Over the years, MOTHER has often opened up this column to such expert economic analysts as Vern Myers, R.E. McMasters Jr. and Julian Snyder (to name a few). And we’ve been pleased to do so, since it allowed us, in effect, to give our readers a distillation of the kind of advice that folks who subscribe to exclusive economic newsletters often pay upwards of $250 a year to receive. On the other hand, though, in any science as imprecise as the study of the economy, a person would be unwise to blindly follow the lead of one (or more!) authorities. And, to illustrate that point, we’ve prepared the following excerpt — containing “expert” quotes about the economy — from Christopher Cerf and Victor Navasky’s 392-page “compendium of authoritative misinformation,” The Experts Speak. That volume is, by the way, about as fine a supply of laughter and enlightenment as we’ve seen, and may be in your local library.
1929: The Coming Stock Market Boom
“The election of Hoover…should result in continued prosperity for 1929.”
–Roger W. Babson (American financial statistician and founder of the Babson Institute), address at Wellesley College,September 17, 1928
“Stocks have reached what looks like a permanently high plateau.”
–Irving Fisher (Professor of Economics at Yale University), October 17, 1929
On Thursday, October 24, 1929, panic struck Wall Street: Stock values plummeted $6 billion before steadying in late afternoon trading, as a record 12,894,650 shares changed hands.
“The worst has passed.”
–Joint statement by representatives of 35 of the largest wire houses on Wall Street at the close of trading, October 24, 1929
“We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices.”
–Goodbody and Company, market letter to customers, quoted in The New York Times, Friday, October 25, 1929
On Tuesday, October 29, the bottom fell out of the market: The day’s losses in share value totaled an unprecedented $10 billion — more than twice the amount of currency in circulation in the entire country at the time.
World War II and the Economy
“There will be no cars, radios, washing machines or refrigerators after the war…[T]he post-war world will be so poor that women will have to return to their grandmother’s spinning wheel and men will have to build their own cottages.”
–Dr. Hans Elias (faculty member of Middlesex University, Waltham, Massachusetts), quoted in the New York Herald Tribune, October 4, 1942
“During the next four years…unless drastic steps are taken by Congress, the U.S. will have nearly 8,000,000 unemployed and will stand on the brink of a deep depression.”
–Henry A. Wallace (U.S. Secretary of Commerce), warning a Congressional subcommittee about the effect of the end of World War II on the economy, November 1945
During the four years after Wallace’s testimony, unemployment — at its worst — barely reached half the total he had predicted. And, instead of declining, the economy boomed: Between 1945 and 1950, the U.S. Gross National Product grew almost 50 percent.
1950-1980: There Will Be No Recession
“I don’t see any significant recession or depression in the offing.”
–George Humphrey (U.S. Secretary of the Treasury), defending high interest rates in testimony before the Senate Finance Committee, July 1957
The recession of 1957 began in August.
“1960 promises to be the most prosperous [year] in our history.”
–Robert A. Anderson (U.S. Secretary of the Treasury), quoted in The Wall Street Journal, April 14, 1960
The recession of 1960 began in April.
“There ain’t going to be no recession. I guarantee it.”
–Dr. Pierre A. Rinfret (American economist and investment counselor), 1969
The recession of 1969-1971 began in the following summer.
How to Fight Inflation
“We now know that inflation results from all that deficit spending.”
–Ronald Reagan (President of the United States), announcing a plan to curb inflation by eliminating the federal deficit within three years, February 5, 1981
“[A] drastic reduction in the deficit…will take place in the fiscal year ’82.”
–Ronald Reagan (President of the United States), news conference, quoted in The New York Times, March 6, 1981
In fiscal 1982, the first full year of the Reagan presidency, the government ran up a record budget deficit of $110.7 billion, breaking the previous record, set in 1976, by over $44 billion.
Economics: An Expert’s Miscellany
“When the U.S. government stops wasting our resources by trying to maintain the price of gold, its price will sink to…$6 an ounce rather than the current $35 an ounce.”
–Henry Reuss (Chairman of the Joint Economic Committee of Congress), quoted in the Milwaukee Sentinel, November 25, 1967
Late in 1971, the United States stopped buying gold. In the next 10 years, the price of an ounce of the metal rose $815.
“By 1960 work will be limited to three hours a day.”
–John Langdon-Davies (British journalist and Fellow of the Royal Anthropological Institute), A Short History of the Future, 1936
“So here is the Great Society. It’s the time — and it’s going to be soon — when nobody in this country is poor.”
–Lyndon B. Johnson (President of the United States), 1965