Hoover's contractionary policies were given a further negative boost by Britain's decision to abandon the gold standard in 1931. Confidence in the dollar fell as investors thought that the United States would follow Britain off gold. Capital began to flow out of the United States, interest rates rose, and bank failures soared. It was in these circumstances that Hoover authorized a tax increase, thereby producing a massive recession in the name of maintaining "sound finance." In December 1931, Hoover raised taxes by $900 million to eliminate the deficit. As Hoover put it in classic austerity-speak, "We cannot squander ourselves into prosperity." The price of this parsimony was to throw the US economy into depression. By 1932 unemployment had reached 23 percent of the labor force, up from 8 percent in 1930.

Mark Blyth, Austerity, loc. 508