Reagan's economic policy worked well. The only tear in its fabric was Congress' inability to work within its own budgetary guidelines. The large increases in revenue resulting from the tax rate reductions had no way of mitigating the massive increases in expenditure.

The current problems are greater or on a par with the Jimmy Carter depression. Obama should be using Reagan's methods not FDR's.

I'm not sure which of Reagan's policies you're referring to, davod. If it's cutting the top personal income tax rate by 20 percentage points, that solution isn't available now—it would be fiscally disastrous. If you're referring to deficit spending to produce a stimulus, that's what's being discussed.

The macroeconomic system of total wages, savings, debt, asset valuation, and asset supply is completely mathematical and mechanistic. It produces asset saturation valuation curve data in hourly, weekly, monthly, and yearly units. These data conform to simple fractal patterns which define the complex macroeconomic system as a science just as the simple mathematical laws of gravity describe the relationships of proximal heavily bodies under the influence of unseen but mathematically discernible and consistent fractal energy forces emanating from the mass-energy bodies.

Within any given section of the asset valuation saturation curve, fractal patterns at various time orders are identifiable. This is the nature of fractals. But in order to prospectively and accurately determine the true ongoing asset valuation fractal pattern, the complete curve and the longer, intermediate and shorter fractal patterns must be viewed in totality and with relational consistency. Likewise the short term and long term decay and growth fractal relationships of debt valuations, currency valuations, commodity valuations, and equity valuations and their respective inverse growth and decay fractal relationships must be consistent. The world is at the historical time frame for a nonlinear commodity and equity collapse involving the most invested and monied second fractal asset valuation saturation curve in the history of the world - the terminal portion of the150 year US equity valuation second fractal. Saturated real estate market assets and saturated equity assets and saturated commodity assets rotationally peaked within a 2 and 1/2 year period of each other - limited by ongoing debt, overvaluation, and oversupply of durable goods including housing involving basic commodities. Now a collapsing real economy: diminishing jobs, diminishing total wages, collapsing commodity, equity, and real prices is an exponential feed back system causing more oversupply, less demand, and greater debt default. And because the United States has been such a dominant force in the world's - debt driven, US consumer driven, US financial facilitator industry driven, US low interest rate driven -macroeconomy, the entire world has operated under the umbrella of the United States- dominant long range 150 year second fractal pattern - especially for the last 50 years since the second world war. The first 70-71 year asset valuation growth cycle for the United States began coincidentally with the writing of its constitution and ended in 1858 shortly before the American civil war. Nonlinearity between the 2x and 2.5x time frame characterizes the terminal portion of asset valuation second fractals. Asset nonlinear devolution has been transpiring in earnest for the last two months and will now accelerate percentage wise in a precise and predictable nonlinear fractal pattern. This predictable nonlinearity has the potential for dislocating the entire global macroeconomic, debt obligation, political, social, ownership, and currency systems.

While the qualitative guidance for the rotational collapse of real estate, equities, and commodities has been accurate, the prospective daily quantitative identification for the daily fractal sequence of the collapse has not been. The prior fractal decay estimations included portions of saturation curve and parts of the various asset elements but not all of the assets within the context of intermediate and longer fractal progression and linked in mechanistic optimal lock step with each other. There is now a fractal solution that fits all parameters: debt instrument growth, commodity and equity collapse, and US dollar growth relative to other basket currencies. This fractal solution provides a time table within which the emanating epiphenomena continuous stream of bad news - collapsing banks, corporations. and retailers; exponentially rising unemployment; unbalance-able state budgets, state budget cuts, tuition increases, defaulting local community bonds, defaulting pension plans, collapsing GDP numbers, and finally decreasing Big Mac sales - will occur. As of 22 November 2008, the inverse fractal daily decay growth pattern is prospectively predicted as 33/14 of 83/25 days.

I wouldn't call it another Great Depression - but I sort of worry that connected insiders are worrying more than they are saying.

I was watching one of the Sunday a.m. political shows. One of the talking heads said he had some recent discussions with some higher up economic types, one being Timothy Geithner and he claims behind the scenes these people are very worried, almost panicked.

My feeling is that the Great Depression was not great until FDR's policies made it great.

Link:http://www.econlib.org/library/Enc/GreatDepression.html

I have never seen anything that says the New Deal caused it either, but I have seen a lot of arguments that it prolonged it.

You might have seen them, but that does not mean they were valid.

Bill H is on the right track. In 1937, an improving economy and concerns about the federal budget led to Roosevelt to prematurely slash federal spending. This led to the "Roosevelt recession", and the depression went on until WW2 kick started the economy.

...but I have seen a lot of arguments that it prolonged it.

You apparently didn't see Paul Krugman slap down George Will. According to PK, the New Deal got things headed toward recovery to a smallish but significant degree, and then FDR was persuaded that he needed to cut spending and balance the budget, retrenching the New Deal, which prolonged the depression. It was a "bigger New Deal" called World War Two that ended the depression.

So it was not the New Deal that prolonged the Depression, according to Krugnam, but rather the retrenchment of it in a misguided effort to balance the federal budget in a triumph of ideaology over good sense.

but I have seen a lot of arguments that it prolonged it.

That seems to be the tussle right now. But you know, if the bank failures and that missing liquidity from the Fed allowed a 33% drop in money supply circa 1932 ... that's a lot to recover from. Fully 1/3 of the nation's money supply was gone.

We only have one history on that. What else might have been done to re-grow the economy, is literally academic. Oh sure, academic arguments can be made about what path might have been more prosperous, but they suffer the same "party out of power convenience."

That is, the party out of power can ALWAYS say that they could have done it better, cheaper, faster.

(Note that our real losses are very much less in this cycle, so far. The first reason because the FDIC is reimbursing losses and preventing bank runs. The second is because the Fed's liquidity is shoring things up somewhat. I seem to recall though that the total lost in the world's equity markets have been better than $10 trillion this year. A $25 billion or a $250 billion bailout doesn't replace that. It slows things down certainly ... but on the road to where?)

But we shouldn’t panic, either.

Said the captain of the Titanic to his first mate: "Don't panic man, this ship is unsinkable and we still have 80' of hull above the water line!"

(Note that the New Deal was not the Fed's contribution:

In his writings Milton Friedman blamed central bank policies for causing the Great Depression. According to Friedman the Federal Reserve failed to pump enough reserves into the banking system to prevent a collapse in the money stock (Milton and Rose Friedman's Free To Choose). In response to this failure, Friedman argues, money stock, M1, fell by 33% between late 1930 and early 1933 (see chart).

source)

My first concern, the first bad trend, is the explosion of Depression and New Deal discussion. (Actually "'new deal'" has a weird cyclical trend. On the other hand "depression economics" has a recent spike.)

My second concern is more fundamental, that critical parts of the economy are not finding support. We're told that good bonds don't have buyers. We're told that good loans are not being rolled over.

.. as consumer spending falls and unemployment rises.

I certainly wouldn't call this a done deal. I wouldn't call it another Great Depression - but I sort of worry that connected insiders are worrying more than they are saying. Arguments about New Deal policies are a signal of deeper concern.