Tuesday, November 2, 2010

Recessions and Policy Effects, Data For 60 Years

Peter Ferrara offers a tour de force history of recessions and the policies used to meet them over the past 60 years. Here's just a short sample of the unassailable evidence that Keynesianism doesn't work:
In April 1960, the American economy tumbled into recession again. There was no trillion dollar stimulus package producing record shattering deficits and national debt. Yet, somehow, in February 1961, just 10 months later, the economy was back in recovery mode, again before Barack Obama was even born. Spurred by the across the board Kennedy tax rate cuts, the economy boomed for a then record 106 months.

In December 1969, the U.S. economy cycled into recession once again, in President Nixon's first year in office. Somehow, by November, 1970, just 11 months later, the economy was in recovery once again, even though Barack Obama was only 9 years old.

In November 1973, the worst recession of the entire postwar era up until then began. It took 16 months for the economy to recover, starting in March 1975. Over the next four quarters, the economy came roaring back, with real economic growth of 6.2%. For 1976, the unemployment rate was 7.7%.

"The Failed Economic Policies of the Past"

In July 1981, after President Reagan had been in office just six months, the economy fell into arguably a worse recession than in 1973-75. Yet President Reagan continued to back the strong dollar monetary policies of the Federal Reserve that slew the roaring inflation of the 1970s, caused by the same monetary policy strategy that current Fed Chairman Ben Bernanke just announced last week.

In just two years, over 1979 to 1980, prices had risen by 25%. The strict monetary policy Reagan supported cut the annual inflation rate in half by 1982, and in half again by 1983, to just 3.2%. Inflation has not been heard from since.
The data is so clear in its implications, one has to wonder what a Keynesian would say. A pack of obfuscating lies, for sure, but what else?

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