sábado, 30 de marzo de 2013

Mises the Fascist: What Is Seen (an “argument”) And What Is Not Seen (the ridiculousness)

How many times have you heard the “Mises was a Fascist” argument? This is the easy way in which some left supporters disposes an opponent in many occasions: calling everything and everyone that is non-left, a right-extreme (Fascist or Nazi) without convincing evidence, just because is easiest to label than to argue. Well, this case has been refuted many times by excellent authors[1], but the best and total refutation is Raico’s excellent book[2].

One of definitions of stupid is “Tending to make… careless mistakes” or “ trivial, silly, or frivolous”. In the case of “Mises the Fascist” argument it fits very well. I have entitled this post following Bastiat because in every forum, blog, comment section or even alleged “serious” academic publications or books, is present the same pattern of silly and ridicule form of argument. 

1. The Quoting Out of Context Fallacy

The left usually use this kind of fallacy to win a debate, and the case of Mises is almost a textbook example. But let’s be fair. It is perfectly possible for non-left people (austrians, libertarians, right-conservatives, Fascists, etc.) to appeal to this fallacy too on this or other issues. In each case it must be demonstrated in which way it has been used and after that it must be denounced. Now let’s go to Mises’ case: Every anti-austrian will show this phrase from Mises:
“It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history.”[3]
If you actually look for that phrase, the first thing you will notice is that it is the last phrase of an entire section. What did Mises say in the whole previous section? The section is called “The Argument of Fascism and in it you have things like this:   
“The fundamental idea of these movements—… Fascist—consists in the proposal to make use of the same unscrupulous methods in the struggle against the Third International as the latter employs against its opponents...
The great danger threatening domestic policy from the side of Fascism lies in its complete faith in the decisive power of violence. In order to assure success, one must be imbued with the will to victory and always proceed violently. This is its highest principle...
For Fascism does nothing to combat it except to suppress socialist ideas and to persecute the people who spread them. If it wanted really to combat socialism, it would have to oppose it with ideas. There is, however, only one idea that can be effectively opposed to socialism, viz., that of liberalism...
Repression by brute force is always a confession of the inability to make use of the better weapons of the intellect—better because they alone give promise of final success. This is the fundamental error from which Fascism suffers and which will ultimately cause its downfall...
So much for the domestic policy of Fascism. That its foreign policy, based as it is on the avowed principle of force in international relations, cannot fail to give rise to an endless series of wars that must destroy all of modern civilization requires no further discussion...” (bold and italics are mine)
Fascists are just a group of violent reactionaries to soviet communism, without any sustainable idea, all they can do is to oppose by force using the same methods as russians. Mises is almost tiring in asserting that to combat communism, violence is totally useless. It is in the camp of ideas where they will be defeated. 

As Raico has brillantly refuted: The first extract has came from a chapter dedicated to ATTACK fascism.[4] Mises has never endorsed fascism. Yes, you read me right: Mises has never endorsed fascism. He clearly pointed out that it is an anti-liberal ideology close to Bolsheviks.

In order to demonstrate how ridicule, dishonest and stupid arguers (see the dictionary definition above) are those who use this kind of fallacy, let's apply it to another author. Who said this?:
"The bourgeoisie has disclosed how it came to pass that the brutal display of vigour in the Middle Ages, which reactionaries so much admire, found its fitting complement in the most slothful indolence. It has been the first to show what man’s activity can bring about. It has accomplished wonders far surpassing Egyptian pyramids, Roman aqueducts, and Gothic cathedrals; it has conducted expeditions that put in the shade all former Exoduses of nations and crusades... The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image... The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. " (bold, colour and italics are mine)
Wow! Who in the world can be so grateful, so candid, so expresive, so vivid in order to exalt the virtues of bourgeois and capitalism? Is he or she a conservative? a libertarian? a republican? some kind of reactionary mercenary paid by bourgeois bankers to defend them? Well, surprise! It is our good friend Karl Marx and his supplier, the industrialist (and possible exploiter?) Engels.[5]   

Now, can someone really say that Marx was a defender of capitalist system in that text? Can we call him "Marx the exploiter" or "Marx the Fascist"? Can we say that the Communist Manifesto was an intellectual defense of bourgeois? No! Everyone will accuse me of deliberately choose a quote, totally out of context, in order to distort what Marx is saying. How could I reach such a stupid conclusion? By commiting a basic and stupid fallacy in order to "convince" (=deceive) my readers.

Well, the "Marx defender of capitalism and bourgeois" case, is exactly the same as the "Mises defender of fascism" case: A ridicule attempt to show someone saying something he did not say by appealing to a low-rank logical fallacy.

That's all about this "quotation issue". There is no more discussion on this issue due to the lack of logical coherence and intellectual honesty of the supporters of this "proof". Anyone who ever rises his voice saying "Mises was a Fascist" because of this quote, must necessarily admit that, using his own pseudo-logic, Marx was a capitalist and bourgeois apologist.

2. The Guilt by Association Fallacy

The second line of fallacious "argument" this people have, is the "you have the ideology of the people you advise" fallacy. It consist in accusing or imply that Mises was or could have been a Fascist because he advised[6] Engelbert Dollfuss, an interventionist and Fascist (though not Nazi! He actually was killed by them) austrian ruler.

Despite the fact that, in itself, the fact of using this fallacy discredits and refutes this accusation, once again, in order to see how ridiculous this accusation is, we must apply the same principle to another similar situation.

Everybody knows that in the period of 1918-19 after the chaos due to the defeat in WWI, european countries started to fall in the Bolshevik "dream". In Austria the man in charge to bring the Bolshevik revolution to home was the austrian marxist theoretician and politician Otto Bauer (not this Otto Bauer!). Some years before that, Bauer attended to Böhm-Bawerk's seminar to try to gain knowledge to defy Bawerk's total refutation and demolition of Marx's theory, there he met Mises. To the chaotic period of 1918-19 Mises was much more than a "close advisor", he was a friend of Bauer. Mises actually spent lots of nights convincing him and his wife to not take Austria to the Bolshevik camp, as many countries, like Hungary, did after WWI. He actually succeeded in convincing him, and Mises saved Austria from the chaotic and disastrous management of Bolshevik fanatics.[7]

As you read it, Mises advised a marxist socialist pro-Bolshevik politician. Can anyone in his right mind insinuate that, because of that, Mises was a socialist? Is there a common factor that relates that Mises advised a socialist marxian and after that a Fascist interventionist? Yes! He was trying to do the best for his country[8]. He tried to avoid the economic chaos of a Bolshevik revolution first, and after that he tried to avoid Nazi domination.

We see how stupidly ridiculous is calling him a Fascist supporter because he advised Dollfuss, and not calling him a marxist-socialist for advising Bauer. The stupidity and ridiculousness of the guilt of association fallacy is evident. This is not an argument at all, it can not be taken seriously.

Another case: Milton Friedman advised the Communist leaders of China in 1980. So, as Milton advised communists, can we say that Friedman was a communist or sympathetic to communism only because he advised a communist government? No![9]

Yet another one: Karl Marx advised the bourgeois-manufacturer-"exploiter" Friedrich Engels. Can we call Marx a capitalism apologist only because he advised a "capitalist"?

All this ridiculous conclusions are more than enough to bury this fallacious way of arguing.

Further Comments on the Out of Context Quotation

  • What did Mises mean by “civilization”?  
"The history of private ownership of the means of production coincides with the history of the development of mankind from an animal-like condition to the highest reaches of modern civilization… 
The foundation of any and every civilization, including our own, is private ownership of the means of production. Whoever wishes to criticize modern civilization, therefore, begins with private property."[10]
By “civilization” Mises meant “private property”. If you attack private property, you are attacking civilization. Now, which group of fanatics was explicitly anti-private property in those years (and maybe now)? Hmmm… Maybe the Bolsheviks! Which group of fanatics was explicitly anti-Bolshevik and combat them violently? I don’t know… Maybe the Fascists! 

So, in combating communism, Fascists avoided a revolution which would have banned private property. This is not (I emphasises NOT) an appraisal of fascism, it is an historical fact: In those chaotic and tumultous years in the post WWI Europe, the alternative was to choose between Bolshevik revolutionaries (which had the great impulse from the recently established Soviet Russia) or other group, no less violent than them, which claimed to combat and oppose them. Centuries of civilization can not be erased in some years, so people supported any group of people who did not promise to steal all their scarce property (thanks to war) once in power.
"[T]hey [the Fascists] have not yet succeeded as fully as the Russian Bolsheviks in freeing themselves from a certain regard for liberal notions and ideas and traditional ethical precepts is to be attributed solely to the fact that the Fascists carry on their work among nations in which the intellectual and moral heritage of some thousands of years of civilization cannot be destroyed at one blow, and not among the barbarian peoples on both sides of the Urals, whose relationship to civilization has never been any other than that of marauding denizens of forest and desert accustomed to engage, from time to time, in predatory raids on civilized lands in the hunt for booty." (bold and italics are mine)[11]
Like you or not, it is another historical fact that people (I'm talking about people in general, not the particular case of Mises) approved and supported violent fascism as reaction against the atrocities of the Bolsheviks. And this description of reality (which is not the same thing as "supporting fascism") in those years was known by Mises:
"Only under the fresh impression of the murders and atrocities perpetrated by the supporters of the Soviets were Germans and Italians able to block out the remembrance of the traditional restraints of justice and morality and find the impulse to bloody counteraction. The deeds of the Fascists and of other parties corresponding to them were emotional reflex actions evoked by indignation at the deeds of the Bolsheviks and Communists.
Many people approve of the methods of Fascism, even though its economic program is altogether antiliberal and its policy completely interventionist, because it is far from practicing the senseless and unrestrained destructionism that has stamped the Communists as the archenemies of civilization. Still others, in full knowledge of the evil that Fascist economic policy brings with it, view Fascism, in comparison with Bolshevism and Sovietism, as at least the lesser evil. For the majority of its public and secret supporters and admirers, however, its appeal consists precisely in the violence of its methods.
Fascism can triumph today because universal indignation at the infamies committed by the socialists and communists has obtained for it the sympathies of wide circles." [12]
As Raico explains: “Millions in the middle classes became convinced that Bolshevism was on the point of overwhelming the country.” After this, Raico advances a brilliant description of the historical context of how the revolution was “at door” in those years. So there is nothig else to discuss here. Describing an historic episode is not justifying or praising for fascism or any other murderous ideology.

  • The "full of the best intentions" part.
Can this insulated phrase mean that Mises was praising fascism? Of course not. Let's see other examples:
“Before the rise of liberalism even high-minded philosophers, founders of religions, clerics animated by the best of intentions, and statesmen who genuinely loved their people, viewed the thralldom of a part of the human race as a just, generally useful, and downright beneficial institution... 
We see that as soon as we surrender the principle that the state should not interfere in any questions touching on the individual's mode of life, we end by regulating and restricting the latter down to the smallest detail. The personal freedom of the individual is abrogated. He becomes a slave of the community, bound to obey the dictates of the majority. It is hardly necessary to expatiate on the ways in which such powers could be abused by malevolent persons in authority. The wielding, of powers of this kind even by men imbued with the best of intentions must needs reduce the world to a graveyard of the spirit."[13]
Even when Mises has said that slavers were “animated by the best of intentions” and “genuinely loved their people”, he was describing an historical fact. Can someone really think that Mises was favoring slavery? If your answer is yes, then you must read again. When Mises says that people wielding excessive powers may be “imbued with the best of intentions”, can any reasonable people assert that Mises was favoring dictators? No.   

For Mises, the intentions or ends are irrelevant whichever they are. The important issue are the means. Mises demonstrated in all his books how, even assuming best of intentions, the means can be totally incorrect to achieve goals. We have already saw how Mises condemned Fascists' violent means and how he stressed that communism must be combated and defeated (the end to be achieved) in the camp of ideas. Bolsheviks said they wanted the equality and to end misery of their people, Hitler said he wanted the best for his nation. I really doubt that any political leader in his campaign discourses or in his oratory had ever said “we are going to gas every Jew in Germany for the greatness of the Nation. Vote for me!” or “In order to achieve equality; we are going to kill by starvation 7 million people in Ukraine. Support us!”. No dictator has ever reached or maintained power by not laying their own people, that has never happened. Dictators and politicians always have the noblest and best intentions, and to achieve them sometimes they became the greatest assassins. People would not support what they think are “bad intentions”, people voted and supported these radical ideologies because they thought it would help them. Even socialists have good intentions[14].   

  • The "for the moment" part.
Mises clearly had said that "for the moment" Fascist movement saved civilization (private property). Just after the "eternally in history." sentence, you have this:
"But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error."
He clearly said that people (not him!) saw fascism as a "an emergency makeshift". But he clearly imply that fascism would not a sustainable solution for future. He is making a descripcion of an historical moment (what people thought or how people viewed it in that moment), he is not endorsing that fascism was any solution. As Jeffrey Tucker has brillantly said:
"Mises clearly condemns this view, pointing out that it is pure historical accident that fascism is less evil than communism; both are ideologies of violence that reject liberalism – the very thing that Mises sought to defend against socialism and fascism. Communism was just more developed; Mises predicts that fascism will eventually be the same."

  • I cannot end this post without talking about my "favorite" anti-austrian blogger: “Well, if it isn't my arch-nemesis, Lord Keynes”  
I got him here talking about this issue. After been obligated to admit that Mises was not a Fascist at all, and after a soft fall on the fallacies 1. and 2. (see above), he cites this passage from Mises: 
"The deeds of the Fascists and of other parties corresponding to them were emotional reflex actions evoked by indignation at the deeds of the Bolsheviks and Communists. As soon as the first flush of anger had passed, their policy took a more moderate course and will probably become even more so with the passage of time."[15]
and he adds:
"Mises was ridiculously wrong about fascism moderating “with the passage of time.” On the issue of fascism in these passages, he was a hypocrite, and, at best, naïve. At worst, what was he? Well, I will leave that up to readers to decide."
However just in the next paragraph (that's right, it was that simple, all LK had to do was to read just one more minute after that quotation), Mises puts serious doubts on this, and shows how Fascists had unthinkable victories:
"This moderation is the result of the fact that traditional liberal views still continue to have an unconscious influence on the Fascists. But however far this may go, one must not fail to recognize that the conversion of the Rightist parties to the tactics of Fascism shows that the battle against liberalism has resulted in successes that, only a short time ago, would have been considered completely unthinkable. Many people approve of the methods of Fascism, even though its economic program is altogether antiliberal and its policy completely interventionist, because it is far from practicing the senseless and unrestrained destructionism that has stamped the Communists as the archenemies of civilization. Still others, in full knowledge of the evil that Fascist economic policy brings with it, view Fascism, in comparison with Bolshevism and Sovietism, as at least the lesser evil. For the majority of its public and secret supporters and admirers, however, its appeal consists precisely in the violence of its methods."(bold and italics are mine)[16]
Anyone can read that that “moderation” was subject to the condition that traditional liberal still exercises some “unconscious influence” on Fascists. However he perfectly warns the reader about the incredible loss of influence of classical liberalism in the previous times. The loss was so great that “Many people approve of the methods of Fascism…”. So if moderation depends on influence of liberalism on Fascists, and Mises is explaining that this influence is less each day, I let the reader reach his conslusion of what Mises really said. The red herring fallacy committed by “Lord Keynes” is evident, and the Wikipedia's definition is perfectly suitable for him: “leads readers or characters towards a false conclusion”.

On his defense I must say that he acknowledges he is not calling Mises a Fascist directly: "While this certainly does not mean that Mises directly supported fascism and fascist ideology (and please note that I am not saying this), his astonishingly positive remarks about fascism in the 1920s cannot be wished away. Frankly, these comments are an utter embarrassment and disgrace to Mises." However I have demonstrated that all the comments LK want us to believe that are "embarrassment and disgrace", are not like that in reality. The quotations used by LK, if are correctly read, are not an "embarrassment and disgrace". His post really is an embarrassment, but that is his problem.

I must also say that in an act of intellectual dishonesty (for more acts of intellectual dishonesty, doble standard and blatant Kontradictions see here and here) LK in the whole post never mentions that Mises had an entire book against fascism and nazism, all he can say is "For all of his denunciation of, and opposition to, Fascism both here and elsewhere...". An truly honest post would had remembered that book, not mentioning it makes his post unfairly unbalance. Besides in his discusion of Mises advising a Fascist Dollfuss, he never mentions the fact that Mises also advised a Marxist like Bauer, that would put him in a uncomfortable situation.

As we saw, the "arguments" used to accuse Mises of being a Fascist are flawed by two basic fallacies: The out of context fallacy and the guilt by association fallacy. No serious case can be made.

To accuse Mises through quoting out of context a phrase from a chapter that attacks fascism is as ridiculous as trying to "prove" that Marx was a capitalist promoter using another quote out of context from a text dedicated to denounce the supposedly defects of capitalism.

Saying that Mises was a Fascist or that he had sympathy for fascism because he advised a fascist-interventionist (who was against Nazis) like Dollfuss, necessarily implies that Mises was a socialist because he advised a marxist pro-Bolsheviks like Bauer, a totally ridiculous statement. It is the same “logic” of the accusation what makes it stupidly ridicule.

Mises neither endorsed nor supported fascism in any form. The “evidence” used by the left to accuse him is flawed, fallacious and ridicule, especially when is applied to other cases.

domingo, 17 de marzo de 2013

Como Combatir Una Recesión Sin Convertirla en Una Gran Depresión en el Intento: La Ultima Depresión “Laissez Faire”: 1920-21

Estamos habituados a que cuando se habla de crisis económicas importantes casi inmediatamente sale el tema de la Gran Depresión y las inevitables comparaciones con ella. Después de todo, todo el mundo sabe lo que fue la Gran Depresión. Sin embargo hay una depresión muy importante, que fue previa a ella y de la cual seguramente nunca oíste hablar ni en la tele, ni en los libros de texto de tu facultad, ni en los diarios, ni en el NatGeo/History, ni en la radio, ni de ningún economista, ni en ningún lado: La Depresión Americana de 1920-21[1]. ¿Por qué es importante? Porque en varios aspectos fue más profunda que la Gran Depresión (GD) y aún así la economía americana salió en solo meses, mientas que en el caso de la GD se tardo años de sufrimiento para millones y creo las condiciones para lo peor que ha visto la humanidad en el Siglo XX.

El manual dice "en caso de recesión/depresión hay que aumentar el gasto publico, aumentar el déficit, aumentar los impuestos (en especial a los ricos), aumentar la oferta monetaria, bajar las tasas de interés, mantener los salarios y evitar que bajen, cerrar la economía a la malvada competencia externa, regular la economía (aún más de lo que YA ESTABA regulada antes de la crisis) pues el mercado libre causo el problema y un innumerable e intervencionista etcétera.". Solo así podrá salir la economía de la mala situación, dicen. 

Sin embargo hay un caso histórico en el que gracias a que se hizo exactamente lo contrario de todo lo que los expertos recomiendan, la economía salió de una depresión/recesión extremadamente profunda en muy poco tiempo. ¿Cuan profunda? ¿Cuan mala? Veamos...


El desempleo trepó desde el 5.20 en 1920 hasta el 11.70 en 1921[2], aumentó un 125% en un único año. Sin embargo así de rápido como subió  también bajo: tan solo al año siguiente el desempleo cayó hasta el 6.70 y en 1923 ya se había reducido hasta el 2.40. 

Tasa de desempleo 1919-1923

Pero veamos ese desempleo en perspectiva. Por supuesto si lo comparamos con la GD se ve bajo, pero en términos de principios de Siglo, el de 1921 fue el desempleo mas alto registrado hasta los 30s. No estamos hablando de poca cosa acá. En un solo año una tasa extraordinariamente alta se redujo a casi la mitad y luego bajo más aún. ¿A que se debió tan "milagroso" proceso?

Tasa de desempleo 1900-1940

Salarios y Precios

La respuesta a ello es que: En un mercado relativamente libre, los salarios pueden ajustarse a shocks enormes. La economía americana tenia salarios mucho más flexibles a principios de los años 20's que al final de ellos y durante la GD. Eso explica que en el primer caso la economía y el empleo se recuperaron rápidamente en unos meses mientras que en el segundo pasó más de una década[3]. 

Veamos el shock de precios que sufrió USA: Desde su pico (20.90) en junio de 1920 hasta el mismo mes de 1921 (17.60) el CPI bajo 15.80% en 12 meses[4]. Al mismo tiempo los salarios bajaron casi un 20% en solo un año[5], es decir la economía se ajustó, a pesar de la caída de precios más grande de la historia del Siglo XX[6], debido a que los salarios cayeron tanto o más que los precios rápidamente. Fue esa caída tan pronunciada de los salarios con respecto a los precios, junto con la liquidación (de las industrias levantadas por error debido a la política de dinero barato) causada por la tasa de interés inusualmente alta, lo que impulsó la recuperación.[7]

Variación anual del Indice de Precios al Consumidor 1919-1924 

Una vez más le demos perspectiva a esto. ¿Cuan grande fue la caída del nivel de precios? Pues como se ve en el gráfico que va desde 1919 a 2009, fue la caída mas grande de precios de la historia del Siglo XX. Así es, mayor en un solo año que cualquier año de la GD.  

Variación anual del Indice de Precios al Consumidor 1913-2009

A pesar de la enorme caída de nivel general de precios ("deflación"), los salarios también cayeron. Eso fue un gran factor de ayuda a la suba de empleo en la economía. Incluso viendo los valores absolutos de los salarios (no su variación anual) se observa una caída notable.

Variación anual del Indice de Precios al Consumidor y salarios 1918-1924
Salarios totales en todas las industrias

Política Monetaria

Pero ¿A que se debió la recesión en primer lugar? A la enorme expansión monetaria debido al esfuerzo bélico de USA durante la Primera Guerra Mundial. Ello provocó, ademas de un Boom insostenible que inevitablemente terminó en la recesión que estamos viendo, la inflación más grande del Siglo desde que la Reserva Federal (FED) se inauguró. En noviembre de 1918 la inflación fue de 20.74% con respecto al mismo mes del año anterior, disminuyo por un tiempo y luego comenzó a aumentar a principios del año 20 de nuevo ubicándose en junio de 1920 hasta el record de 23.67%. La FED empezó a aumentar la tasa de interés de descuento en noviembre de 1919 del 4.56 al 4.74, y de ahí la continuo subiendo al 6.00 en febrero hasta un increíble y record 7.00 en junio de 1920[8], manteniéndola así por 11 meses a pesar de la recesión. Es decir que a pesar de lo severo de la depresión (un desempleo medio de 11.70%), el Banco Central mantuvo la tasa de interés a un altura record por casi un año, recién en mayo comenzó a bajarla.

Tasa de interés 1919-1923
¿Se preguntan cual fue la causa del shock "deflacionario" que provoco la enorme caída de precios vista mas arriba? ¿Cómo se comportó la oferta monetaria? La Base Monetaria empezó a contraerse (con respecto al año anterior) desde febrero de 1921, pero a partir de julio se contrajo a tasas de más de -11% anuales, llegando a otro record del Siglo XX: En octubre y noviembre de 1921 la Base se contrajo -15.48%.[9] Ni siquiera al inicio de la GD la contracción monetaria fue tan grande. Sin embargo, de acuerdo con algunos monetaristas que culpan a la reducción de oferta monetaria como la causa de la misma[10], los años 20’s no fueron una década de “Gigantesca Depresión”, sino fue de las productivas de la historia. De acuerdo a la explicación de Chicago de la GD, la década del 20 debió haber sido horrorosa, mucho peor que la del 30, sin embargo no fue así.  La Base siguió decreciendo a tasa cada vez menor hasta que recién en 1922, terminada la depresión, en el mes de abril la tasa negativa de crecimiento dejo de ser de dos dígitos y en octubre ya comenzó a ser positiva con lo que comenzó una nueva expansión. La oferta monetaria M1 paso de 23.73 billones en 1920 a 21.51 en 1921, una caída de 9.36%, y el M2 paso de 34.80 a 32.85 en esos años, cayendo un 5.60%[11]. En términos mensuales la cantidad de dinero empezó a disminuir en septiembre de 1920 que llego hasta 34776 y en setiembre de 1921 estaba en 31735, una disminución de 8.74%, desde entonces comenzó a aumentar de nuevo[12].

Base Monetaria variación anual 1918-1942
Base Monetaria variación anual 1919-2007

M1 y M2 variación anual 1915-1923 según Balke y Gordon
M1 y M2 variación anual 1915-1923 según Commerce
Stock de dinero variación anual 1915-1923 según Friedman y Schwartz

El PBN real cayó un 8.71% y el mismo pero per cápita un 10.49% entre 1920 y 1921[13] y el nominal un 23.93% en ese periodo. La producción industrial cayó 32.54% desde el pico al fondo.

PBN real y nominal, total y per capita variación anual según Commerce
PBN real y nominal, total y per capita variación anual según measuringworth.com
PBN real y nominal variación anual según Romer
Producción Industrial
Producción Industrial variación anual
Producción física, numero de asalariados y producción por asalariado
Política Fiscal

La política fiscal fue implacable: El gasto federal entre los años fiscales de 1919 y 1920 paso de 18.5 billones de dólares a 6.4 billones (ya venia bajando debido a que la I Guerra Mundial recién terminaba), una sorprendente baja de 65.41% en solo un año, luego en 1921 bajo un 20.31% hasta los 5.1 billones y finalmente en 1922 llegó hasta los 3.4 billones cayendo un 33.33% más aún. Los ingresos fiscales se mantuvieron por encima de los gastos, es decir que no se recurrió al déficit fiscal para tratar de combatir la depresión sino al contrario: lo que sobró permitió reducir la deuda pública. Los ingresos fiscales fueron: 6.7 billones en 1920, 5.6 billones en 1921 y 4.1 en 1922. La deuda pública se redujo de 24.3 billones en 1920, pasando por 24 billones en 1921 hasta los 23 billones en 1922[14]. En ese periodo además se comenzó a bajar el impuesto a los ingresos desde un altísimo 73% para los que obtenían $1.000.000 anual en 1921 hasta el 24% en 1925, también bajo los impuestos a los pobres del 4% al 1.5% en el mismo periodo, se le aplico a los que ganaban entre $0 y $4.000.[15] La cantidad de empleados civiles pagos del gobierno bajo 14.36% solo entre 1920 y 1921. La baja de impuestos permitió el enorme salto de productividad de la economía norteamericana en los años 20’s[16] e hizo que fuera una de las épocas más productivas de la historia, cambiando totalmente el nivel de vida del americano.[17]

Gasto publico en miles de millones de dolares
Gasto publico variación anual
Impuesto a los ingresos tasas
Gasto publico, ingresos públicos y déficit/superávit en miles de millones de dolares
Deuda publica en miles de millones de dolares

Compárece todo lo anterior con lo que se hizo en 1929 y en adelante para "combatir" la crisis: Se contrajo al oferta monetaria y luego se expandió de nuevo, se bajó la tasa de interés, aumentaron los impuestos, aumentó el proteccionismo, aumentó el gasto publico enormemente, aumentó el déficit fiscal, el estado y los sindicatos no permitieron a los salarios caer como cayó el nivel de precios, etc. El resultado fue transformar una simple recesión, que debería haber terminado en unos meses como la mucho mas profunda de 1920-21[18], en una Gran Depresión.

La llegada de la depresión luego de una política de dinero barato (expansión crediticia) es inevitable. La Depresión 1920-21 demuestra que hay una alternativa. Existen únicamente dos caminos posibles para enfrentar una crisis:

Opción (a): Al reducir el peso del estado en la economía la  inevitable crisis es profunda pero corta, una Depresión en "V".  Todas las malas inversiones (debidas a la influencia monetaria del estado) se purgan rápidamente porque el mercado es muy eficiente en términos dinámicos.

Opción (b): Aumentar la intervención estatal y hacer que una recesión normal se transforme en una Gran Depresión durante décadas, una Depresión en "L".

La opción (a) es mala, pero la opción (b) es mucho peor. Lamentablemente la solidez real de esa recuperación de inicios de los 20's se encontró en simultaneo con una nueva expansión monetaria insostenible que se inicio en 1922, se consolidó en 1926-29 y que terminaría con la crisis del 29.