Over the last decade, there has been a concerted effort to rewrite the history of the Great Depression (here, here, and here). Historian Robert McElvaine (here) and economist Paul Krugman (here) have both attempted to challenge the revisionists.
Basically, the revisionists have argued that the policies of the New Deal were either ineffective or actually caused the Great Depression. Revisionists point to the 1937 Recession as proof of their assertions.
The challengers argue that the 1937 Recession was caused precisely by contractionary spending policies the Roosevelt administration mistakenly pursued after Roosevelt's 1936 re-election. They argue that, like the Obama administration during the late-2000s Great Recession, the Roosevelt administration failed to stimulate the economy enough until the spending spigot was opened during World War II.
After reading both side of the debate, it still seems an open question whether anything short of putting the entire economy on a war footing (that is, conventional deficit spending, tax cuts, monetary manipulations, etc.) would be an effective policy response. Part of the problem is defining what a "return to normalcy" would actually mean when the period before the collapse was being driven by an economic bubble.
One definition would be a return to full employment but "normal" employment was itself distorted by the bubble: people who would normally not be in the labor market were drawn in during the bubble and people were pushed out who should not have been as a result of the crash.
I don't think we really appreciate the distortionary effects of bubbles and the importance of preventing bubbles from expanding in the first place.
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