In the textbook, The American Pageant, the following arguments are used to explain the economic boom that followed the Great Depression and WWII (and why the country did not fall into another Great Depression when WWII ended). In 1944 the U.S. gov’t passed the GI Bill because of a fear that the employment markets would never be able to absorb 15 million returning veterans. As the Cold War began and intensified the U.S. increased military spending (i.e. NSC-68), which primed the pumps of high technology industries such as aerospace, plastics, and electronics. The military budget also financed much scientific research and development. Finally, European nations, devastated from the War were not able to compete as America became the world’s primary producer.
Excellent! Thank you. Very helpful. One other thing. I understand the role of the ABC Theory as a major cause of the Great Depression, but what about Milton Friedman’s argument that the Fed. Res. made a mistake when it raised interest rates. Was that a mistake?