So, Robert P. Murphy would have one and all believe, based on a post by him out of the Mises Institute of Canada on Dec. 22. His post seems to be triggered by a mistaken comment I made to my own post here on the 1921 recession, although it did not appear in the main post itself and was not part of the main argument. Murphy has long been one of those arguing that 1921 is indeed a role model for studying later downturns, with the supposed bottom line being that economies will bounce back on their own from sharp downturns if prices and wages are flexible and there are no efforts at monetary or fiscal stimulus.
My post argued that there was monetary stimulus in 1921 and noted that even though there was downward stickiness of wages in 1945-46 and also in 1982, there were rapid bouncebacks with monetary policy in particular being stimulative during those episodes (and fiscal policy also being so in the 1982 one under Reagan). Murphy's post has nothing to say about those episodes, meaning, I guess, that he is desperate with this post to distract from the complete failure on his and his allies parts to address these points.
So, let me confess and apologize for the mistake I made in one of the comments to my own post. I falsely claimed that Commerce Secretary Hoover (under Harding) had initiated stimulative public spending in 1921, which, while it did not kick in until after the bounce happened, aided the move out of the recession. This was inaccurate. Hoover proposed such spending, but his proposals were not accepted. He did increase public spending after 1929, as I also noted, and which Murphy does not dispute, indeed revisits and reiterates.
So, does this mistake on my part in this comment indicate "desperation," or is it those failing to reply to the arguments in the main part of my post (still waiting to see those) who are desperately floundering around for an appropriate response? Murphy usefully provides data on federal spending during the period, and indeed it fell. However, by far the largest decline he shows in his post was between 1919 and 1920, when federal spending fell from about $18 billion to merely $6 billion in 1920. Murphy does not think that this sharp fiscal contraction had something to do with the collapse of the economy in 1920? It is true that federal spending continued to decline, but it did so at a very slow rate. So, it was $5 billion in 1921 and down to $3 billion in 1922, after which it stabilized. So, yes, the pressure of fiscal policy was downwards, but nothing like 1919-20. Murphy disagrees about monetary policy, but I shall not repeat the arguments here, and he does not present them again.
He also shows spending during the Hoover presidency. Again, I agreed with him that those criticizing Hoover for running balanced budgets were off. FDR ran on a balanced budget platform against his deficit spending. However, while indeed Hoover did engage in public works spending, as I noted in my comment, building the Hoover Dam and a lot of airports, the increase in spending was relatively modest, although notable in percentage terms. So, it was $3 billion in 1928 and 29, but had only risen to $4.5 billion by 1932 and 1933, to be compared with the $18 billion in 1919 and the $6 billion in 1920, much more stimulative than what Hoover had going after 1929, even if he had a rising trend.
Again, my story was more about monetary policy, and I repeat that neither Murphy nor any of his allies has even remotely responded to my points about what went on in 1945-46 or 1982. There was a -12.7% change in GDP in 1945 with the fiscal spending decline, but also a quick bounceback the following year, like after WW I, but with downward wage stickiness and an expansionary monetary policy. 1982 also saw a rapid bounceback, but I leave it to anybody interested to go back and look at my original post that lays out further details, including commentary on our more recent case, which does not remotely resemble 1921. The point that one might not be able to infer anything at all today about what policy today should be based on what went on in 1921 remains I believe both valid and pretty straightforward. Looks to me like those disagreeing with this are the desperate ones.