History sometimes rhymes

The government themselves prevented the benefits of cheap money as far as they were able. Having secured cheap money, they refused to use it, and prevented those wom they controlled from doing so. The budgets of 1932 and 1933 were meant to balace, though they did not according to the strict doctrine of financial purity. Even so, they helped to create a psychology of economy, not of spending. The government refused to contemplate a deficit, or even public works on any large scale for the relief of unemployment. Such schemes as the Labour government had inaugurated were cut off. Local authorities were sternly told to limit their expenditure. The building of new schools practially stopped. The making of new roads stopped altogether. A later generation paid a bitter price for this in traffic congestion... Later on, when the economy recovered, the government authorised more public spending. Thus their use of cheap money was directly contrary to modern theory. They refused to spend when the economy was going down; spent when it was going up; and so exaggerated the respective trends instead of smoothing them. More sensible behaviour came from local authorities who embarked on large-scale schemes which could not easily be suspended. Their reward was to be much condemned for "waste".

AJP Taylor, English History 1914-1945


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