What happened in the 1930’s?

That question was put to students in an economics class at a leading university by the professor.  I wasn’t in the class, but had I been here is what my answer would have been:

An economic downturn was first turned into a recession by wrongheaded government actions (increased taxes and government spending, Smoot-Hawley tariff, tight money policy by Federal Reserve, Kellog-Briand Pact, etc.) Next the government-instigated recession was turned into a full blown depression by the government with a scheme its proponents called the “New Deal.”  The Great Depression thus created was then prolonged by implementation of massive government  interference in the free market which persisted for the next 5 years. By 1937 the Depression had deepened and unemployment remained nearly 17%.  The Great Depression finally ended in 1941 with America’s entry into World War II when a wartime economy necessitated the end of the New Deal, which in turn allowed the Depression to end.   The government that first caused the Great Depression and then made it worse tried to absolve itself of its disastrous economic policies by claiming that it was government spending on war production that finally ended the Depression, but this was not true.  The war simply ended the New Deal, and that allowed the Great Depression to end.

The only branch of government that acted at all responsibly in the 1930’s was the United States Supreme Court which held much of the “first” New Deal unconstitutional.  But in 1936 the justices completely caved and joined the other branches in their policies of economic folly by reinterpreting the Constitution so that all of the foolish legislation the Congress and President wanted in the “second” New Deal was blessed by the Court.  The Constitutional jurisprudence of the second New Deal remains as the prevailing guidance on the Court to this day.

Extra credit: The Great Recession of 2008-2009 has officially ended but the recovery has been the weakest in modern history.  A strong recovery will only occur when the current government economic policies are ended.