HOOVER DIDN'T SPEND ENOUGH! A MEME BORN IN A VACUUM, EMPTY OF REALITY, BELOVED BY THE FOOLISH EVERYWHERE.

Once again in my life, I came across the oft-parroted false meme "Fretting over its cost when capital and labor are plentiful is Hebert Hoover economics," which is another way of saying Hoover didn't spend enough. Today, I read that expressed foolery over at Bloomberg.com.

In case you don't know, Herbert Hoover was President of the United States between the years 1929 and 1933. Hoover is the guy the Ph.D. priests of Academia Economics like to blame for the Great Depression rather than the guy they should, President Franklin Delano Roosevelt. 

Of course, Roosevelt was president who criminalized money by confiscating gold from Americans, and thus the guy who forced Americans into the legal tender cash system of the Federal Reserve.

Owing to party politics, Hoover nailed the job as the U.S. Secretary of Commerce under President Calvin Coolidge. President Coolidge said of the chronic meddler Hoover, "That man has offered me unsolicited advice every day for six years, all of it bad." 

Of course all should realize that Congress and not any President decides spending; and that Hoover signed in law massive spending increases during his term in office.

According to the Office of Management and Budget of the U.S., Hoover inherited the 1929 budget from Congress, which decreed federal spending at $3.1 billion. In the following years, Hoover signed into law, spending that increased to $3.3 billion in 1930, $3.6 billion in 1931, and $4.7 billion and $4.6 billion in 1932 and 1933. Over his four years, Hoover increased spending a whopping 48%! As a percentage of GDP, Hoover agreed to almost triple spending between 1929 to 1933, from 3.64% to nearly 9%!

Throwing out the crazy 1862-1865 war spending of the war-mongering Lincoln and the 1918-1919 war spending of the war-mongering Wilson, between 1792 and 1929, average Congressional spending as a percentage of GDP calculates to a scant 2.62%.

Taken from the National Bureau of Economic Research, Wikipedia lists 33 recessions after 1792 start with the Panic of 1797 up until the Great Depression. 


There is no correlation between Congressional spending and whether Americans experience recession or expansion in their economy, none. Recessions hit both after periods of increasing spending by Congress as a percent of GDP and decreasing spending as a percent of GDP. 

Recessions are periods of reckoning after the growth of credit outstrips the growth of output owing to credit being priced too cheap, or that which we call inflation, and profits fail to materialize. When enough discover that receivables cannot get collected and payables cannot get paid from income on sales — the profit squeeze — crisis arises.

Many come to see they cannot afford to stand losses formerly sustained in lines of business and thus shutter those lines. Efforts get underway to kill off all those firms unworthy of credit and whose existence constitute a standing menace to legitimate business enterprises.

Recessions are resultant of bad credit practices, especially by bankers. The residential realty bubble of the 2000s is a period of inflation that led to widespread bankruptcy because enough became incapable of servicing debt owed on extended credit.

The speculative expansion of inflation leads to the need to adjust credit lower through forced credit liquidation, which results in declining valuation of assets and a lessening ability to meet outstanding credit obligations. 

Academician economist priests all preach in their Temples of Academia that government spending is the key to bettering an economy.  However, they state their claims upon the false premises — utility and scarcity — of the pseudo-science of economics. 

Paul Krugman, the public face of the Economics Temple of Academia forever pushes the false Hoover meme to support his false beliefs that increased government spending is the key to a better economy. If Krugman's claims were true, then how can Krugman explain why between 2007 and 2014, Congressional spending as a percent of GDP has averaged 21.65% and yet most Americans have seen no improvement in their financial affairs.

In WHY IS THE ECONOMY SO HORRIBLE? BECAUSE ACADEMIA ECONOMICS IS FAKE, I reveal property and profit as the basis of all trade, also said as commerce, or what is authentic economics. 

In the end, credit is the means by which property, which is the right of ownership and never the thing owned, gets called into existence. When more property gets called into existence than profits arise for which to pay for new property, the debt duty owed to credit cannot get paid.

So why does inflation happen? Well, YOU LIVE AT THE MERCY OF A CLOWN-CAR DRIVEN BY MEN AND WOMEN OF THE FEDERAL RESERVE. 

And what is the fix for this? Well, WHY FUTURES MARKETS SHOULD SET THE FEDS FUNDS RATE RATHER THAN THE FEDERAL RESERVE BOARD OF GOVERNORS

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THE WEALTHY PEOPLE EFFECT AND WHAT IT TRULY SHOULD MEAN TO YOU

As their neoclassical school brethren, those of the Austrian school get reality as wrong as the Keynesians and Monetarists do. The latter wrongly believe one side of the coin, spending, leads to a better state of trade. The Austrians wrongly believe its the other side of the coin, savings (see Chris Casey's attempt to justify savings over at the Austrian mouthpiece in the USA, Mises.org).

Neither spending nor savings increases the state of trade. It's profit. 

Savings are illusory. It's profit that must arise. If profit lays idle, then trade stops.

Whether Austrians, Keynesians or Monetarists, the Neoclassicists get it wrong because economics is fake, a false knowledge. As I explained in WHY IS THE ECONOMY SO HORRIBLE? BECAUSE ACADEMIA ECONOMICS IS FAKE, like the Keynesians, the Austrians wrongly believe that the basis of trade, or what they call, "the economy" is scarcity and utility. 

Yet, the whole of what humans do, which is trade, can be summed up in two words, property and profit. 

The "wealth effect" is badly named. It should be said as the "wealthy people effect." The "wealthy people effect" also is known as "trickle-down" economics. 

The "wealthy people effect" is the belief that if street prices rise of extant property (right of ownership) that can be held as collateral, wealthy people will trade that property as wealth held in collateral letting them sell rights of action against themselves to buy bank credits in a purchase and sale. With these bank credits, these wealthy ones then will buy luxury goods (e.g., through HELOCs) or to expand business. In either case, it is believed that employment should rise either to produce more of these goods or to fulfill work in expanding business.

The idea of savings is rather silly. There is no such thing as savings. Beyond break-even, individuals and firms gain profit. In trade, there are only purchases and sales. Individuals for themselves or their firms through purchases and sales buy property in bank credits by selling cash, bank credits or debt, or buy property in other things by selling selling cash, bank credits or debt instruments.

Only through profit for workers (wages less living expenses) or firms (sales less outlays) can individuals and firms call for more goods. It is from confidence in expectation of profit that bankers enter into purchases and sales of bank credits for both cash and debt at discount. 

Back in 2010, then chairman of the Federal Reserve, Ben Bernanke said, "Higher equity prices will boost consumer wealth and help increase confidence, which can spur spending." Deciphering, Bernanke said, when stock prices rise, those who hold stock have collateral with increased liquidation prices, which instills confidence in bankers, who will sell bank credits to those seeking it with such collateral.

As I explained in YOU LIVE AT THE MERCY OF A CLOWN-CAR DRIVEN BY MEN AND WOMEN OF THE FEDERAL RESERVE, guys like Bernanke believe prices make people behave rather than increases in their buying power owing to increasing profits, whether by wages less living expenses for individuals or sales less outlays for firms.

Prices aren't wealth, whether rising or not. Only property which can be traded at the moment of trade is wealth. Once trade ceases, that which was traded no longer is wealth, but merely potential wealth. A used bicycle with flat tires and bent handle bars on offer at a garage sale no one buys isn't wealth, yet the seller has property in it.

The foolish believe the key lies in prices. For them, higher prices means worthier collateral. However, ever increasing prices leads to the profit squeeze, when at some point of ever rising prices, outlays outstrip sales and wages fail to rise with living expenses thus pushing people to below break-even loss. It is from then that collapse follows and debt reckoning begins.

Even the phrase "paradox of thrift" is badly named. Thrift means prosperity, not savings.

The word savings enters English in 1737 meaning "money saved," in turn from the Old French "save" meaning to "keep safe," which came into English around 1200. By 1300 save was being said to mean "keep possession, hold back." 

In the days of money, and money only ever can be coined metal by weight and fineness, some would sell their gold or silver to bankers in purchases and sales for shares of future profits of those bankers. The rhetoric around doing such became "Save your money with us," and "We'll keep your money safe with us."

Yet, nothing ever was saved. Bankers didn't keep anyone's money separated from all others in a warehouse, keeping anyone's money for safe. Instead, bankers lent money in which they had property, property acquired in purchases and sales of claims against profit, which gets called interest, for money.


The word thrift is a Middle English word from about 1300 meaning "thriving, prosperity" and comes from the Old Norse meaning the same.

In prosperity, anyone who wants to work can find work. Profit abounds. Wages increase faster than living expenses. Sales increase faster than outlays. The creation of property grows at an increasing rate.


Under false-belief faux prosperity, little creation of property of wealth happens. Instead, increases in the estimates of street prices for extant property of potential wealth swells false beliefs leading to credit inflation and speculative promotion (2002-2008 Residential Realty Bubble, 1997-2000 Dot Com Bubble) .

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