Franklin Delano Roosevelt: Keynesian Economic Analysis

President Franklin Delano Roosevelt of the United States faced a dilemma. The American economy was in shambles. As the president, Roosevelt had to solve the problems and he relied on one man 's theories to pull him through. John Maynard Keynes was an important British economist during the twentieth century. His theories had a major impact on FDR 's perspective on the American government 's economy. In 1933, the United States, quite out of keeping with its constitution, embraced Keynesian economics with the announcement of the "New Deal. ' The New Deal programs were created to combat the Great Depression. The following essay will discuss Keynes ' theories regarding coping with a recession and how the government should be involved. Upon acknowledging
Relying on Keynesian economics, Roosevelt created the New Deal program in order to combat the depression. Though FDR was a firm believer in balanced budgets and laissez-faire, he managed to follow Keynes theories regarding supply and demand, and deficit spending. During 1936, the federal deficit was 13 percent of GDP. Using Keynes ' two most important theories, Roosevelt created "make-work programs ' such as the Civilian Conservation Corps and the Public Works Administration. Roosevelt took these theories and applied it to his programs correctly. As a result, the economy improved and the unemployment rate was lowered. Though it did not restore the economy back to pre-1929 levels, it was a start. In fact, the New Deal was so successful that even though the economy has had four separate recessions since 1937, the economy did not collapse in the scale of 1929-1939. This is because a "set of safeguards, mostly put in place during the New Deal in the 1930 's, that makes a 1930-style collapse of a nation 's financial system highly unlikely" (Peterson: 1981,
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