that the New Deal retarded recovery. . .His book is well written and should be required reading in all modern U. S. history courses and in economic courses that explore the causes of wealth and poverty.”— Burton W. Folsom, Jr., Professor of History, Hillsdale College and author of New Deal or Raw Deal?: How FDR’s Economic Legacy Has Damaged America

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