The Great Depression really was a perfect storm caused almost entirely by greed. First, there was unprecedented economic growth. There was a massive building spree. There was a growing sense of optimism and materialism. There was a growing obsession for celebrities. The American people became spoiled, foolish, naive, brainwashed, and love-sick. They were bombarded with ads for one product or service after another. Encouraged to spend all of their money as if it were going out of style. Obscene profits were hoarded at the top. In 1928, the rich were already way ahead. Still, they were given huge tax breaks. All of this represented a MASSIVE transfer of wealth from poor to rich. Executives, entrepreneurs, developers, celebrities, and share holders. By 1929, America's wealthiest 1 percent had accumulated 44 percent of all United States wealth. The upper, middle, and lower classes were left to share the rest. When the lower majority finally ran low on money to spend, profits declined and the stock market crashed.
Of course, the rich threw a fit and started cutting jobs. They would stop at nothing to maintain their disgusting profit margins and ill-gotten obscene levels of wealth as long as possible. The small business owners did what they felt necessary to survive. They cut more jobs. The losses were felt primarily by the little guy. This created a domino effect. The middle class shrunk drastically and the lower class expanded. With less wealth in reserve and active circulation, banks failed by the hundreds. More jobs were cut. Unemployment reached 25% in 1933. The worst year of the Great Depression. Those who were employed had to settle for much lower wages. Millions went cold and hungry. FDR was elected in order to repair the damage done by his conservative predecessor. The recovery involved a massive infusion of new currency, a public works program and MUCH higher taxes on the rich. This effectively redistributed a significant portion of actual buying power from the rich back to the lower majority.
Unemployment declined every year from 1933-1940 except 1938 when FDR listened to the GOP and cut back on the New Deal. GDP grew every year except 1938. The rest of the world was in free fall. Without government spending it would have been total collapse in America as well.
Unemployment (% labor force)
1933 24.9
1934 21.7
1935 20.1
1936 16.9
1937 14.3
1938 19
1939 17.1
1940 14.5
Percent change GDP
1933 -4%
1934 15%
1935 10%
1936 13%
1937 9%
1938 -7%
1939 7%
1940 9%
The necessary and vital transfer of wealth from the rich back to the lower majority was well underway and hugely successful in terms of GDP and unemployment by 1940. GDP had been restored and the unemployment rate had been cut by over 10% in spite of the 1938 setback. The most severe depression in US history was officially over in 1939. The most fiscally liberal economic policies in US history were a proven success. The progress made in FDR's first two terms continued and accelerated with WWII. With so many men in the service and so many women on the production line, an additional unemployment drop of 2.2% over the annual trend of 2.6% was achieved resulting in a 4.8% drop to a rate of 9.7% in 1941.
With immediate and significant progress made the first year of his Presidency and 7 out of 8 consecutive years, his first two terms, ultimately ending the depression in 1939, FDR proved that unlike his fiscally conservative predecessor Herbert Hoover, he knew and understood what had to be done. His liberal policies fully intended and designed to redistribute wealth from rich to poor resulted in a full return of GDP, several double digit annual increases and a double digit reduction in unemployment rates over his first two terms thereby ending the Great Depression. This was achieved under the most difficult circumstances in modern history.
Only a die-hard conservative coward would have the gall to suggest that FDR's economic policies were anything less than successful. After all, there is only one place in the universe where a 'quick' recovery from a record wealth concentrated and severe depression like that which FDR inherited from Herbert Hoover in 1933 is even possible.
That place is Fantasy Land.
FDR's liberal economic policies were such a success and so well appreciated that he was re-elected to a record 4 consecutive terms. Three of which were landslide victories.
Mariner Eccles, Chairman of the Federal Reserve under FDR, the most fiscally liberal, the most successful, the most proven right, the most beloved and the most re-elected President in US history had this to say about the Great Depression and the related wealth concentration:
"The United States economy is like a poker game where the chips have become concentrated in fewer and fewer hands, and where the other fellows can stay in the game only by borrowing. When their credit runs out the game will stop."
Keep in mind, the above quote is of a man who along with FDR was PROVEN RIGHT.
Proven right two full years BEFORE the US was dragged into WWII.
With FDR's liberal economic policies still in place and those higher taxes on the rich to help pay for WWII, more US wealth was gradually transferred back down to the lower majority from whom it was reaped. The high income taxes on the rich were left in place for many years even after FDR died. This redistribution of wealth continued until the late seventies. By 1979, the richest 1 percent held less than 20% of US wealth. This was less than 1/2 of their previous high of 44% in 1929. The lower majority held the rest.
There you have it. Liberal economic policies were proven hugely successful in response to the Greatest Depression in US history and over a period of four decades to follow. Wealth redistribution, with or without the massive government stimulus known as war, is the only answer to wealth concentration. It has been proven to work wonders. This is true regardless of legitimate growth or wealth creation. Heavy concentrations are an absolute deal breaker. Just like they were in 1929.
Unfortunately, a bad actor took the office of President in 1981. He cut those taxes drastically on the rich. Here we are 34 years later. The richest one percent of US households now own over 40 percent of all US wealth. The upper, middle, and lower classes are sharing the rest. This is true even after taxes, welfare, financial aid, and charity.
America's income and wealth have once again reached a very dangerous level of concentration.
"The income gap between the rich and the rest of the US population has become so wide and is growing so fast that it may eventually threaten the stability of Democratic Capitalism itself.". -Alan Greenspan, Chairman of the Federal Reserve under four administrations testifying before Congress.
Again, the richest 1% of US households hold over 40% of our nation's total wealth. They are within striking distance of their record high of 44% in 1929, the first year of the Greatest Depression in US history.
The government won't step in and do what's necessary. Not this time. They are more sold out than ever. It's up to us. Support small business more and big business less. Support the little guy more and the big guy less. It's tricky but not impossible.
For the good of society, stop giving so much of your money to rich people.
By the way, the non-partisan CBO (Congressional Budget Office) just recently did the math and confirmed that government stimulus will be necessary, get this and get it good, FOREVER. One of the primary factors hindering growth according to the CBO, is, you may want to sit down for this one critics, that's right, THE HIGH CONCENTRATION OF WEALTH.
The Greater Depression will be underway by 2020 at the very latest. Sooner and more severe if we end up with more conservative economic policies.
Greed kills. It will be our downfall.
