How Did The New Deal Affect The Economy

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The New Deal did not attempt truly radical solutions to the problems of the American economy in the 1930s. Neither did it end the nation's suffering. It did, however, lead to some profound and lasting changes in American politics and social life.

The New Deal did not put an end to the Great Depression. As predicted by economist John Maynard Keynes, the New Deal's massive government spending did lead to some economic improvement, but the economy collapsed again in August 1937. After 1937, FDR's advisers convinced him to start up suspended programs such as the public works programs in 1938. Still, hard times lasted well into the 1940's, until the nation's entry into World War II.

Despite its horrors, World War II did bring an end to the Depression
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Federal spending increased from $9.4 billion in 1939 to $95.2 billion in 1945, and the gross national product more than doubled in that time. Massive wartime spending ended the Great Depression. In the 1930s most economists believed that the economy would fix itself if the government did not interfere. English economist John Maynard Keynes, on the other hand, argued that deficit spending - government spending of borrowed money - should be used to get a depressed economy moving again. Deficit spending during World War II instantly turned the economy around. Unfortunately, it also propelled the nation into a habit of deficit spending, causing economic problems that continue to this day.

The results of wartime spending were stupendous. Each year the United States raised its production goals for military materials, and each year it met them. By the middle of 1945, the nation had produced 80,000 landing craft, 100,000 tanks and armored cars, 300,000 air-planes, 15 million guns, and 41 billion rounds of ammunition. The country had indeed become, in Franklin Roosevelt's words, the "arsenal of
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