Skidding or Crashing?

[Calabrio]

Commentary: Is Obama skidding or crashing?

By Penn Jillette
Special to CNN

Editor's note: Penn Jillette -- the larger, louder half of Penn & Teller -- is a magician, comedian, actor, author and producer.

Counterintuitive action makes a fellow feel smart. When I first got my driver's license, I took my old Ford Falcon into the Greenfield Public High School parking lot when it was freshly covered with fresh powder on top of wet slippery Western Massachusetts snow and ice. I turned fast, gunned it and lost control of the car in a skid.

I turned into the skid and instantly gained control of my car. Telling someone to turn into a skid, that's crazy talk. It seems so wrong, but my Dad knew it worked. Dad suggested I do it over and over in the parking lot, so I would conquer my intuition to be ready when a real emergency arose on a real road. Counterintuitive actions prove we can trust real knowledge and do the opposite of what we feel makes sense.

I'm a fire-eater. There is some technique to fire-eating, but most of the practice goes into learning that one's mouth is wet enough, most of the heat goes up enough, and cutting the oxygen leg off the fire triangle (it's now a fire tetrahedron, but I learned fire-eating a long time ago) with one's mouth really does put the fire out.

It took watching a professional whom I trusted do it -- a lot of trust and a lot of practice -- before my first reaction, when my mouth started to burn from the lit torch in my mouth, was to put the torch deeper in my mouth, close my mouth around the torch and put it out.

Handling fire seems like a superpower. There are whole seminars and self-help jive centered on fire-walking, which is hustled as "mind over matter," or "empowerment" but is really just counterintuitive physics. As long as the fire walk is set up right and you keep moving, you can even hope and pray to be burned, while yelling counter-self-help slogans such as "I do not have any power to do this" and "universe, please burn my little piggies," and you'll be fine.

Whether it's fire walking or knowing that the Earth is round, everyone seems to dig counterintuitive thinking. Many dig it when our president explains we're going to spend our way out of debt. That's way against all the intuition we've developed in our adult lives. Spending our way out of debt doesn't work often, does it? It's crazy talk. Didn't a lot of people try that spending out of debt thing?

I live in Vegas, and I see people by the side of the road with cardboard signs who seem like they might have tried that spending their way out of debt thing. Or maybe they tried the all too intuitive "crack will make me feel healthy again" thing. I don't know.

Didn't lots of people try piling up debt on credit cards and buying houses they couldn't afford in hopes of solving all their financial problems? I've tried spending more than I was going to earn (remember, I was carny trash, that's why I know how to eat fire), and it way didn't work. Spending more money than I had to spend put me more in debt, just like my silly intuition warned me.

President Obama is so damn smart. He just drips smart. He clearly understands stuff that we could never understand. He's trustworthy. If Obama were teaching fire-eating, we would all learn fast. If he told you that the burns would be minor and the fire would go out when you closed your mouth, you'd believe him. If I weren't twice his weight, I'd fall back with my eyes closed into his caring arms in one of those cheesy '70s church trust exercises. He could talk me into anything.

Obama tells us that we can spend our way out of debt. He tells us that even though the government had control over the banks and did nothing to stop the bad that's going on, if we give them more control over more other bank-like things, then they can make sure bad stuff doesn't happen ever again. He says we can get out of all those big wars President Bush caused by sending more troops into Afghanistan. And I don't know. I really don't know.

I trusted my Dad that turning into a skid would work. I trusted my carny mentor, Doc Swan, that closing my mouth around a burning torch would put it out. They were right. Maybe the United States borrowing more money than I could imagine in a billion years with a billion computers and a billion monkeys typing on them, will get us out of financial trouble. I really don't know. It's certainly true that many counterintuitive things are true, and when you have the guts to do something counterintuitive that works, it's really cool. It's a superpower under our yellow sun.

But there are some things that are just intuitive. Did you know, that if you're going 100 mph, directly at a very, very thick, reinforced concrete wall, and you speed up, so you're accelerating right when you hit the wall that the accident you have is going to be much worse than if you'd jammed on the brakes as soon as you saw the wall at the end of the street? Did you know that? It's exactly what everything you know and feel would tell you, and it's exactly true. Most times when you're driving, or playing with fire, or handling money, the thing that makes sense to you is also true.

I way hope we're turning into a skid and not accelerating into a concrete wall.

Note: Reading this article does not give you the information you need to really eat fire, fire walk or even turn into a skid. Do not try any of it. You really need a trained professional to teach you, and most important you need to sign something that says Penn Jillette and CNN are not in any way responsible for your inevitable injuries.

 

[fossten]

Good article. I predict that the non-thinkers will not read it, and the astroturfers like fox will not comment.

 

[shagdrum]

I wanna go turn into a skid now...

 

[foxpaws]

Good article. I predict that the non-thinkers will not read it, and the astroturfers like fox will not comment.

Really - Foss, I claimed at some point to be a grass roots organizer or proponent? I don't remember that...

I actually don't really pay a lot of attention to Penn. Teller seems to be the smarter of the two...

But, you know, it seems like most people here claimed it took WWII before Roosevelt got out of the depression. What was WWII's contribution? Spending on a huge scale, literally throwing billions and billions at the economy by the government. According to people like Cal, the spending that Roosevelt did previous to the onset of the war didn't help at all, perhaps hindered. What did it take to turn the economy according to him - the War. What happened during the war, massive spending.

 

[Calabrio]

I actually don't really pay a lot of attention to Penn. Teller seems to be the smarter of the two...

Oh look, a cute.. and obnoxious way to avoid acknowledging the sentiment, and common sense logic, of the little opinion piece.

But, you know, it seems like most people here claimed it took WWII before Roosevelt got out of the depression. What was WWII's contribution? Spending on a huge scale, literally throwing billions and billions at the economy by the government. According to people like Cal, the spending that Roosevelt did previous to the onset of the war didn't help at all, perhaps hindered. What did it take to turn the economy according to him - the War. What happened during the war, massive spending.

Again, this would be an example of you either being completely full of crap or merely totally clueless. For the moment, I won't presume to know. I also don't understand what your point is here, to confuse things?

Technically, the depression didn't end until AFTER the second World War...not so coincidently AFTER FDR was dead. But there were no signs of recover through out the 1930s despite multiple phases of the New Deal and two recessionary cycles. And the failures of the FDR economy weren't merely the spending but the aggressive, hostile, interference in the markets.

If massive spending by the government would have been sufficient to recover the American economy in the 1930s, then FDR would have succeeded sometime during his first decade as President.

 

[foxpaws]

Oh how cute.. and obnoxious way to avoid acknowledging the sentiment of the little opinion piece.

It is a 'little' opinion piece, by a magician. A heartwarming story, with speculation at the end. I personally do like Teller better. He is a far more interesting man. Penn is very much like he appears, over the top.

Again, this would be an example of you either being completely full of crap or merely totally clueless. For the moment, I won't presume to know. I also don't understand what your point is here, to confuse things?

Technically, the depression didn't end until AFTER the second World War...not so coincidently AFTER FDR was dead. But there were no signs of recover through out the 1930s despite multiple phases of the New Deal and two recesionary cycles. And the failures of the FDR economy weren't merely the spending but the aggressive, hostile, interference in the markets.

So, Cal, what ended the depression? You stated in the past it was WWII. I am really curious. As it does go to point within the article. 10th paragraph - Obama tells us that we can spend our way out of debt.

 

[fossten]

Really - Foss, I claimed at some point to be a grass roots organizer or proponent? I don't remember that...

Ah, clever, you try to weasel out by saying you never CLAIMED to be an astroturfer.

And you know what one is, too...

And you've admitted to helping Obama's campaign on a grassroots and CENTRALLY PLANNED LEVEL. Even bragged about making phone calls to prospective voters.

And I'd never expect an astroturfer to admit to being one.

If it looks like a duck, waddles, and quacks...

 

[Calabrio]

It is a 'little' opinion piece, by a magician. A heartwarming story, with speculation at the end. I personally do like Teller better. He is a far more interesting man. Penn is very much like he appears, over the top.

Perhaps you can make a list of professions or backgrounds that have the proper authority to write an opinion or make logical and sound observations.

Based upon what I know of both Penn & Teller, I'm fairly confident that they are both in agreement on this issue. They are both staunch libertarians.

So, Cal, what ended the depression? You stated in the past it was WWII. I am really curious. As it does go to point within the article. 10th paragraph - Obama tells us that we can spend our way out of debt.

What ended the depression?
Well, I can give you that answer in just two words. FDR died.

There's an underlying misunderstanding implied in your questions. You presume that something government did "fixed" the economy. It didn't.

World War 2 expanded the demand for manufactured goods, internationally and domestically. (MARKETS EXPANDED) Military recruiting and the draft help reduced the number of statistically unemployed people in the population, opening up manufacturing jobs that enabled women to go to work outside the home in larger numbers- this helped shaped the perception of the war time economy. But the economy didn't really recover until AFTER the war, when FDR was dead and the economic restrictions and the fascist hand of FDR was released from the throats of businesses.

It wasn't federal spending or federal control of the economy the fixed the economy, it simply stopped preventing it.

 

[fossten]

Cal, notice that Fox doesn't try to refute the major claim of Penn's article - namely that spending your way out of debt defies logic and doesn't work. Instead, she tries to deflect by engaging you in a back and forth straw man argument about FDR and the depression.

I don't think she's capable of answering a claim on the merits. It's always deflection and straw man with her. That's what astroturfers do, try to maintain the talking points and distract if possible; hijack threads.

 

[shagdrum]

But, you know, it seems like most people here claimed it took WWII before Roosevelt got out of the depression. What was WWII's contribution?

Can you say, "wartime economy"?

We had rationing, thus allowing people more disposable income for other things (markets expanding). We also had the draft; many of those unemployed were put to work...overseas. The number of mouths to feed and people to shelter and consume resources dropped dramatically. There are other factors, but those are probably the biggest two.

And even still, as Cal pointed out, we didn't really get out of the recession until after the war. The wartime economy saw a tremendous buildup of wealth as well as changing perceptions concerning the economy. When the war ended (and FDR was out of the picture), government controls started coming off the economy very rapidly. This unshackled the economy, paving the way for investment of the wealth created during the war and thus allowing for a huge post war boom that launched us out of the recession.

 

[Calabrio]

Cal, notice that Fox doesn't try to refute the major claim of Penn's article - namely that spending your way out of debt defies logic and doesn't work.

Maybe she'll get to that in her next post.

 

[foxpaws]

Ah, clever, you try to weasel out by saying you never CLAIMED to be an astroturfer.

And you know what one is, too...

And you've admitted to helping Obama's campaign on a grassroots and CENTRALLY PLANNED LEVEL. Even bragged about making phone calls to prospective voters.

And I'd never expect an astroturfer to admit to being one.

If it looks like a duck, waddles, and quacks...

I always stated I worked for Obama's Democrat campaign - never a grass roots thing. Every campaign makes phone calls and walks door to door - McCain/Palin did it - heck, one weekend I was walking the same neighborhood with a McCain/Palin worker. This has been happening forever - my Mom did it for JFK. Foss - I don't know what planet you live on, but major political campaigns have been using phones and canvassing forever. Heck I bet Alexander Graham Bell's second call to Watson was... "Watson - don't you think that Hayes is a better choice?" I stated every time I was with the 'Obama campaign.' How is that astroturfing? If I had stated I was with the local Bird Lovers for Change campaign, that would be astroturfing.

Maybe you don't quite understand the definition Foss - go look it up. If I state I am with the Presidential campaign, it means I am not astroturfing...

 

[foxpaws]

Perhaps you can make a list of professions or backgrounds that have the proper authority to write an opinion or make logical and sound observations.

Based upon what I know of both Penn & Teller, I'm fairly confident that they are both in agreement on this issue. They are both staunch libertarians.

I don't think Ray would be in agreement on this...

And I think anyone can write an opinion piece - I was just commenting on the 'spending our way out of debt' line. It is however an 'opinion' piece. And it is from a professional magician. I do weigh opinion pieces. I will give Sowell's opinion more weight than Penn Jillette. I would give Michelle Maulkin more weight than Ray Teller. Everyone gives opinions different values.

What ended the depression?
Well, I can give you that answer in just two words. FDR died.

There's an underlying misunderstanding implied in your questions. You presume that something government did "fixed" the economy. It didn't.

World War 2 expanded the demand for manufactured goods, internationally and domestically. (MARKETS EXPANDED) Military recruiting and the draft help reduced the number of statistically unemployed people in the population, opening up manufacturing jobs that enabled women to go to work outside the home in larger numbers- this helped shaped the perception of the war time economy. But the economy didn't really recover until AFTER the war, when FDR was dead and the economic restrictions and the fascist hand of FDR was released from the throats of businesses.

It wasn't federal spending or federal control of the economy the fixed the economy, it simply stopped preventing it.

So, now you are saying it is FDRs demise that ended the depression - right Cal?

 

[foxpaws]

The wartime economy saw a tremendous buildup of wealth as well as changing perceptions concerning the economy. When the war ended (and FDR was out of the picture), government controls started coming off the economy very rapidly. This unshackled the economy, paving the way for investment of the wealth created during the war and thus allowing for a huge post war boom that launched us out of the recession.

Shag - the wartime economy created massive wealth. Government contracts to almost every industry created a huge influx of money into the economy.

Wouldn't you say that then that wartime economics created trickle down economics? Don't you give credit to Reagan for trickle down - give more money to the wealthy, and they will spend and that money will trickle down. So, the government gave all those contractors huge funds. The owners of those corporations started to spend that money (the money they received because of their Government contracts) on new factories, new products for the consumers, etc. and so the government's money trickled down to the common man.

The huge amount of money spent by the government on the war, finally jump started the economy (under some opinions). It created the opportunity for investment of the wealth created during the war. The wealth that the government's money created - correct?

 

[shagdrum]

Shag - the wartime economy created massive wealth. Government contracts to almost every industry created a huge influx of money into the economy.

...The wealth that the government's money created - correct?

Not quite. Rationing and "outsourcing" of unemployment through the draft effectively created more disposable income. Much of that was spent on government bonds which later got paid out and shifted to private sector investment. It was specific conditions brought about due to the war that allowed for that wealth creation due to private funds being willingly invested in government bonds with a specific and expected return (not taxed with no direct return expected).

There are other factors, especially concerning changing perceptions of the economy due to the war, that played into it.

You seem to be trying to ignore and/or downplay those wartime circumstances. If you do that, you ignore essential factors that led to the post war economic boom. In fact, when you say, "The owners of those corporations started to spend that money (the money they received because of their Government contracts) on new factories, new products for the consumers, etc." you seem to be ignoring the fact that, in many cases, those businesses were not allowed to produce "new products for the consumer" during the war. They were only allowed to produce for the war effort. And the money was never the government's. It was always the private citizen's. The big difference is that it wasn't simply in the form of taxes but in the form of government bonds that the money was going through the government to fund the war effort. That is a big distinction.

Here is a real good explanation of what got us out of the Depression:

To sum up, World War II got the economy out of the Great Depression, but not in the manner described by the orthodox story. The war itself did not get the economy out of the Depression. The economy produced neither a “carnival of consumption” nor an investment boom, however successfully it overwhelmed the nation’s enemies with bombs, shells, and bullets. But certain events of the war years—the buildup of financial wealth and especially the transformation of expectations—justify an interpretation that views the war as an event that recreated the possibility of genuine economic recovery. As the war ended, real prosperity returned.​

So, the war economy changed perceptions of the economy that had developed due to FDR's failed policies, and provided the wealth necessary for an economic boom. Basically, the war economy provided a clean slate for an economic boom after the war. It effectively wiped away the failures of FDR's policies (and the effects of those failures).

 

[Calabrio]

So, now you are saying it is FDRs demise that ended the depression - right Cal?

Nothing government actively did, nothing FDR did alive or dead, ended the depression. However his demise helped prevent government from prolonging it even further.

 

[foxpaws]

Not quite. Rationing and "outsourcing" of unemployment through the draft effectively created more disposable income. Much of that was spent on government bonds which later got paid out and shifted to private sector investment. It was specific conditions brought about due to the war that allowed for that wealth creation due to private funds being willingly invested in government bonds with a specific and expected return (not taxed with no direct return expected).

Shag - there was hardly any discretionary spending during WWII. Just because they could only purchase 5 gallons of gasoline a week, doesn't mean they had money that they were spending on clothes or saving. (Plus, there wasn't a lot of other stuff out there - the country was building army boots, not making sexy sandals) And when they were investing in war bonds, or buying a new outfit - it probably trickled down from the government anyway.

A man was finally able to get a factory job at Gates Rubber, because the government needed lots of tires for their jeeps. Where was the money coming from that paid his check - the contract that the US Government gave Gates to make tires for Jeeps. So, if he was buying bonds - it basically was with the government's money. If he took his girl out to the movies - it was the government's dime that got him in the door, and the government's nickel that paid for the popcorn. And that dime and nickel from the government is what helped the movie theater owner hire another usher on Friday and Saturday night -

And you thought I didn't understand 'trickle down'

And the draft created government jobs - right? So, the government was directly involved in getting people back to work, as well as indirectly (a huge amount of the population was involved in the war machine, like the factory worker above).

It was because of government money that unemployment plummeted - right?

But certain events of the war years—the buildup of financial wealth and especially the transformation of expectations—justify an interpretation that views the war as an event that recreated the possibility of genuine economic recovery. As the war ended, real prosperity returned.[/INDENT]
So, the war economy changed perceptions of the economy that had developed due to FDR's failed policies, and provided the wealth necessary for an economic boom. Basically, the war economy provided a clean slate for an economic boom after the war. It effectively wiped away the failures of FDR's policies (and the effects of those failures).

So, the wealth that the bolded text talks about is directly attributed to government dollars. The Ford family did extremely well during the war years, along with many corporations, with the money that the government gave them to build the war machine. That wealth also trickled down to Rosie the Riveter because she helped build the ships. And then it went outward from them to other businesses and people, the money that the government spent positively effected the entire economic system...

Winning the war would make anyone feel better. And spending that money that the government infused into the economy was a result.

Once again Shag - that money came from the US Government - almost all of it -right? The Fords had enough money to retool a factory and build a new, better Lincoln. The GIs came home with their battle pay and their GI bills waiting for them. Guess what they could do with that government paycheck? Buy that new Lincoln. With that Gi bill - they could buy a house (government money) and maybe even go back to school to learn a trade on the government's nickel.

Follow the money - where did it come from Shag?

 

[Calabrio]

We'll come back to the WW2 part of your argument later.
But are we now in agreement that the government spending under all phases of the New Deal FAILED to pull the country out of the depression?

This new argument of yours appears to recognize this historic and economic fact, but the new fall back position seems to be that "well, huge government spending during the war DID save the economy... so Obama is right."

That's not right, but let's check off these points one at a time.

In order for the War to have pulled us out of the Depression, that means Roosevelt DID NOT. Thus, the New Deal while not only tremendously expensive, leaving horrendous legacy costs, and being inherently fascist, interfering in the marketplace and destroying competition failed.

I can't wait to start seeing this new, stupid, argument used to defend Obama and the current reckless, dangerous economic policy we're in engaged in all over the internet next. I'd ask you where you get your talking points from Foxpaws, but then it wouldn't be nearly as much fun to read your post. It'd ruin the surprise.

 

[foxpaws]

Cal - once again - Roosevelt's policies were moving us out of the depression. However, since neither you or anyone on the right side here will agree - fine. So rather than argue that point ad nauseum, I am just trying to figure out how the war, or the aftermath of the war got us out of the depression, which seems to be the right's claim. It seems like in all cases government spending will be at the root of the recovery. If it isn't - answer me, where did the money come from? I am trying to figure out how did the economy get out of its doldrums, according to you and shag. I am trying to figure out where the money comes from.

Oh, I get my talking points from me. Almost all my friends are conservatives - and I don't read a lot of internet junk, and what I do read is mostly conservative. Know your enemy.

So, if you see this new, stupid argument all over the internet you will have to show it to me - I haven't seen it...

And thank you for calling my argument stupid -

Is that better Foss - less 'victim'?

 

[Mr Wiggl3s]

. .

 

[fossten]

Oh, I get my talking points from me. Almost all my friends are conservatives - and I don't read a lot of internet junk, and what I do read is mostly conservative. Know your enemy.

So what you're saying is that you're either a liar or a phony. You make 'friends' with conservatives because you want to know your enemy? Mkay...

 

[foxpaws]

So what you're saying is that you're either a liar or a phony. You make 'friends' with conservatives because you want to know your enemy? Mkay...

No- I read conservative viewpoints to find out more about what the other side is 'thinking'... To have some sort of idea of where these ideas are coming from... "know your enemy" so when I discuss things with my friends, I will have an idea of where their argument might go.

And Foss - where do you get your viewpoints from? Oh that is easy - all I have to do is review the myriad of posts that you start. Apparently you never have an original thought - They all stem from someone else.

How nice. A textbook case of 'groupthink'.

 

[shagdrum]

Shag - there was hardly any discretionary spending during WWII. Just because they could only purchase 5 gallons of gasoline a week, doesn't mean they had money that they were spending on clothes or saving. (Plus, there wasn't a lot of other stuff out there - the country was building army boots, not making sexy sandals) And when they were investing in war bonds, or buying a new outfit - it probably trickled down from the government anyway.

A man was finally able to get a factory job at Gates Rubber, because the government needed lots of tires for their jeeps. Where was the money coming from that paid his check - the contract that the US Government gave Gates to make tires for Jeeps. So, if he was buying bonds - it basically was with the government's money. If he took his girl out to the movies - it was the government's dime that got him in the door, and the government's nickel that paid for the popcorn. And that dime and nickel from the government is what helped the movie theater owner hire another usher on Friday and Saturday night -

And you thought I didn't understand 'trickle down'

You clearly don't understand trickle down economics, or are intentionally mischaracterizing them. Wealth cannot trickle down from the government. It starts where it is created, and it can only be created in the private sector. the government, at best functions as an intermediary.

You are also, glossing over that distinction between taxes and bonds. Taxes are collected with no expected return; they are not an investment. Bonds are an investment and have an expected return. Combine all the money in bonds with the wartime inflation and then all that money hitting the market right after the war, as well as massive restrictions coming off the market at that same time, you have the recipe for a massive economic boom. You are ignoring that fact of massive restrictions coming off the economy just before the boom. The biggest thing the government did to get the economy moving was to get out of it's way.

And the draft created government jobs - right? So, the government was directly involved in getting people back to work, as well as indirectly (a huge amount of the population was involved in the war machine, like the factory worker above).

That is unique to the wartime economy. You cannot equate the wartime economy with the peacetime economy. To do that is to mischaracterize both.

There is also the nature of the change in the economy before, during and after the war. Here is another quote in that article I cited that you should read:

As the 1940s began, the economy, although substantially affected by various government intrusions, remained one in which resource allocation for the most part reflected the operation of the price system. It was far from classic capitalism but also far from a command economy. Beginning in the fall of 1940, proceeding slowly until the attack on Pearl Harbor and then very rapidly, the government imposed such pervasive and sufficiently effective controls that, by the beginning of 1943, the economy became a thoroughgoing command system. This regime persisted until the fall of 1945, when the controls began to come off rapidly. Although some persisted, the overwhelming mass of them had been removed by 1947. In the late 1940s the economy was once again broadly market-oriented, albeit far from pure capitalism. So, within a single decade the economy had moved from being mainly market-directed to being nearly under the complete control of central planners to being mainly market-directed again. When one views any economic measure spanning the decade, one must keep this full revolution of the institutional framework in mind, because the meaning of such measures as the unemployment rate, GNP, and the consumer price index depends on the institutional setting to which they relate.​

Here is a real good summary of the factors that led to us getting out of the depression through the wartime economy.

the performance of the war economy, despite its command-and-control character, broke the back of the pessimistic expectations almost everybody had come to hold during the seemingly endless Depression. In the long decade of the 1930s, especially its latter half, many people had come to believe that the economic machine was irreparably broken. The frenetic activity of war production—never mind that it was just a lot of guns and ammunition—dispelled the hopelessness. People began to think: if we can produce all these planes, ships, and bombs, we can also turn out prodigious quantities of cars and refrigerators.

When the controls began to come off and the war ended more quickly than anticipated in 1945, consumers and producers launched eagerly into carrying out plans based on rosy forecasts and, by so doing, made their expectations a reality. Of course, the ability to draw on the accumulations of financial assets built up by “forced saving” during the war was important, especially in conjunction with the Federal Reserve's continued support of bond prices. But the liquidation of those assets alone could not have turned the trick—if such tricks were possible, a government could produce prosperity simply by cranking the money presses.

Probably the most solid evidence of expectations comes from the stock markets, where thousands of transactors risk their own wealth on the basis of their beliefs about future economic conditions. Evidently investors took a dim view of the prospect of a war economy. After 1939, stock values dropped steadily and substantially; U.S. entry into the war in December 1941 did not arrest the decline. By 1942 the Standard & Poor’s index had fallen by 28 percent, and the market value of all stocks on registered exchanges had plunged by 62 percent in nominal terms. (Adjustments for price level changes would make the declines even greater.) The declines occurred even though current corporate profits were rising steadily and substantially. In 1943, as the tide of war turned in favor of the Allies, the stock market rallied and small additional advances took place in 1944. Still, in 1944, with the war economy operating at its peak, the stock market’s real value had yet to recover to its 1939 level.

By early 1945, almost everyone expected the war to end soon. The prospect of a peacetime economy electrified investors. Stock prices surged in 1945 and again in 1946. In just two years the Standard & Poor’s index increased by 37 percent and the value of all shares on registered exchanges by 92 percent, despite a decline of current-dollar after-tax corporate profits from their peak in 1944. Did people expect the end of “wartime prosperity” to be economically deleterious? Obviously not.​

So, the wealth that the bolded text talks about is directly attributed to government dollars.

Again, wealth cannot be created by the government, only by private sector. In this case, the government was the client, but the engine of that wealth creation was still the private sector.

Once again Shag - that money came from the US Government - almost all of it -right?

Nope. The wealth came from private citizens in the form of taxes and large amounts of wartime bonds. The government was the collector and functioned as the bank to the bond holders (investors) and the consumer to the businesses.

and the only reason any of the worked at all to create wealth was due to the very specific conditions of the wartime economy. If you overlook that, then you are mischaracterizing things. That is what the recovery hinged on; the perceptions and willful sacrifices of the general population that were necessitated and made possible to the wartime effort. You are trying to downplay that and change the focus to the government spending through mischaracterization and misdirection.

 

[foxpaws]

You clearly don't understand trickle down economics, or are intentionally mischaracterizing them. Wealth cannot trickle down from the government. It starts where it is created, and it can only be created in the private sector. the government, at best functions as an intermediary.

You are also, glossing over that distinction between taxes and bonds. Taxes are collected with no expected return; they are not an investment. Bonds are an investment and have an expected return. Combine all the money in bonds with the wartime inflation and then all that money hitting the market right after the war, as well as massive restrictions coming off the market at that same time, you have the recipe for a massive economic boom. You are ignoring that fact of massive restrictions coming off the economy just before the boom. The biggest thing the government did to get the economy moving was to get out of it's way.

Shag – you still haven’t answered me – where did the money come from that rekindled the economy? Where did the private sector get the money to create new jobs, and build new factories?

It was the government’s spending on the war effort. And then it was the government paying interest on war bonds and collecting taxes on the people who were employed by the war effort. And the government printing money...

And I do know the difference between bonds and taxes. The people, with the money they got from their government created jobs bought bonds. So, the government was basically, in many cases, getting back their own money. Then, when the war was over, and those bonds were cashed in – who paid the interest on those war bonds? The government.

You could have had zero restrictions and it wouldn’t have made any difference, if you didn’t have any money. The government created that wealth. If the government didn’t – who did? Once again shag – you haven’t answered – where did the money come from?

That is unique to the wartime economy. You cannot equate the wartime economy with the peacetime economy. To do that is to mischaracterize both.

We haven’t been in a wartime economy for the last 7+ years? Really? Haven’t we been at war for over 7 years?

From your article…

The frenetic activity of war production—never mind that it was just a lot of guns and ammunition—dispelled the hopelessness. People began to think: if we can produce all these planes, ships, and bombs, we can also turn out prodigious quantities of cars and refrigerators.
​

So, the money that created the atmosphere of hope, came in the form of government contracts to build those guns and planes and bombs. And the people who bought those refrigerators bought them with the money they had saved because they had jobs in those factories that built the guns and planes and bombs. The money that stemmed from government contracts.

Of course, the ability to draw on the accumulations of financial assets built up by “forced saving” during the war was important, especially in conjunction with the Federal Reserve's continued support of bond prices. But the liquidation of those assets alone could not have turned the trick—if such tricks were possible, a government could produce prosperity simply by cranking the money presses.​

So, how did the people build up those ‘forced savings accounts’ during the war? Wasn’t it the money that the government spent on the war effort? If not shag, where did the money come from?

And once again – when they ‘forced saved’ into government war bonds, who paid out the interest on those funds – wasn’t it the government?

The declines occurred even though current corporate profits were rising steadily and substantially. In 1943, as the tide of war turned in favor of the Allies, the stock market rallied and small additional advances took place in 1944. Still, in 1944, with the war economy operating at its peak, the stock market’s real value had yet to recover to its 1939 level.​

Ah, shag – you don’t invest in the stock market if you think you might lose the war. There was a definite feeling in the US that we could lose this war. Would you invest in the stock market right now if you thought the Chinese were going to be at our shores next year? During a world war the stock market will go down – it has nothing to do with corporate profits at that point, it has to do with perception that the country might not be here next year.

By early 1945, almost everyone expected the war to end soon. The prospect of a peacetime economy electrified investors. Stock prices surged in 1945 and again in 1946. In just two years the Standard & Poor’s index increased by 37 percent and the value of all shares on registered exchanges by 92 percent, despite a decline of current-dollar after-tax corporate profits from their peak in 1944. Did people expect the end of “wartime prosperity” to be economically deleterious? Obviously not.​

Once again – if the end of the war is in sight – what happens, people feel good about the economy. They had saving accounts now - thanks to their jobs in the factories that built the planes and guns. They had bonds that were going to get paid back, with interest, by the US Government. The money that they were anxious to spend stemmed from the war effort and the billions and billions of dollars that the US government fed into the economy.

Nope. The wealth came from private citizens in the form of taxes and large amounts of wartime bonds. The government was the collector and functioned as the bank to the bond holders (investors) and the consumer to the businesses.

How were the private citizens able to pay taxes and buy war bonds? Could it be because they had jobs that the government created by going to war?

You still haven’t showed me shag where the money came from that paid those taxes and bought war bonds, or went into those savings accounts that were all ready to be spent on refrigerators after the war. Who or what created that wealth if it wasn't the government?

 

[fossten]

No- I read conservative viewpoints to find out more about what the other side is 'thinking'... To have some sort of idea of where these ideas are coming from... "know your enemy" so when I discuss things with my friends, I will have an idea of where their argument might go.

And Foss - where do you get your viewpoints from? Oh that is easy - all I have to do is review the myriad of posts that you start. Apparently you never have an original thought - They all stem from someone else.

How nice. A textbook case of 'groupthink'.

That's really a stupid thing to say. It shows shortsightedness, ignorance, and tunnelvision. I will speak specifically to it later, as I don't have time right now. Suffice it to say that you're wrong as usual.

I will note that you are drawing an overall conclusion based on your faulty assumption that started posts are representative of all posts. That's a logical flaw known as generalization. FAIL.