New Deal Lessons
The obvious analogy is FDR and the birth of the New Deal. With the economic crisis facing the nation, President Obama should revive the economics of John Maynard Keynes: Prime the pump with government spending, save the financial and banking structure by pumping funds into banks to enable people to save their homes, restore credit, and save our manufacturing system.
President Obama appears to be aiming at solutions that will address these weaknesses in the financial system, the liquidity crisis, and rising unemployment. The main danger is doing too little over fears of the impending astronomical deficits. It will take all the courage Obama can muster to rally the Congress and overcome the stubborn thinking of many of our congressional leaders wedded to ideological solutions based on archaic economic theory.
There is another to be learned from the New Deal era. In 1936-37 there was a resurgence of economic crisis stemming from a fear of deficit spending. It was not until the advent of World War II, with rearmament and military spending, that the economy finally turned the corner. President Obama should create programs like the WPA projects of the New Deal, single-payer health care, spending for a revolution in education, and encouraging entrepreneurship through tax policy.
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