Did President Franklin Roosevelt's New Deal economic policies pull the country out of the

Great Depression?

My research clearly suggests that the answer, contrary to popular belief, is no.

In fact, the New Deal made matters worse.

Let me explain.

The centerpiece of Roosevelt's New Deal plan to fix the economy was the National Industrial

Recovery Act, or NIRA, which the President announced with great fanfare in June of 1933.

The New Deal policy are believed that he could use the government to artificially raise

both prices and wages.

It would work like this.

Higher prices would raise profits.

That makes business happy, and higher wages would raise income.

That makes workers happy.

More profits for business mean more money to higher new workers.

Higher wages for workers means more money to buy consumer goods.

A virtuous cycle is set in a motion and the economy improves rapidly.

But here is what FDR missed.

FDR raising wages also raises labor costs.

And when labor costs go up, business hires fewer workers, or no workers at all, especially

in a difficult economic environment.

Meanwhile, artificially raising prices reduces demand for the obvious reason that people

buy less of something when as price goes higher.

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