Lessons From the Great Depression

We have been here before, and we should learn from the past.

On March 4, 1933, Franklin D. Roosevelt took the oath of office and told Americans, "(T)he only thing we have to fear is fear itself...nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance...

"Values have shrunken to fantastic levels, taxes have risen, our ability to pay has fallen, government of all kinds is faced by serious curtailment of income, the means of exchange are frozen in the currents of trade, the withered leaves of industrial enterprise lie on every side...the savings of many years in thousands of families are gone."

But FDR came to the White House ready to take action, and he did. When the next president moves into the White House in January, it may be too late to start.

What made the Great Depression a catastrophe, a leading economist points out, was "that some of the worst shocks occurred right before the 1932 presidential election. There then followed an extended interregnum between the election and inauguration of the new president when no one was in charge."

As Barack Obama and John McCain spend these next weeks trolling for votes, it would be comforting to see each of them set up a council of economic advisors to work on a set of specific measures that the winner would announce on November 5th to start putting a 21st century New Deal into motion.

As Hillary Clinton used to say in another context, the new President has to be ready to move on Day One.