Comment 29336

By A Smith (anonymous) | Posted March 05, 2009 at 00:46:04

JonC >> People were able to save money when unemployment was 3% but weren't able to save when the unemployment rate was 23 or 24% 4 years into the great depression. What a shock

Okay, then let's just look at the numbers we do have. From 1950 to 1969, the U.S. economy performed very well, averaging 4.29% in real GDP growth per year. During that time period, there were two wars, the Korean and Vietnam, marginal tax rates ranged from 70-90% and military spending averaged 10.68% of GDP. Non military spending averaged around 15% of GDP, as compared to 30% today. Furthermore, in this time period, government debt to gdp fell from about 95% to 37%.

In 1929, government debt stood at about 17% of GDP and by 1933, it was up to around 40%. In 1929, non military spending comprised 8.59% of GDP and by 1933 it had almost doubled to 16.49%. Military spending in from 1929 to 1933 averaged only about 1.2%.

What can we learn from these numbers? Well, it appears that if you want a strong economy, you have a large military budget (over 10% of GDP) a moderate non military budget and you make sure that debt to GDP does not increase.

How do you interpret these numbers?

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