Hoover’s economy hit bottom in late 1932, with unemployment at 24%, and Franklin Roosevelt resoundingly spanked Hoover in the presidential election. But just like 2009, 1933 was a year when hope was replaced by fear.
Unemployment averaged 25% through 1933, and U.S. output as measured by GDP had fallen in real terms by more than a quarter of its 1929 value. In the first three months of 1933 alone, an estimated 4,000 banks failed nationwide.
Roosevelt in March of 1933 prohibited banks from buying or selling foreign currencies or gold and confiscated all gold held by Americans at $20.67 per ounce. Just a few months later by the end of 1933 and having confiscated almost all of America’s private gold holdings, Roosevelt devalued the dollar by 60% and raised the official price of gold to $35 per ounce.
If done by anyone else, these actions would be a Madoff-esque crime. But when done by Roosevelt, it was a massive wealth tax a la French economist Thomas Piketty.
To learn more about tax policy visit www.LafferCenter.com