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Did the Government cause the Great Depression?

(I did not write this. However, a very, very intelligent person did and I couldn't have said it better.) Most people have been duped into believing the Great Depression was caused by a free market. Nothing could be further from the truth. It was government intervention in the market that set the stage for the Great Depression and made it much worse than it would have been otherwise. Here's a brief list of some of the government intervention and regulation in the economy prior to 1929: The first labor unions, then called federations were active in 1820. National labor union - 1866. American Federation of Labor - 1886. Dept. of Labor, 1913. Dept. of the Interior 1849. Dept. of Agriculture - 1862. Anti-Trust Acts 1902. Dept. of Commerce 1903. Shift from private to state-funded education began in the 1800's. Interstate Commerce Act of 1887. Federal Highway Act of 1916. Air Commerce Act of 1926. The Income Tax and Federal Reserve Act- 1913 (the graduated income tax and centralized bank are both planks of The Communist Manifesto). Also had the estate tax act in 1916. Corporate Tax Act of 1909. Zoning laws and regulations, which the Supreme Court ruled constitutional in 1921. And we had federal ownership of land throughout the history of our country. Contrary to what some might say, this constitutes a heavily regulated and unfree market. This is anything BUT unregulated capitalism. The Great Depression was caused by government influence in the economy (http://www.shambhala.org/business/goldocean/causdep.html), not unregulated capitalism. Primarily, the Smoot-Hawley Tariff Act - which even a liberal like Al Gore admits was a major factor, the increase of the income tax (the top rate went from 25% to 63%), and the manipulation of credit, specifically the shrinking of the money supply, through the government central bank, the Federal Reserve. "And, of course, there was the political regime of Franklin D. Roosevelt. To finance government expenditures to pay for his beloved New Deal welfare programs, Roosevelt and his cohorts began printing massive amounts of government notes. To ensure that gold would not expose what they were doing, legal-tender laws were enacted. But that wasn't the worst of it. The Roosevelt people next canceled — nullified — extinguished — every single gold clause in every single contract, public and private. And even that wasn't the worst of it. Roosevelt and his cronies nationalized — confiscated — the gold coins of the American people and then made it illegal for Americans to own gold. Imagine — after 150 years of the strongest monetary system in history — a system free from government assault — a system that was a bulwark for American liberty — the American people became subject to serving time in a U.S. federal penitentiary for owning a gold coin! What about the Constitution? What about enumerated powers? Unfortunately, Roosevelt had sufficient cronies on the Court to sustain his policies, especially after his infamous and shameful court-packing scheme." http://www.fff.org/freedom/0596a.asp

Public Comments

Rush Limbaugh made a very profound statement one time. He was saying how not one of the severe recessions that we've ever experienced was a result of a natural or normal capitalistic economic cycle downturn , but rather the direct result of unneeded government intervention which hampered private investment causing a slow down. I believe he was correct. God bless.
It was the monstrous war debt incurred by Democrat President Wilson, along with organized labor unions that caused the Great Depression. The unions allowed the workers to live far beyond their means and in so doing, drove up the rate of inflation (products, goods and services). We're seeing a repeat with the current economic situation. Labor unions, NAFTA and WTO, bank foreclosures on those who were living far beyond their means... Seems Bill Clinton and Barney Frank failed to study history. *later* Bob, I know at least a dozen economists who would beg to differ with your economists on FDRs New Deal helping the economic recovery. Most economists have stated that FDRs New Deal set the recovery back by approximately seven years. And, having studied FDR I have to agree with them. FDR was an elitist and a socialist who did far more harm than good. He gutted an already skeletonized military to help pay for his New Deal. He had no idea of how he was going to legitimately pay back all of the debt he was incurring, other than to hide it in the war debt of the soon to come WW II. He assigned Assistant Army Chief of Staff Eisenhower to investigate what it would take in both money and man power to convert a civilian peace time industry into a weaposn producitn war time industry well before we publically involved ourselves in that war. The guy was a shyster from the word go. Anyone with half a brain who has studied him would tell you that. Most economists believe that Hoover's "Do Nothing" stance was far less harmful towards the recovery of the economy than was FDRs New Deal (of which we are STILL paying for some 70+ years later. And so I end this on a business note. Regardless if we are talking small business, personal finance or government how much logic is there in the thought that while pearched on the brink of bankruptcy, you should take out a massive loan in hopes of spending your way out of debt? And still further, what lending institution in its right mind would make such a loan? Only in America folks, only in America...
If the above is factual it appears they had a hand in it.
Government is mainly responsible for all of the problems that we have faced, and are indeed facing now. Why do they continue to allow financial institutions to keep raising interest rates, such as the recent escalation in credit card interest, when the banks have gotten billions in taxpayer dollars? Why doesn't the government address the problem of the homeowners in jeopardy of losing their homes, instead of bailing out failed incompetent fatcat executives? The root cause of the failure in the first place was the escalation of interest rates of mortgages, combined with confiscatory taxes, and soaring costs of fuel and all commodities. Yet the government sat by and did nothing. The homeowners still get minimal help. That's the basis for the problem, and why don't they declare a moratorium on home foreclosures and force the banks to renegotiate these loans? Seems to me that such measures would help stop this mess. But the government wants to keep failed fatcat execs in their cushy jobs with their bloated salaries. But then again, the fatcats can pay bribes and political "contributions," like AIG did, but homeowners can't afford it.
Sure it did.
The argument that FDR worsened the Great Depression is ridiculous enough, and now you are trying to tell me that government caused it? Smoot-Hawley destroyed the world, true, but the depression had already started. Markets aren't magic. They fluctuate. Absent regulation they fluctuate violently. With bad regulation, they perform badly. The opinion of the vast majority of economists (i.e. the people who know who they are talking about) is that the New Deal softened the Great Depression and helped get us out. The war is proof that government consumption is all it takes to get the economy going There is nothing special about wars except for the fact that they consume a whole lot and that they are easier to sell than "make work" projects. Everyone agrees that the war is what ultimately dug us out. Wars create value and destroy it immediately. If they can stimulate the economy, what would capital creation projects on the scale of the second World War do? I suggest you look at China and its phenomenal growth, and see what it does.
Milton Friedman is an Economic hack, not an intelligent person.
Thus argument leaves too many things unexplained to be convincing. There was an equally bad economy in the decade following the banking panic of 1837, Nor does it explain why most of the countries in the world also suffered from a depression in the 1930's when their governments had a variety of policies and actions. Also the government has interfered in the economy since the 1930 is a bigger way than they did before but our economy has grown faster and had fewer down turns than we did when it interfered less.
Yes, the government had a hand in it, but one must also look at the banks. The Federal reserve and the IMF had a greater hand in causing the world wide depression. It had it's beginnings at the end of WW I when thousands of soldiers returned to no jobs and a weak economy. By 1929 things had snowballed into oblivion and our banks couldn't take the strain, our factories were not working full capacity and the economy sank. F.D.R. didn't help it , but if they had followed Hoovers plan the economy would have returned in half the time, just like the one today will take 10 times longer to heal than if they government had stayed out of it.