There may be an outdated cliché that claims, The only constant is change.” While that is typically true, there are some things of which we may be fairly certain. Economists finally began to grasp what essentially drove the business cycles and tips on how to better mitigate its ups and downs so as to forestall the economic system from ever again from suffering from manic-despair, as it had prior to 1940; Keynesian economics was America’s lithium.
For WW II, America experienced a GDP decline of over 12%, which is fairly important, but, not like other warfare related recessions before it, unemployment didn’t rise precipitously, in reality, it hardly rose at all; only to 5.2%. Like the recessions after the Warfare of 1812 and WW I, this recession was relatively quick, only lasting 8 months; for different reasons, the recession following the Civil Warfare last over two years.
It was founded in the late 1800s, when it break up from the Classical college, by Austrian’s Carl Menger, Frederich von Wiesner, and others 1 The Austrian college’s fundamental tenets embody a basic imagine the economic system is driven by individual folks.
KEYNESIAN ECONOMICS: Developed in 1936 by John Maynard Keynes to answer the question as to why classical economics could not account for the violent increase-bust cycle experienced by the American (and world) economic system for the last a hundred thirty years.
I imagine that the crash of 1929 was roughly a standard downturn in the business cycle that may have corrected itself within 2-3 years had not Hoover and later FDR intruded in the non-public sector thereby creating market distortions that saved the economic system in a depressed state.…