Governments Destroy the Economy

Milton Friedman: "Inflation is made in Washington because only Washington can create money...What produces it is too much government spending and too much government creation of money and nothing else."

Milton Friedman was a U.S. economist and Nobel laureate, having won the 1976 Nobel Prize in Economic Science. He was the most influential advocate of free-market capitalism and monetarism in the 20th century. Friedman understood absurd government spending, printing of money and interfering with the free flow of the economy caused inflation. Government interference in picking winners and losers, in bailing out companies that made horrible business decisions was a sure fire recipe for high inflation.

https://www.investopedia.com/terms/m/milton-friedman.asp

https://www.econlib.org/library/Enc/bios/Friedman.html

The Depression you've never heard of occurred in 1920-1921. It hit every bit as hard as the Great Depression of the 1930s... which lasted 10 years. The handling of the 1920-1921 Depression was handled exactly opposite of how President Herbert Hoover and President Franklin D. Roosevelt handled the Great Depression.

In 1920-1921, the federal government slashed its spending budget from $18.5 billion to $6.4 billion—a 65 percent reduction in one year. Over the next two years, it further reduced government spending down to $3.3 billion by 1922.

By June 1920, the Fed increased its discount rate to 7%. The discount rate is the amount of interest on loans extended by the central bank to commercial banks or other depository institutions. This tightened the monetary supply during the 1920-1921 Depression, which caused the Consumer Price Index to fall during that year.

Like the Great Depression, the 1920-1921 Depression was painful. Unemployment rose to 11.7 percent in 1921, but dropped to 6.7 percent by the following year and was down to 2.4 percent by 1923. The slashing of federal spending “purged the rottenness out of the system” and provided a solid framework for sustainable growth. This allowed the economy to right itself without the government trying to control every aspect of recovery, and this Depression you've never heard of only lasted a year. Quite the opposite of the Great Depression, where the government tried to control every aspect of the recovery with huge spending, causing the Great Depression to last more than 10 years. The Japanese attack on Pearl Harbor resulted in the U.S. entering WW II, and the steps taken during that war led to the end of the Great Depression.

The message is clear... when government gets out of the way of society and the economy, and cuts spending drastically, things right itself much faster under the people's control.

https://fee.org/articles/the-depression-youve-never-heard-of-1920-1921/

https://www.investopedia.com/terms/f/federal_discount_rate.asp