I’m sure many readers are familiar with a cartoon from the Chicago Tribune dated 21st April, 1934. It was widely re-published early in the Obama administration by sources and outlets opposed to its policies, and it looks like it’s doing the rounds again as the Biden administration’s so-called “Green New Deal” policies are implemented. Click the image for a larger view.
If you’d like to know more about the background to the cartoon, and the political personages lampooned in it, you’ll find a description here.
What I find most apposite about the cartoon is that it’s completely accurate in what then-President Roosevelt advocated, and his “New Deal” implemented. The US government did “Spend! Spend! Spend!” as hard as it could – and it didn’t help. It took World War II to overcome the Great Depression, and while the war caused even more spending, it also brought the antidote to that spending – “Produce! Produce! Produce!” Economic output soared, and that output absorbed and (in due course) paid off all the extravagant expenditure that had preceded it. Note the national debt before, during and after the war years (click the image for a larger view):
The whole point about the massive debt incurred to win World War II is that the USA’s economy grew to match it, and produced its way out of the debt and paid it off. Since the so-called “great recession” of 2007/08, we have not grown our economy’s production; rather, we’ve imported more and more from other economies, using the “funny money” dollars created out of thin air by the Federal Reserve. They’ve benefited from that: we haven’t. Our domestic economic activity and production has not supported those “excess dollars”. They didn’t produce sufficient additional economic activity to justify their creation.
That’s why the 1934 cartoon is so apposite to our present situation. We’re spending like there’s no tomorrow, but in the absence of equivalent growth in our economic output, there’s no guarantee whatsoever that tomorrow’s economy will be able to pay off today’s debt. That’s what the “New Deal” looked like in 1934, too – and it took the most destructive and widespread war in the history of humankind to change that.
Will we need something similar to balance our books this time? God forbid!