Not even the onset of World War II ended the Depression. True enough, unemployment ended; but this was only because of the draft

From Mises, a book review that takes a hard look at Roosevelt and the 1930's. The myth that government action or even that world war II brought us out of the depression are addressed. Since the current fed chairman embraces what was done then and thinks that Roosevelt didnt do enough it is pertinent. So Bernanke will keep pouring on the onions,loose monetary policy, and Obama has already announced his new public work projects all in the name of helping the economy.

The Disaster Called the New Deal
by David Gordon
...His anti–New Deal verdict is hard to dispute: levels of unemployment at the end of the 1930s remained at depression levels. In May 1939, Treasury Secretary Henry J. Morgenthau Jr., one of Franklin Roosevelt's best friends, testified before the House Ways and Means Committee: "I say after eight years of this Administration we have just as much unemployment as when we started…

And an enormous debt to boot" (p. 2). When he spoke, unemployment exceeded 20 percent. Further, and here Folsom has absorbed the pioneering research of Robert Higgs, not even the onset of World War II ended the Depression. True enough, unemployment ended; but this was only because of the draft….

Spending by the government does not add to employment, since taxes displace private spending and investing. Folsom aptly quotes Hazlitt in this connection:"Every dollar of government spending must be raised through a dollar of taxation," Hazlitt emphasized. If the WPA builds a $10 million dollar bridge, for example, "the bridge has to be paid out of taxes…

Therefore," Hazlitt observed, "for every public job created by the bridge project a private job has been destroyed somewhere else… All that has happened, at best, is that there has been a diversion of jobs because of the project. (p. 84)…

Government spending, if it takes place through the expansion of bank credit, will, if "successful," result in another artificially created boom. The recovery thus generated will result in the long run in even worse economic distress, once that new boom in turn collapses. Nor can a policy of further monetary expansion indefinitely postpone disaster. Eventually people's confidence in the monetary system will crumble, and a hyperinflation will result….