Thomas E. Woods Jr on The Forgotten Depression of 1920

THE economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent …

President Warren G. Harding (d. 1923). The nation’s unemployment rate dropped by half during Harding's administration, and he and openly advocated African American political, educational, and economic equality.

Instead of “fiscal stimulus,” Harding cut the government’s budget nearly in half between 1920 and 1922. The rest of Harding’s approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third …

By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923. …

THE experience of 1920–1921 reinforces the contention of genuine free-market economists that government intervention is a hindrance to economic recovery.

It is not in spite of the absence of fiscal and monetary stimulus that the economy recovered from the 1920–1921 depression. It is because those things were avoided that recovery came.

The next time we are solemnly warned to recall the lessons of history lest our economy deteriorate still further, we ought to refer to this episode — and observe how hastily our interrogators try to change the subject.

Read the whole article at Mises.org»

Thomas E. Woods Jr on The Forgotten Depression of 1920 (Source.)

Tags: Big government, President Warren G. Harding

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