These times are among the strangest economic times we have ever lived through as a nation. We are simultaneously witnessing a horror show and a happy days are here again show.
As we all know, back in February, the U.S. economy was roaring along at a fantastic pace. We had immense corporate profits, full employment or maybe over full. We had a booming stock market.
Despite the threats and fearmongering of certain entities, we had the best situation for energy we have ever had in the period since the mid-1960s. Housing was strong. The high tech sector was racing forward almost insanely well. Travel and entertainment were super strong.
We were seeing some dark omens about the national debt. Despite the promises of the “supply siders,” tax cuts had not led to a big jump in national tax revenue.
The national debt was growing at a rate of very roughly one point five trillion dollars per year. To many economists, this was what had fed the immense jump in national economic output. It was a classic deficit fed boom, just as we had in World War II.
We had by January 20, 2017, already passed the point at which the national debt could ever be paid off. But hardly anyone was worried about it. The Fed could print all the money the government could need and the deficit can could be kicked down the road indefinitely.
Then something happened. That something was COVID-19. Once it hit, the federal and state governments did something they had never done before: they purposely shut down much of the economy.
For all of American history, at least since 1929, the goal of the government was to stimulate the economy.
Now, with the evidence pouring in that a lethal virus was running wild in the economy, the government moved to shut down immense sectors of the economy where the disease could be caught and spread.
Retail shopping, except for groceries, was put at a virtual stop. Travel was largely shut down. Movies, sporting events, live shows, restaurants and cafes were close to a dead stop.
Restaurants alone accounted for about 10 percent of all U.S. jobs, so to take a sledgehammer to that was a deadly blow.
The stock market dived. Unemployment rocketed upward. Pessimism ruled. Even panic. Learned men and women predicted another Great Depression — only this one would be worse because there would presumably be no massive rearmament for a world war to pull us out of it.
And then, a miracle happened. The miracle was that it turned out that all of the lessons of the Great Depression of the Thirties and the Great Recession of 2009 had not been ignored or forgotten, but had been learned.
The government had actually learned to do something right! In 2008-2009, the administration had acted out of some incomprehensible motives, ignored the truths about how Depressions happen, and done most of the big things wrong.
It was only by a series of genuine miracles that the whole economy did not just collapse.
Had it not been for the Treasury relief programs, generally referred at as TARP, had it not been for the much criticized "bailouts," grass — not marijuana, grass — would have been growing on the main streets of the towns and cities of America.
What did we learn from 1929-31 and from 2008-2009?
To read Ben Stein's full article, please visit The American Specator.
Ben Stein is a writer, an actor, and a lawyer who served as a speechwriter in the Nixon administration as the Watergate scandal unfolded. He began his unlikely road to stardom when director John Hughes as the numbingly dull economics teacher in the urban comedy, "Ferris Bueller's Day Off." Read Ben Stein's Reports — More Here.
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