Re: Franklin Roosevelt’s Treasury secretary, Henry Morgenthau

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(email exchange)

Yes, then, like now, they were afraid of the numbers, and couldn’t see them in context of the size of the economy.

They were also concerned that ongoing deficits were needed to sustain output and employment, just like they are today.

Within a year after that deficit spending on the war shot up to over 20% of GDP and the Depression ended.

My guess is that we need deficits averaging about 4-5% of GDP to sustain output and employment. Some periods, like now, we need more, some, like the late 90’s during that credit boom, we needed far less.

>   On Tue, Feb 10, 2009 at 10:05 AM, Mike wrote:
>   Franklin Roosevelt’s own Treasury secretary, Henry Morgenthau, lamented in
>   an address to Congressional Democrats in May of 1939:
>   ”We have tried spending money. We are spending more than we have ever
>   spent before and it does not work. And I have just one interest, and if I am
>   wrong … somebody else can have my job. I want to see this country
>   prosperous. I want to see people get a job. I want to see people get enough
>   to eat. We have never made good on our promises … I say after eight years
>   of this Administration we have just as much unemployment as when we started
>   … And an enormous debt to boot!”