In my most recent blog, I briefly described our four year recession as a copy of FDR’s twelve year New Deal that was misdesigned to fix the great depression. After twelve years it resulted in World War II: a development associated with the void and chaos of a depressed Europe and America. This blog is an extension of that article. It attempts to further explain those developments in the mid-twentieth century from a social-psychological perspective rather than an economic one. It is my belief that if Americans have not learned from history we are destined to repeat it.
The point is this; it was not deficit spending and the new deal that got us out of the great depression. It was the forced implementation of the war years that provided the structure and the obsessive qualities that were necessary to end that cultural depression. These economic bubbles that you hear so much about from economists are the symptoms of an underlying manic quality that allows people to think risk taking under questionable conditions is acceptable. The economic bubble is part of an underlying cultural manic state. The problem is psychological stupid: not economic.
If I am right, then the economic path we are pursuing is likely to result in a real and on-going fiscal crisis or a war. The reason is that we have not learned our lesson yet from the past. This cultural problem is much bigger than just the field of economics. This topic, Obama’s New Deal, is a major topic of the new book that I am writing.