The article, “Are We About to See the 1937 Mistakes Replicate?” was published by Bruce Bartlett In July 12 2011, 6:00am. The author played a major role during the administration of George H.W. Bush and Reagan, Where he worked under Jack Kemp and Ron Paul who were representatives in the administration. In this article, the author gives an elaborate discussion on how the fiscal policies of the Federal Reserve can help ease inflation within the American economy.
Bartlett is categorical that the tightening of the fiscal policies of the Federal Reserve as an economic tool to counter recession could easily result into other undesirable economic aftermath for instance increased bank interest rates, hiking in prices, and higher levels of unemployment as was the case between 1933 though 1937. Successive attempts by the Democrats and Republicans at the congress cut down government expenditure and further tighten the fiscal policy at the Federal Reserve are squarely to blame for the escalation in tax rates of taxes and the predominant fall in the levels of Gross Domestic Product (GDP) that made the lives of the ordinary American citizens miserable.
I am fully in agreement with the author that an imminent tightening of the monetary policies at the Federal Reserve coupled with the reduction in the government consumption and investment spending- as would be demanded by the Republicans against the recommendation of President Obama’s Administration- could definitely cause another round of economic recession similar to that of 1973 in magnitude. Bartlett does a wonderful job in his articulate presentation of how tightening fiscal policy could easily lead to economic recession.
In conclusion, it is evident that economic recession is caused by tightening of fiscal policies of the Federal Reserve and a reduction in the government consumption and investment spending against the popular notion that states otherwise.