FDR: … the only thing we have to fear is fear itself —nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. Franklin Delano Roosevelt President, 1933 – 1945 Workers: Fear of job loss. Business: Fear of deflation.

Onset of the Depression: Persistent Deflation…Persistent Job Loss $/pound DJIA Manufacturing Employment

Onset of the Depression: Bank Runs Deflationary Expectations

“…liquidate labor, liquidate stocks, liquidate the farmer, liquidate real estate. It will purge the rottenness out of the system…People will work harder, lead a more moral life.” Rembrandt, The TurkTitian, Venus With The Mirror Andrew Mellon Secretary of the Treasury, 1921 – 1932

The Circular Flow: Consequences of Financial System Meltdown

FDR Inaugural Address … the only thing we have to fear is fear itself —nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance…This Nation is asking for action, and action now. Franklin Delano Roosevelt President, 1933 – 1945 A “New Deal”—A New Regime 1932 Reconstruction Finance Corp, Glass-Steagall (T-bonds back cash) March/April 1933 Loosened Fetters Emergency Banking Act/Gold to Treasury CCC and Reforestation Relief Act May 1933 AAA/Thomas Amendment (President & gold price/ BoG & reserve requirement), TVA, Federal Securities Act June 1933 NIRA, Glass-Steagall  FDIC October-November 1933 Commodity Credit Corp, Civil Works Administration January 1934 Gold Reserve Act : $ Devaluation: $20.67  $35/oz. June 1934 SEC, FSLIC 1935 WPA, REA, Wagner Act  NLRB Schechter Poultry – NRA

$/pound Producer Price Index

New Deal Reflation

Fiscal and Monetary Stimulus…And Retrenchment

Stimulus and Retrenchment: Recession in Depression

The Four Freedoms: – Freedom of belief – Freedom of speech – Freedom from want – Freedom from fear