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Vintage pro-inflation propaganda

    Inflation (1933)

    This propaganda film attempts to explain how inflation can bring about happy days.

    The title of the video is now changed to vintage pro-inflation propaganda. It has been brought to my attention that Roosevelt's policy was in no part influenced by John Maynard Keynes' theory. Calling it Keynesian is misleading. In fact, Kenyes was quite critical of FDR's New Deal. In an open letter to FDR published by New York Times on Dec 31, 1933 Keynes wrote:

    "Now there are indications that two technical fallacies may have affected the policy of your administration. The first relates to the part played in recovery by rising prices. Rising prices are to be welcomed because they are usually a symptom of rising output and employment. When more purchasing power is spent, one expects rising output at rising prices. Since there cannot be rising output without rising prices, it is essential to ensure that the recovery shall not be held back by the insufficiency of the supply of money to support the increased monetary turn-over. But there is much less to be said in favour of rising prices, if they are brought about at the expense of rising output. Some debtors may be helped, but the national recovery as a whole will be retarded. Thus rising prices caused by deliberately increasing prime costs or by restricting output have a vastly inferior value to rising prices which are the natural result of an increase in the nation's purchasing power."

    "I do not mean to impugn the social justice and social expediency of the redistribution of incomes aimed at by N.I.R.A. and by the various schemes for agricultural restriction. The latter, in particular, I should strongly support in principle. But too much emphasis on the remedial value of a higher price-level as an object in itself may lead to serious misapprehension as to the part which prices can play in the technique of recovery. The stimulation of output by increasing aggregate purchasing power is the right way to get prices up; and not the other way round."

    Thus, Keynes did not agree with FDR's way of cutting production to bring about inflation and he thought FDR's emphasis on inflation is misguided. Further in the letter he wrote about the money supply:

    "The other set of fallacies, of which I fear the influence, arises out of a crude economic doctrine commonly known as the Quantity Theory of Money. Rising output and rising incomes will suffer a set-back sooner or later if the quantity of money is rigidly fixed. Some people seem to infer from this that output and income can be raised by increasing the quantity of money. But this is like trying to get fat by buying a larger belt. In the United States to-day your belt is plenty big enough for your belly. It is a most misleading thing to stress the quantity of money, which is only a limiting factor, rather than the volume of expenditure, which is the operative factor."

    Keynes believed there was enough money to go around in 1933 and flooding the US with more money would not help recovering.


    Full text of the letter can be found here: http://newdeal.feri.org/misc/keynes2.htm


    I hope that clears up some confusion.
    Thanks to drmadjdsadjadi for pointing me to the Keynes letter.

    This propaganda film attempts to explain how inflation can bring about happy days.

    The title of the video is now changed to vintage pro-inflation propaganda. It has been brought to my attention that Roosevelt's policy was in no part influenced by John Maynard Keynes' theory. Calling it Keynesian is misleading. In fact, Kenyes was quite critical of FDR's New Deal. In an open letter to FDR published by New York Times on Dec 31, 1933 Keynes wrote:

    "Now there are indications that two technical fallacies may have affected the policy of your administration. The first relates to the part played in recovery by rising prices. Rising prices are to be welcomed because they are usually a symptom of rising output and employment. When more purchasing power is spent, one expects rising output at rising prices. Since there cannot be rising output without rising prices, it is essential to ensure that the recovery shall not be held back by the insufficiency of the supply of money to support the increased monetary turn-over. But there is much less to be said in favour of rising prices, if they are brought about at the expense of rising output. Some debtors may be helped, but the national recovery as a whole will be retarded. Thus rising prices caused by deliberately increasing prime costs or by restricting output have a vastly inferior value to rising prices which are the natural result of an increase in the nation's purchasing power."

    "I do not mean to impugn the social justice and social expediency of the redistribution of incomes aimed at by N.I.R.A. and by the various schemes for agricultural restriction. The latter, in particular, I should strongly support in principle. But too much emphasis on the remedial value of a higher price-level as an object in itself may lead to serious misapprehension as to the part which prices can play in the technique of recovery. The stimulation of output by increasing aggregate purchasing power is the right way to get prices up; and not the other way round."

    Thus, Keynes did not agree with FDR's way of cutting production to bring about inflation and he thought FDR's emphasis on inflation is misguided. Further in the letter he wrote about the money supply:

    "The other set of fallacies, of which I fear the influence, arises out of a crude economic doctrine commonly known as the Quantity Theory of Money. Rising output and rising incomes will suffer a set-back sooner or later if the quantity of money is rigidly fixed. Some people seem to infer from this that output and income can be raised by increasing the quantity of money. But this is like trying to get fat by buying a larger belt. In the United States to-day your belt is plenty big enough for your belly. It is a most misleading thing to stress the quantity of money, which is only a limiting factor, rather than the volume of expenditure, which is the operative factor."

    Keynes believed there was enough money to go around in 1933 and flooding the US with more money would not help recovering.


    Full text of the letter can be found here: http://newdeal.feri.org/misc/keynes2.htm


    I hope that clears up some confusion.
    Thanks to drmadjdsadjadi for pointing me to the Keynes letter.
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    votes
Posted by mzk1 (3 years ago)
Did anybody see the other article in the newspaper the girl was showing, about someone saying that capitalism would need to be replaced with socialism? Of course, it's up in the air whether they meant it should or that this would avoid it, or that it just happened to be there.
    votes
Posted by mzk1 (3 years ago)
Did you hear 3.2? I think that refers to the limited alcohol beverages permitted as prohibition winded down.
    votes
Posted by mzk1 (3 years ago)
Only one thing. Inflation is horrible, I remember those days - but deflation is worse. What you want is a minimal amount of inflation - as close to 0 as possible.
    votes
Posted by KarlMarx (4 years ago)
I love this video... so well done. If I were alive I would hire this propagandist... Those Democrats what useful idiots....
    votes
Posted by JC_Ryle (5 years ago)
Yes, a pencil and 20 ballots for each and every Acorn member. The Chicago way!
    votes
Posted by Jingo_Fett (5 years ago)


Someone should make a documentary in Venezuela about their Managed Economy. Oh wait, they don't allow cameras. I guess we'll just have to take their word for it.

Something tells me their chief economists draw charts with pencils too. I think they even mark ballots with pencils.
    votes
Posted by Amitabh_Bachchan (5 years ago)


My favorite part is the mortgage guy being called a 'villain.' Where did the farmer get the money to buy his farm? Of course the Socialists believe that you should go to the government.
    votes
Posted by JC_Ryle (5 years ago)
Patronizing simplistic false Hollywood propaganda for a socialist, now where have we seen that before? Notice how they throw the hint of infidelity/immorality at the end, they so can't help but appeal to the underbelly of man's character. The best his how he just makes it up with a pencil, but we call him "professor." Attack the rich, and spread the government cheese, watch them print money and give it to their croonies-socialism!...it's criminal.
    votes
Posted by Kato_Institute (5 years ago)


This video seems full of assumptions. Like as the dollar increases in value, the cost of living goes down . . . but wages go below the cost of living??? Why is that?

Are wages based on some kind of Dollar to Cost of Living Ratio that I've never heard of? Or are wages based on supply and demand? If I recall correctly, after Katrina, people were making upwards of $15 to $20 an hour working at jobs that paid the minimum before the hurricane. Reason being a high demand of workers and a short supply of workers. Not cost of living or the value of a dollar.
    votes
Posted by Jingo_Fett (5 years ago)


But what if rising prices DO NOT lead to higher wages and/or output? Isn't that a large assumption?

And 2 minutes in, they talk about the gold standard but never say why we got off it.



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From: domesh
Added: 03-02-2009
Views: 16,033
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