In 1932 Hoover lost because he "did nothing" while the depression grew. FDR came into office and managed to prolong an economic correction into a ten year depression. The irony is that Hoover did not "do nothing" but actually enacted most of the precursors of FDR's destructive policies. However, the myth remained that Hoover "did nothing" and allowed the depression to grow while FDR's interventionism is what saved us. It was such a well loved myth that we did not recover from it until 1980. Until Reagan every politician, Democrat or Republican was convinced that the government not only had a large role in economics, but that without government intervention the economy would inevitably collapse.

My fear is that we are seeing the exact same scenario repeat itself. The "Great Depression" was largely the result of the institution of the Federal Reserve to replace the less destructive (but still far too interventionist and inflationary "state banking" system we had in the 19th century). Thanks to the Federal reserve inflation grew ever faster, creating the bubble that fueled the "roaring 20's", and then lead to the inevitable crash. Of course, had we been spared Hoover's efforts to reinflate the economy, along with erecting trade barriers, not to mention FDR's far more expansive version of the same, we probably would have been back on our feet in the early 30's.

And we are seeing the same once again. A Democrat policy, the Community Reinvestment Act passed by Carter and liberalized by Clinton, combined with rampant inflation promoted by both Clinton and Bush, has brought about an economic collapse. But instead of blaming it on the government and suggesting we wait out the correction, the problems are being blamed on the free market (and on "greed") and a nominally conservative president is trying to inflate the economy in hopes of postponing the inevitable.

Even more ironically, just as with Hoover, Bush is not being blamed for his bad economics, but instead is being blamed for bringing about a crisis caused mostly by his predecessors, and for "doing nothing" while throwing hundreds of billions of newly printed dollars at it.

And along comes the messiah Obama, just as the savior FDR appeared in 1932, full of plans to meddle in the economy, to "correct" the "problems of the free market". in other words, to implement more of the same policies that caused the original problems, prolonging a correction into an endless recession. And, sadly, I worry that just as with FDR, Obama will get credit when, despite all his meddling, the market manages to correct itself enough that we escape the endless cycle of inflation and collapse he is certain to start.

However, what worries me most of all is that when Obama finally leaves office, just as when Truman left, we will end up with not another Reagan as many hoped, but another Eisenhower, a Republican who has internalized the big government, intrusive message of his predecessors. And I also worry that it will be another 30 or 40 years before the Republican party finds another champion with the nerve to push for a reduction in the size of government.

Before you dismiss this thought, recall that following free market Democrat Grover Cleveland, the next president to suggest down sizing government was Reagan, and even he was not bold enough to suggest returning to the gold standard, ending fiat currency, eliminating the income tax, or undoing any of the big government policies the came between the two. So no matter how passionate we may be about the free market, no matter how much we may desire small government, we could easily be shoved tot he sidelines just as hard money Democrats were at the turn of the century, or, more recently, as anti-FDR Republicans were. Recall that until the Goldwater candidacy, free market Republicans were cranks on the fringe of the party, without a voice. So it is far from impossible that we could once again find ourselves without a voice in government for many, many years.

POSTSCRIPT

I may have given Charles Krauthammer a hard time about overlooking the inflationary problems of the bailout, but his most recent article proves that he has not completely forgotten all of his common sense. It is somewhat close in tone to this essay, so I feel I should add a link.

POSTSCRIPT II

Before anyone dismisses my fears, I would point out that we are already seeing a plethora of Republicans, and even supposedly conservative Republicans, who are not only espousing bailouts, but arguing in favor of regulation to "stem the tide of greed". If that has become the conservative line, what is left for liberals to espouse short of outright communism?

POSTSCRIPT III

I would also like to note that I still believe this "crisis" is being exaggerated in the media. There is a problem, and the problem is fueling liquidity problems int he market. However, more than anything, the panic engendered by the talk of crisis is itself bringing about more of a crisis than the economic factors themselves did. In a large part this is much more a crisis of confidence than a real economic collapse. Then again, as we have a fiat currency system which relies not on intrinsic value but public confidence, I suppose a crisis of confidence is to be eared much more than it would in a commodity currency system.

POSTSCRIPT IV

While adding links, I realized how much I have written on this topic. So, rather than fill this article with still more linked text, here is a comprehensive list of essays on this topic:

And you got rich?
A Quick Thought On The Housing "Crisis"
Two Perspectives
Inventing a Crisis
Inventing a Crisis II
Inventing a Crisis III
And Here It Comes Again
To Correct Debra Saunders
Another Thought on the Housing "Crisis"
Hooray For Phil Gramm!
Confirmation
I Hate Election Years
If We Took Them Seriously...
The Crisis Ratchet
Hooray For Debra Saunders!
Maybe It Isn't a Crisis After All
Quick Economic Update
An Unfortunate Consequence
Bringing Some Good Out of Our Financial Problems
Direct Your Anger Properly
Some Brief Thoughts on the Bailout
Living Beyond Their Means
A Question
Face The Music, Don't Try to Buy Votes
A Final Comment on the Futility of a Bailout
A Question For Republican Politicians
$700 Billion?
Asking Yet Again
Clarification of My Opposition to the Bailout
Greed
A Little More On CEO Salaries
Greed Part 2
A Bit Disappointed
Laughable Talk About the Bailout
A Short Question
The Excuse Making Begins
More Bad Excuses
More Bad Excuses II
Well, It Was Bound to Happen...
Repeating the Errors of FDR
One More Senseless Defense
Doing Nothing
A Question
Economic Question
It Is Ending Already 
How Does That Work?
It Is Nice To Get Confirmation
Are You Serious?
I Think I Finally Got It, and... Eh
And the Excuses Begin
Things You Won't Hear on the News Until Wednesday
Our Financial Problems
Critique of Krauthammer
I Must Keep Asking
Monetary Issues Made Simple Part I
Et Tu, Town Hall?
Thanks For Saving My Stocks
More Confirmation
Perception and Reality
Crisis?
And Still More Confirmation
Monetary Issues Made Simple Part II
Silly Panic
Apparently I Was Not Alone
Hair of the Dog?
More Bailout Silliness
Playing Cassandra
John Stossel Imitates Me
Brief Comment
Remember I Predicted It
Microloans and the Community Reinvestment Act

I think that is everything. I may have missed one or two passing comments on the early part of the crisis, when it was just the bursting of the housing bubble. However, I think I hit all the highlights with this list.