Take a peek at the 1920s figures in this table. Look at what happened to the national debt. Who presided? Harding was president 1921-1923, with Coolidge as his VP. Coolidge was president 1923-1928. (Hoover took over in 1929, the market crashed his first year, and the government made a giant mess thereafter).
Ever hear of the Depression of 1920? Most have not. See how they managed it? Cut the federal budget in half, slash tax rates. Boom, recession over, roaring twenties begins. 4.2% average GDP growth from 1920 to 1929.
The other half of the coin, the Federal Reserve and its actions, is equally enlightening and cautionary. Coolidge left office, Hoover took over, the stock market crashed, Smoot-Hawley killed trade, the Federal Reserve made idiotic decisions, a recession was turned into the Great Depression due to government mismanagement (yeah, yeah, statists will disagree, but history’s on my side), and the nation didn’t really start recovering until the post-WWII Republican Congress started dismantling the New Deal.
Next time someone tells you that you can’t cut government spending in an economic downturn, just mention the Depression of 1920 to them. Maybe one in a hundred will have enough open-mindedness to read about it, but that’s 1 in 100 that you’ve enlightened.
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