Most of America has suffered since the crash of 2007. Property values plummeted, unemployment soared and remained stubbornly high, the use of food stamps continues to set records. Pension plans are going broke and municipalities around the country are teetering on the edge of bankruptcy. All this five full years after the crash.
A federal government stimulus armada led by Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner hurled trillions of dollars at the meltdown. Instead of green shoots, main street seems to be in the middle of seven lean years while Wall Street’s short memories inflate bubbles in junk bonds and government debt.
Left to its own devices, the economy’s healing powers are extraordinary. For instance, the depression of 1920 was a doozy. Unemployment jumped that year from 4 percent to nearly 12 percent, and GNP declined 17 percent.
Had the likes of Tim Geithner taken over as Treasury Secretary, who knows for how long the pain would have dragged on. But it was not a career bureaucrat that took the job but instead a 66 year old industrialist, Andrew Mellon.
By the summer of 1921, recovery was already underway. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923. By 1926, Treasury Secretary Mellon was able to say, “We are now at a very high tide of prosperity.”
Read More at dailyreckoning.com . By Douglas French.
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