Now that sequestration has hit, people are wondering whether we're going to see another 1937.
That's the year that brought America a 12-month-long "recession-within-a-depression."
The Dow also fell 47 percent.
But there remains disagreement about what caused this event.
Keynesians like Paul Krugman argue it was indeed the result of Roosevelt's decision to curb New Deal spending.
Monetarists, meanwhile, believe fears of inflation choked off business spending.
And still a third prominent economist, Dartmouth's Douglas Irwin, has recently written it was the result of gold sterilization — that is, federal gold reserves out of the monetary supply.
Before we determine who's right, we wanted to go back and see what contemporary accounts were saying.
By April of 1937, many had grown fearful about excessive New Deal Spending. This editorial compared it to Santa's bag of gifts. But it's also worth noting it says it was inevitable.
By August, there were signs the economy was faltering.
But the government was convinced it was time to leave business to its own devices — lest the U.S. risk bankruptcy, as writer David Lawrence put it.
See the rest of the story at Business Insider
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