ECON Yes we are in a Great Depression

etc · May 27, 2010

http://www.voxeu.org/index.php?q=node/3421

Start of original column (published 6 April 2009)

The parallels between the Great Depression of the 1930s and our current Great Recession have been widely remarked upon. Paul Krugman has compared the fall in US industrial production from its mid-1929 and late-2007 peaks, showing that it has been milder this time. On this basis he refers to the current situation, with characteristic black humour, as only “half a Great Depression.” The “Four Bad Bears” graph comparing the Dow in 1929-30 and S&P 500 in 2008-9 has similarly had wide circulation (Short 2009). It shows the US stock market since late 2007 falling just about as fast as in 1929-30.
Comparing the Great Depression to now for the world, not just the US

This and most other commentary contrasting the two episodes compares America then and now. This, however, is a misleading picture. The Great Depression was a global phenomenon. Even if it originated, in some sense, in the US, it was transmitted internationally by trade flows, capital flows and commodity prices. That said, different countries were affected differently. The US is not representative of their experiences.

Our Great Recession is every bit as global, earlier hopes for decoupling in Asia and Europe notwithstanding. Increasingly there is awareness that events have taken an even uglier turn outside the US, with even larger falls in manufacturing production, exports and equity prices.

In fact, when we look globally, as in Figure 1, the decline in industrial production in the last nine months has been at least as severe as in the nine months following the 1929 peak. (All graphs in this column track behaviour after the peaks in world industrial production, which occurred in June 1929 and April 2008.) Here, then, is a first illustration of how the global picture provides a very different and, indeed, more disturbing perspective than the US case considered by Krugman, which as noted earlier shows a smaller decline in manufacturing production now than then.

TidesofTruth · May 27, 2010

Ask someone who lived it and they will shake their head and laugh at your naivety. We haven't seen anything like the Great Depression yet.

etc · May 27, 2010

It's far worse than back then.

The statistics all lie.

What planet do you live on? The same one as me? People are losing jobs left and right. Each job opening invites 800 applicants. Even janitor level positions invite dozens. The currency is collapsing. The debt is exploding. In 1930's we had a hard money system, it was flexible but you couldn't just add zeroes to it at will.

Right now the unemployment statistics are completely bogus because they count burger flipping jobs the same as 'real' jobs and you cannot live on min wage or even close to it --- but in 1930's, you could. Prices were collapsing but stuff was becoming more affordable to the consumer. I think collapsing prices are preferable to them exploding into stratosphere.

the real estate is still insane, I don't ever foresee myself owning a house, and this "buy a house" stuff, a euphemism for going into debt for decades and making banks rich doesn't seat well with me.

Oh yeah but the poor have nice cell phones and color TVs (all from China) and running cars. Other than the technological edge, education, medicine, housing, etc. are drastically less affordable than ever.

the official U6 number is almost 20% and I think that's too optimistic. You have to include the purchasing of the FRN into the equation, otherwise the statistics are meaningless. In 1930's, the dollar was 371 grains of silver, how much does it have now?

We are like the people who are consuming the seeds to be planted for the next harvest. I think widespread famine is likely in the next decade. As US becomes another Banana Republic.

Troy R · May 27, 2010

TidesofTruth said:
Ask someone who lived it and they will shake their head and laugh at your naivety. We haven't seen anything like the Great Depression yet.

Actually the 2nd Greater Depression will make the first look like a vacation

Green Co. · May 27, 2010

I assume it must be bad in certain areas of the country. I read here, too. However, seems many could improve their lot in the job market by moving to another area. Even our boss DO is preparing, before the money runs completely out.

It's hell to leave home to find work, BTDT. But ya gotta have the will to survive, or you will sink.

UncurledA · May 27, 2010

In the '30s, we were the industrial producers. The decline hit us right away, hard. Now, we're the financiers. The producers are once again getting hit hard, right away. Due to our status as financiers to the world, there is a time lag where we can incur debt to continue consumption due to our special circumstance of trust. Essentially, the world has placed with us a fiduciary responsibility to preserve their produced wealth in stores of value. We are grossly abusing that responsibility, and when the party is finally over, and our time lag is finished, so are we, much more than in the '30s.

Not only will we be bereft of goods, we will have no one from which to garner goods on promise of payment, as it will be the time when our payments are known to be no good. In the '30s, we had a basic industrial/agriculture machine which could build wealth and therefore employment, etc., from scratch. My grandpa used to hire workers to dig his potatoes and pay them in bags of potatoes, which they were thrilled to get. Now ? Maybe a physical therapist could pay their workers in physical therapy, or a banker could pay its workers in free banking ? Doesn't seem to work as well.

The people who say the Depression has already started, on this board and other venues, understand the above. Whether we yet perceive the Depression, is immaterial, but we are such pragmatists ( to a fault ) that we insist it isn't here until we feel it fully. So, reasoning processes such as above fall on mostly deaf ears in the U.S. They mock those who say a Depression has already started, and will be much worse this time. Reasoning and musing on sure consequences of actions means nothing to a pragmatist.

Great Northwet · May 27, 2010

Interesting responses to the OP. I'm just too tired to respond this late.

Bump.

etc · May 27, 2010

Green Co. said:
I assume it must be bad in certain areas of the country. I read here, too. However, seems many could improve their lot in the job market by moving to another area. Even our boss DO is preparing, before the money runs completely out.

It's hell to leave home to find work, BTDT. But ya gotta have the will to survive, or you will sink.

Yeah, you can try to move. Have a feeling it will work about as well as the first time:

etc · May 27, 2010

UncurledA said:
In the '30s, we were the industrial producers. The decline hit us right away, hard. Now, we're the financiers. The producers are once again getting hit hard, right away. Due to our status as financiers to the world, there is a time lag where we can incur debt to continue consumption due to our special circumstance of trust. Essentially, the world has placed with us a fiduciary responsibility to preserve their produced wealth in stores of value. We are grossly abusing that responsibility, and when the party is finally over, and our time lag is finished, so are we, much more than in the '30s.

Not only will we be bereft of goods, we will have no one from which to garner goods on promise of payment, as it will be the time when our payments are known to be no good. In the '30s, we had a basic industrial/agriculture machine which could build wealth and therefore employment, etc., from scratch. My grandpa used to hire workers to dig his potatoes and pay them in bags of potatoes, which they were thrilled to get. Now ? Maybe a physical therapist could pay their workers in physical therapy, or a banker could pay its workers in free banking ? Doesn't seem to work as well.

The people who say the Depression has already started, on this board and other venues, understand the above. Whether we yet perceive the Depression, is immaterial, but we are such pragmatists ( to a fault ) that we insist it isn't here until we feel it fully. So, reasoning processes such as above fall on mostly deaf ears in the U.S. They mock those who say a Depression has already started, and will be much worse this time. Reasoning and musing on sure consequences of actions means nothing to a pragmatist.

Interesting points you make.

One nitpick, I don't think we are the financiers. We don't finance anyone, we are not a creditor, we are the debtor. What happens when other countries get tired of financing our monetary drug habits. China can cause WWIII right here and now with a mouse click by selling all their financial instruments and refusing to buy more. We are hostages to them basically.

Green Co. · May 28, 2010

UncurledA said:
In the '30s, we were the industrial producers. The decline hit us right away, hard. Now, we're the financiers. The producers are once again getting hit hard, right away. Due to our status as financiers to the world, there is a time lag where we can incur debt to continue consumption due to our special circumstance of trust. Essentially, the world has placed with us a fiduciary responsibility to preserve their produced wealth in stores of value. We are grossly abusing that responsibility, and when the party is finally over, and our time lag is finished, so are we, much more than in the '30s.

Not only will we be bereft of goods, we will have no one from which to garner goods on promise of payment, as it will be the time when our payments are known to be no good. In the '30s, we had a basic industrial/agriculture machine which could build wealth and therefore employment, etc., from scratch. My grandpa used to hire workers to dig his potatoes and pay them in bags of potatoes, which they were thrilled to get. Now ? Maybe a physical therapist could pay their workers in physical therapy, or a banker could pay its workers in free banking ? Doesn't seem to work as well.

The people who say the Depression has already started, on this board and other venues, understand the above. Whether we yet perceive the Depression, is immaterial, but we are such pragmatists ( to a fault ) that we insist it isn't here until we feel it fully. So, reasoning processes such as above fall on mostly deaf ears in the U.S. They mock those who say a Depression has already started, and will be much worse this time. Reasoning and musing on sure consequences of actions means nothing to a pragmatist.

Perhaps this is my problem, U-A. I've been a blue-collar industrial worker type for most all of my near 60 years. All my contemporaries are employed, at wages as good as ever. Many have had to move to Wy, the Dakotas, Pa or even NY, but at rates of pay rivaling those in the past.

They all work in & around the oil patch, from rig hands to pipe line hands. The only folks I know that are unemployed worked in the tech or financial industries. We know our time is limited, as we are seriously over-producing product now. It may take another 6 months to a year, but we'll catch up with the unemployed. However, there are still many unfilled jobs in the meantime.

Many of us remember the bad times of the mid to late 80's in this field. Personally, I had to leave the wife & kid at home & live out of the back of a pickup truck for a year & a half, working construction jobs in places as far away as northern Nebraska. But we kept our home, survived 'till now, prepped and with an education that could not be bought.

I see so many now without that education, so many that refuse to learn from history. Many more will be affected this time. Glad I learned when I did.

Green Co. · May 28, 2010

Yeah, you can try to move. Have a feeling it will work about as well as the first time

Read my line about having the wrong education. :lol:

Just leaves more for the ones that can, while the time remains.

UncurledA · May 28, 2010

etc said:
Interesting points you make.

One nitpick, I don't think we are the financiers. We don't finance anyone, we are not a creditor, we are the debtor. What happens when other countries get tired of financing our monetary drug habits. China can cause WWIII right here and now with a mouse click by selling all their financial instruments and refusing to buy more. We are hostages to them basically.

You're right, etc. I should have called what we do "financial products arrangers", a broad category of investment-type banking. Seriously, "financial products" is the second-biggest general "industry" in the country, after all types of government and government-supported ( like Medicare-propped health care ) spending programs ( also called "product" in GDP calculations - sheesh ! ).

lectrickitty · May 28, 2010

They didn't call the 30's a depression until AFTER it was over...

... and they won't identify this as a depression until it gets so deep that people force the term into use.

During the 30's they called it "hard times", or "difficult times", but they didn't call it a depression until later.

Dad lived thru it and he warned me a few years back that another depression is coming. He seen the signs and recognized them for what they are. We keep hearing the word "unsustainable" being tossed around, but nobody is making the changes needed to make it sustainable.

Here's some interesting stuff I read earlier:

25 Questions To Ask Anyone Who Is Delusional Enough To Believe That
This Economic Recovery Is Real

Published on 05-25-2010
By Michael Snyder - BLN Contributing Writer

If you listen to the mainstream media long enough, you just might be tempted to believe that the United States has emerged from the recession and is now in the middle of a full-fledged economic recovery. In fact, according to Obama administration officials, the great American economic machine has roared back to life, stronger and more vibrant than ever before. But is that really the case? Of course not. You would have to be delusional to believe that. What did happen was that all of the stimulus packages and government spending and new debt that Obama and the U.S. Congress pumped into the economy bought us a little bit of time. But they have also made our long-term economic problems far worse. The reality is that the U.S. cannot keep supporting an economy on an ocean of red ink forever. At some point the charade is going to come crashing down.

And GDP (Gross Domestic Product) is not a really good measure of the economic health of a nation. For example, if you would have looked at the growth of GDP in the Weimar republic in the early 1930s, you may have been tempted to think that the German economy was really thriving. German citizens were spending increasingly massive amounts of money. But of course that money was becoming increasingly worthless at the same time as hyperinflation spiraled out of control.

Well, today the purchasing power of our dollar is rapidly eroding as the price of food and other necessities continues to increase. So just because Americans are spending a little bit more money than before really doesn’t mean much of anything. As you will see below, there are a whole bunch of other signs that the U.S. economy is in very, very serious trouble.

Any “recovery” that the U.S. economy is experiencing is illusory and will be quite temporary. The entire financial system of the United States is falling apart, and the powers that be can try to patch it up and prop it up for a while, but in the end this thing is going to come crashing down.

But as obvious as that may seem to most of us, there are still quite a few people out there that are absolutely convinced that the U.S. economy will fully recover and will soon be stronger than ever.

So the following are 25 questions to ask anyone who is delusional enough to believe that this economic recovery is real….

#1 - In what universe is an economy with 39.68 million Americans on food stamps considered to be a healthy, recovering economy? In fact, the U.S. Department of Agriculture forecasts that enrollment in the food stamp program will exceed 43 million Americans in 2011. Is a rapidly increasing number of Americans on food stamps a good sign or a bad sign for the economy?

#2 - According to RealtyTrac, foreclosure filings were reported on 367,056 properties in the month of March. This was an increase of almost 19 percent from February, and it was the highest monthly total since RealtyTrac began issuing its report back in January 2005. So can you please explain again how the U.S. real estate market is getting better?

#3 - The Mortgage Bankers Association just announced that more than 10 percent of U.S. homeowners with a mortgage had missed at least one payment in the January-March period. That was a record high and up from 9.1 percent a year ago. Do you think that is an indication that the U.S. housing market is recovering?

#4 - How can the U.S. real estate market be considered healthy when, for the first time in modern history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together?

#5 - With the U.S. Congress planning to quadruple oil taxes, what do you think that is going to do to the price of gasoline in the United States and how do you think that will affect the U.S. economy?

#6 - Do you think that it is a good sign that Arnold Schwarzenegger, the governor of the state of California, says that “terrible cuts” are urgently needed in order to avoid a complete financial disaster in his state?

#7 - But it just isn’t California that is in trouble. Dozens of U.S. states are in such bad financial shape that they are getting ready for their biggest budget cuts in decades. What do you think all of those budget cuts will do to the economy?

#8 - In March, the U.S. trade deficit widened to its highest level since December 2008. Month after month after month we buy much more from the rest of the world than they buy from us. Wealth is draining out of the United States at an unprecedented rate. So is the fact that the gigantic U.S. trade deficit is actually getting bigger a good sign or a bad sign for the U.S. economy?

#9 - Considering the fact that the U.S. government is projected to have a 1.6 trillion dollar deficit in 2010, and considering the fact that if you went out and spent one dollar every single second it would take you more than 31,000 years to spend a trillion dollars, how can anyone in their right mind claim that the U.S. economy is getting healthier when we are getting into so much debt?

#10 - The U.S. Treasury Department recently announced that the U.S. government suffered a wider-than-expected budget deficit of 82.69 billion dollars in April. So is the fact that the red ink of the U.S. government is actually worse than projected a good sign or a bad sign?

#11 - According to one new report, the U.S. national debt will reach 100 percent of GDP by the year 2015. So is that a sign of economic recovery or of economic disaster?

#12 - Monstrous amounts of oil continue to gush freely into the Gulf of Mexico, and analysts are already projecting that the seafood and tourism industries along the Gulf coast will be devastated for decades by this unprecedented environmental disaster. In light of those facts, how in the world can anyone project that the U.S. economy will soon be stronger than ever?

#13 - The FDIC’s list of problem banks recently hit a 17-year high. Do you think that an increasing number of small banks failing is a good sign or a bad sign for the U.S. economy?

#14 - The FDIC is backing 8,000 banks that have a total of $13 trillion in assets with a deposit insurance fund that is basically flat broke. So what do you think will happen if a significant number of small banks do start failing?

#15 - Existing home sales in the United States jumped 7.6 percent in April. That is the good news. The bad news is that this increase only happened because the deadline to take advantage of the temporary home buyer tax credit (government bribe) was looming. So now that there is no more tax credit for home buyers, what will that do to home sales?

#16 - Both Fannie Mae and Freddie Mac recently told the U.S. government that they are going to need even more bailout money. So what does it say about the U.S. economy when the two “pillars” of the U.S. mortgage industry are government-backed financial black holes that the U.S. government has to relentlessly pour money into?

#17 - 43 percent of Americans have less than $10,000 saved for retirement. Tens of millions of Americans find themselves just one lawsuit, one really bad traffic accident or one very serious illness away from financial ruin. With so many Americans living on the edge, how can you say that the economy is healthy?

#18 - The mayor of Detroit says that the real unemployment rate in his city is somewhere around 50 percent. So can the U.S. really be experiencing an economic recovery when so many are still unemployed in one of America’s biggest cities?

#19 - Gallup’s measure of underemployment hit 20.0% on March 15th. That was up from 19.7% two weeks earlier and 19.5% at the start of the year. Do you think that is a good trend or a bad trend?

#20 - One new poll shows that 76 percent of Americans believe that the U.S. economy is still in a recession. So are the vast majority of Americans just stupid or could we still actually be in a recession?

#21 - The bottom 40 percent of those living in the United States now collectively own less than 1 percent of the nation’s wealth. So is Barack Obama’s mantra that “what is good for Wall Street is good for Main Street” actually true?

#22 - Richard Russell, the famous author of the Dow Theory Letters, says that Americans should sell anything they can sell in order to get liquid because of the economic trouble that is coming. Do you think that Richard Russell is delusional or could he possibly have a point?

#23 - Defaults on apartment building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter of 2010. In fact, that was almost twice the level of a year earlier. Does that look like a good trend to you?

#24 - In March, the price of fresh and dried vegetables in the United States soared 49.3% - the most in 16 years. Is it a sign of a healthy economy when food prices are increasing so dramatically?

#25 - 1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008. Not only that, more Americans filed for bankruptcy in March 2010 than during any month since U.S. bankruptcy law was tightened in October 2005. So shouldn’t we at least wait until the number of Americans filing for bankruptcy is not setting new all-time records before we even dare whisper the words “economic recovery”?

MaureenO · May 28, 2010

I've been looking at this situation for a few years and I have to say it's looking bleaker by the day.

My department had to let 11 officers go and 15 station staff go, also. It's that way all over the state. If it weren't for the DHS grant that I work under, I might have been let go. I cost the department a lot of money because I was shot.

When areas are letting public safety workers go, it's bad. But I also wonder how much of this is cyclic. It seems like prosperity and poverty go up and down every several generations and we're back into the down cycle now.

I think the earth is shedding her skin.

Maureen

PCViking · May 28, 2010

The people who have jobs, think everyone who does not have one is lazy and not looking... eager to sit on their butts and accept unemployment...

The people who do not have jobs, ask where the jobs are.

In the early 1930's the MSM was doing everything they could to paint things black so they could get a 'progressive' elected (FDR). These days with an 'progressive' in office... the MSM is doing everything they can to paint a happy face on the economy. Even though FDR made things much worse than Hoover did, historians paint the picture that FDR saved us and brought us through the depression. It's all about the propaganda... look at the statistics, and then study the sources!

I have former Aerospace co-workers who have been out of work for a year or more. Programs are being postponed or canceled... In Aerospace, HR offices are taking resumes, but not hiring... or there are a couple hundred applicants for any opening that is real. The companies are pushing the people they have to the limit... but are reluctant to bring new people in.

:vik:

doctor_fungcool · May 28, 2010

UncurledA said:
In the '30s, we were the industrial producers. The decline hit us right away, hard. Now, we're the financiers. The producers are once again getting hit hard, right away. Due to our status as financiers to the world, there is a time lag where we can incur debt to continue consumption due to our special circumstance of trust. Essentially, the world has placed with us a fiduciary responsibility to preserve their produced wealth in stores of value. We are grossly abusing that responsibility, and when the party is finally over, and our time lag is finished, so are we, much more than in the '30s.

Not only will we be bereft of goods, we will have no one from which to garner goods on promise of payment, as it will be the time when our payments are known to be no good. In the '30s, we had a basic industrial/agriculture machine which could build wealth and therefore employment, etc., from scratch. My grandpa used to hire workers to dig his potatoes and pay them in bags of potatoes, which they were thrilled to get. Now ? Maybe a physical therapist could pay their workers in physical therapy, or a banker could pay its workers in free banking ? Doesn't seem to work as well.

The people who say the Depression has already started, on this board and other venues, understand the above. Whether we yet perceive the Depression, is immaterial, but we are such pragmatists ( to a fault ) that we insist it isn't here until we feel it fully. So, reasoning processes such as above fall on mostly deaf ears in the U.S. They mock those who say a Depression has already started, and will be much worse this time. Reasoning and musing on sure consequences of actions means nothing to a pragmatist.

Yep, it's called the barter system.....and bartering will become more and more common as this depression deepens.

summerthyme · May 28, 2010

How bad off this country really is compared to the 1930's is being masked, in great part, by programs put in place by FDR and the socialists and progressives who followed him: food stamps, welfare, Medicaid and Social Security.

We aren't hearing about seniors starving to death- yet. We aren't seeing pics of "soup lines" mostly because food stamps have provided the "privacy and dignity" of receiving aid more anonymously, but it also tends to hide the sheer magnitude of the problem. We've got roughly 40 MILLION people on food stamps!!! Think about what it would look like if that many people were lined up on a daily basis outside of soup kitchens, or begging for crusts of bread in the streets!!

And we're still in the early stages... no matter what BS Obooby spews about green shoots, the only ones I'm seeing for the most part are poison ivy. Yes, some machine shops are getting more orders- from the government. Who rejects somewhere around 30% of the delivered parts, therefore refusing to pay for them- but they refuse to return the rejects!! The employment figures are being jacked around with by stupid tricks like hiring and firing individual census workers four or five times, and counting EACH TIME as a "new job"!!

Green Co... you're only seeing a tiny, specialized part of the economy if you work in the oil industry, and that minor "boom" are is about to bust bigtime, thanks to BP and Obooby. And I'm not sure you'll be able to move anywhere in the US and find "blue collar" work for much more than minimum wage, unless you're a skilled machinist (and even then, I'm hearing of machine shops laying off long term workers, and then "offering" them a contract job- at the exact same money per hour; no benefits, nothing. That's what? A 40% cut in pay? At least!)

As the governments begin to run out of even funny money dollars to fund the programs that are hiding this giant disaster in plain sight, the wheels are going to start coming off, and the true magnitude will become apparent to everyone. But by then, we're going to be so far into it that the only thing to do will be to let it all crash and burn, and start over. It's NOT going to be pretty.

summerthyme

UncurledA · May 28, 2010

This is a thread we had better read through, all the way through, and slowly. We are being propagandized terribly by Bernanke, Geithner, Mainstream Media, Financial TV, and the White House. Some tidbits which will prove handy in collecting thoughts here, IMO:

... and they won't identify this as a depression until it gets so deep that people force the term into use.

Standalone great comment

Next:

The people who have jobs, think everyone who does not have one is lazy and not looking... eager to sit on their butts and accept unemployment...

How apropos. Same old human pride. Do the people who are so proud of their ability to have a job realize they don't even open their eyes in the morning, except by the grace and mercy of God ? The truly lazy will stumble and fall, but there are multitudes who are simply suffering enoormously due to the easy money destruction of capital that has taken place. And that is partly their fault, partly my fault, and partly your fault, for cluelessly embracing the debt money Ponzi scam all these years.

Pride goes before a fall. He who mocks the poor despises his own Maker.

Der nächste:

..and bartering will become more and more common as this depression deepens.

People who denigrate bartering as impractical never needed a bag of potatoes to feed to their family that night, or the family would go hungry. They're still imagining a world where their lawn gets mowed every week, their 401(k) is intact ( if not very good ), they have medical care available somehow, they have an automobile or three, they have their eye on that new 5-iron or GPS device. They can't imagine how it would be possible to line up all those trades for the goodies they have always enjoyed. It gets a heckuva lot simpler in the worst of times.

El siguiente y pasado:

We aren't seeing pics of "soup lines" mostly because food stamps have provided the "privacy and dignity" of receiving aid more anonymously, but it also tends to hide the sheer magnitude of the problem. We've got roughly 40 MILLION people on food stamps!!! Think about what it would look like if that many people were lined up on a daily basis outside of soup kitchens, or begging for crusts of bread in the streets!!

We'll never see what's happening if we can't update our thinking as this comment urges. Great observation, summerthyme. We need to get past the pictures from yesteryear, and stride as a colossus into the present managed perceptions.

Thanks, etc and all. Keep this thread going - I'm refreshing a lot of what I need to think about and keep in proper perspective, from it.

doctor_fungcool · May 28, 2010

Japan prices and spending slip, unemployment rises
Friday, May 28, 2010 4:12:02 AM · by The Magical Mischief Tour · 2 replies · 288+ views

TOKYO (MarketWatch) -- Japan's key price gauge showed the country remained in deflation's grip in April, while other data Friday showed spending remained weak and employment conditions worsened, suggesting the effects of the export-powered recovery have yet to fully permeate the domestic economy. The core consumer price index -- which excludes volatile fresh food prices -- fell 1.5% from the year-ago month, the Ministry of Internal Affairs and Communications said. Core CPI was down for the 14th consecutive month, and marked a bigger fall than March's 1.2% drop. The median forecast of economists polled by Nikkei and Dow Jones was...

doctor_fungcool · May 28, 2010

US money supply plunges at 1930s pace as Obama eyes fresh stimulus
The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.

deflation =s depression=s deflation=s depression....which came first..the chicken or the egg?

The black hole of depression cannot be fixed by flooding that hole with a ton of fiat dollars. That is only a temporary fix, and it will never work...

UncurledA · May 28, 2010

doctor_fungcool said:
US money supply plunges at 1930s pace as Obama eyes fresh stimulus
The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.

1.deflation =s depression=s deflation=s depression....which came first..the chicken or the egg?

2. The black hole of depression cannot be fixed by flooding that hole with a ton of fiat dollars. That is only a temporary fix, and it will never work...

From physics: 1. Vicious cycle = 2. black hole. 1. Vicious cycle = 2. Unstable feedback condition. Great analogy there, doc.

Troke · May 28, 2010

Well folks, lots of (wishful?) thinking here.

Now we all know we cannot have the Big D until O declares a bank holiday. I have read that on this very forum.

Now the purpose of unemployment, FDIC etc was to prevent the Big D. And it has. So to run around claiming we are in the Big D is bullsh*t. Not yet, anyway.

How will you tell? Easy. No cars on the street, nobody at WallMart, half the restaurants closing, nobody at the car dealers etc etc etc. That is what happened in the 1930's. I was around at the end of it and I heard the stories.

We ain't there yet so it is stupid to claim we are. Kind of like those folks running around here claiming we were in the Big R at the precise time that Gov revenues were the highest in history.

Are we heading for the Big D? Sure looks like it to me but we are not there yet..

BTW, 40 million on food stamps? That is about 12% of the population. Yet everybody 'knows' that the real unemployment rate is 20-25%. If so, why is not 20-25% of the population on food stamps? One would surely think that.

Anyway, I tremble for my grandchildren. I don't see a way out of this because of the large number of people in high positions who want us further into it so they can consolidate their power.

UncurledA · May 28, 2010

Pragmatism.

WildDaisy · May 28, 2010

I've been reflecting on this thread a while, and don't shoot me, but I'm going to "mind dump" some things that have been on my heart about watching this nation decay for years. I understand the times and violence that is coming, but searching for a deeper meaning and "hope" about it all.

A small part of me thinks that as terrible as a "Greater Depression" will be this go around, especially on the people who have been conditioned to "take" and not give, I also think it is a necessity for it to happen to get this country back to what it was.

Greed has dug its nails so deeply into the flesh of every American (yes, even most of us to an extent), that the only way to strip that from the mentality is to have people struggle and understand what the real cost and value of the things they need are. They will finaly learn the difference between wants and needs.

After the chaos and destruction settles from those who will riot at the thought of not being "spoon fed" any longer, they will come to realize that hard work is the only way to get what you need for your family. They either roll up their sleeves and work for it, or die. It will force communities to band together and families to come back together for survival. Know thy neighbor will have a whole new meaning, both in security and in survival.

Perhaps this will turn this country around. I don't know. But I know that it took major disasters in the bible to smack the Israelites out of their delusions and back to focusing on God. Perhaps this is our "wake up call" from Him?

I don't wish the suffering, chaos and rioting that will happen on anyone, but I think it is the only thing that is going to force some in this country to stop taking from others or for those getting taken from to fight back.

So part of me thinks that "hard times" will smack some people back into reality.

Anyone else know what I mean?

Dennis Olson · May 28, 2010

So far, I've made it about 1/3rd of the way down this thread, but feel compelled to answer what I've read so far.

First, many people who have lived through the first Depression have been saying that we ARE INDEED IN ONE. So TidesOfTruth's postulation above is erroneous. The only thing keeping the breadlines from forming is unemployment insurance and foodstamps, and if the government stops paying that out, THEN WATCH OUT! You're going to see crime like you never have, as desperate families turn to robbery to try and feed their families.

Second, and far more importantly, in past economic declines, the jobs have eventually returned. THIS CYCLE WON'T SEE THAT HAPPEN. The jobs that have left are gone for good, to Turd Whirled hell-holes at 10¢ a day. Our government has facilitated this since Reagan (thanks Ronnie! :kk1:

) all the up to the present. The jobs that will be "created" here in the US moving forward WILL NOT BE LIVING WAGE JOBS. At best, these jobs will mostly pay minimum wage. If each parent works two of those jobs full-time (IF they can even GET two full-time jobs each), they might be able to survive. (and if everyone is working two jobs, that cuts in half the physical number of jobs available to "other people".)

But how much time does that leave for raising children in a loving family environment? ZERO, that's how much. So when very young, the children (if the couples even CHOOSE to have children these days) will be "farmed out" to corporate "child-rearing centers", where they'll be indoctrinated in NewSpeak from a very young age. Then, as they grow, they'll return home from school to empty houses, unsupervised and undirected. With all that time on their hands, they'll be free to engage in illegal/immoral activities, and many will end up in the juvenile "justice system" for yet more indoctrination in NewSpeak.

Third, this country is NOT a manufacturing nation, nor is it a financeer. All the US does these days is push INFORMATION around between computers. We have effectively become a "virtual society", where DATA is the product produced. That CANNOT end well for us.

The trades (electrician, plumber, carpenter, etc) are filling up with illegals, pushing out Americans. Taxicabs and truck driving are filling up with immigrants, pushing out Americans. Service jobs have long been populated with illegal (and legal) immigrants, pushing out Americans. "Just doing jobs Americans won't" is the NewSpeak that the elites use to put the masses to sleep, thus allowing ever more illegals in to take our livelihoods away from us. (Why do you think Bush2, and now Obama, were/are so DESPERATE to get Mexican trucks running in the US? Because an average annual salary for a company OTR trucker is about $40-$50k, and the elites CANNOT allow that much money to be earned by "blue collar" Americans.)

No, we are definitely in a Depression, but THIS ONE WILL NEVER END. The first Depression ended with WW2, when we needed our manufacturing base as never before. THIS ONE will take us all the way to Mad Max, and the only POSSIBLE end will be when CW2 comes. Until that time, we're on a downward spiral that WILL NOT AND CANNOT BE STOPPED. Because TPTB *WANT* it to go this way. They've been shepherding our country and economy for decades toward this precipice.

Critical Mass has been reached. The oil disaster in the Gulf is just the exclamation point at the end of the statement. The sheeple are now officially panicking. They haven't stampeded yet, but as many of us here feel, by mid-to-late summer, TS will indeed HTF. And more and more of us are saying that if you're going to be somewhere for when "it" happens, GET THERE BY THE END OF JUNE.

The bloodbath we'll ultimately see will make Pol Pot's Killing Fields look like a summer day at the park by comparison.

The Greater Depression. Are you ready...?

UncurledA · May 28, 2010

Sure, lots of us know what you mean, bethshaya. I certainly don't presume you mean you "hope" we are in the unacknowledged stage of a Depression. You just see the cathartic value in it, as do many of us. The suffering that will result will bring great sadness to us all, and that is also anticipated. It does no good to always be assuming today will be OK; the bad will really hit later. That is not even really comforting, if you have a bent to ponder the abstract, as you have done. We have done the damage, and now we are masking it, which will make the reckoning that much worse.

As summerthyme said, we now have bread lines - they are just food stamps instead of an actual line. Unemployment insurance was meant only to cover the constant ongoing labor market transients. That is why it was limited to 13 or 26 weeks. The legislators at that time knew that a severe labor disconnect would require the government to excessively borrow to keep paying UB, and that would ultimately make the situation worse as private investment capital gets crowded out. So, they limited it, as it doesn't save anything in a long downturn, especially a deflationary depression. Now, in the throes of a major coming Depression, we have forgotten that, and choose to mask that essential problem, too. We are redefining unemployment into a completely worthless statistic - estimates of the real unemployment are all horrendously high, with the potential to drop precipitously with any hiccup in government borrowing credibility. The same logic, that "if we delay the symptoms, the disease isn't there", prevails in almost all the responses that we are trying in order to hide the real problem that is directly upon us.

We are doing everything but the right thing, because we are stubborn and PROUD. That was the Israelites' problem that led to the 400 year period of the Judges, with all its heartache and occupation and suffering. And, it was meant to bring them to thinking about what they were doing, as you said about this coming time, bethshaya.

Let me be clear: NO ONE is "wishing" for this, but it may have good effects along with the bad. The pragmatist, the materialist, sees only his coming material loss, and refuses to acknowledge it until it is crushing him. The spiritual application can be applied by the wise much sooner than the actual arrival of the destruction, much as the prophets of old urged everyone to heed the word of the Lord and repent.

We as a nation have much to repent OF. What ?, someone says. Other countries are a lot worse than us ! Comparative ethics is the road to hell. We all fall very short of God, that is the bottom line, and why a Depression would be applied to us, not the "other countries". They will have their chastening, too, if the Lord directs.

etc · May 28, 2010

lectrickitty said:
... and they won't identify this as a depression until it gets so deep that people force the term into use.

During the 30's they called it "hard times", or "difficult times", but they didn't call it a depression until later.

Dad lived thru it and he warned me a few years back that another depression is coming. He seen the signs and recognized them for what they are. We keep hearing the word "unsustainable" being tossed around, but nobody is making the changes needed to make it sustainable.

Here's some interesting stuff I read earlier:

These are some astute observations. I can only wonder what they will call our epoch.

etc · May 28, 2010

bethshaya said:
A small part of me thinks that as terrible as a "Greater Depression" will be this go around, especially on the people who have been conditioned to "take" and not give, I also think it is a necessity for it to happen to get this country back to what it was.

It's not a Depression, it's a correction. It's inevitable and it's necessary in a sense. A lot of paper wealth will disappear into the void it came from.

etc · May 28, 2010

The fraud of the "unemployment insurance"

Unemployment is caused by recessions, which are caused by debt. Fact. Debt causes depressions and busts. Rothbard wrote at length about it.

Now their solution to the unemployment problem is to borrow FRNs, or just plain print them, going deeper into debt, to pay the unemployed. It doesn't take a 3-digit IQ to see where this is going and the magnitude of the crash it's generating. A few months later the prices rise, the jobs are even more difficult to find and the net result is zero, or worse.

You cannot create wealth out of zeroes in a computer database.

We are just spinning down into the negative feedback loop.

ECON Yes we are in a Great Depression

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