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Fri Aug 23, 2019, 08:04 PM

The Trump era could wind up like the 1930s

After nearly a decade of good times, things, all of a sudden, looked wobbly. The stock market fell sharply. The president — a wealthy man who had never been elected to office before, but was very sure of himself, thank you very much — reassured Americans that all was well and the future bright.

Even so, the president thought one thing was needed to make things better: tariffs on America’s trade partners. Many economists and lawmakers argued against this, saying it would hurt trade, kill jobs and slow, if not contract, the economy. The president dismissed their reasoning, and into place the tariffs went.

As economic uncertainty mounted, many investors moved into gold, which was perceived as a safe haven (so much so that the Treasury feared it might run out of bullion).

And even though the economy had previously been good, many Americans feared immigrants were coming to take their jobs and sought to keep them out. Sure, Europeans were generally OK, particularly if they were from places like Norway, Sweden and Germany — in other words, if they looked “American.” The mood toward others was far less hospitable, and efforts were made to bar entire ethnic groups.

More ominously, the anti-immigrant mood dovetailed with a resurgence by white supremacist groups like the Ku Klux Klan, which widened its hateful, racist agenda to include (along with blacks, of course) Jews and Catholics. Elites — well-educated Americans who lived in urban areas — were also despised. Klan membership soared to an estimated 2.5% to 6.5% of the population. Think about that. If that was today, that would mean some 21 million Americans in the KKK.

In short, it was a hateful, divisive, dangerous time — even though the economy had been good.

If the past is prologue, then the situation that President Trump finds himself in — and our country finds itself in — increasingly resembles what we’ve seen before. Don’t get me wrong: This isn’t 1929. But there are worrisome signs. Hate crimes are on the rise: The FBI reported 7,175 hate crimes in 2017 — a 17% jump from 2016. Among a sizable minority of Americans, there’s an anti-immigrant frenzy, the likes of which hasn’t been seen in this country since the 1920s. Emma Lazarus’s poem on the Statue of Liberty — “Give me your tired, your poor, your huddled masses yearning to breathe free” — that was just meant for Europeans, the White House now claims. It’s another reminder, and a dangerous one, that history can be whitewashed for the ignorant.


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Reply The Trump era could wind up like the 1930s (Original post)
Yo_Mama_Been_Loggin Aug 23 OP
virgogal Aug 23 #1
kurtcagle Aug 23 #2

Response to Yo_Mama_Been_Loggin (Original post)

Fri Aug 23, 2019, 08:20 PM

1. One good thing happened in the 30s,I was born.😀

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Response to Yo_Mama_Been_Loggin (Original post)

Fri Aug 23, 2019, 09:52 PM

2. The analogy is disturbing close

Recessions tend to alternate between residential bond recessions and equity recessions. In 1919 there was a mild recession and marginal recovery, which by 1920-21 had slipped into a more severe recession, based primarily on land deals in Florida going bad (this is where the "selling swampland in Florida" meme first made its appearance), exacerbated by economic instability in Europe after World War I.

The next recession, marked by the selloff in equities on Black Thursday, Oct 24, 1929 actually begun back in August of that year after the market hit its peak in June. Hoover had initiated a tariff war with Europe at the time, and lowered the tax rate for the highest bracket from 25 to 24% while providing no real relief to anyone else. He was also very much an isolationist as mentioned by the OP.

The recession of 1919-1921 hit its trough in late 1920, with about ten years to the 1929 recession. The trough of the 2018 recession was in April of 2009, and it's been about ten years. Bond recessions usually have a characteristic "dead cat" bounce shape, which the 2008-09 recession did. Equity recessions come in two flavors - relatively mild and typically focused on overbuilt sectors (cf., the Tech Winter of 2000-2002), or deep recessions more akin to the Great Depression, characterized by collapsing institutions, strong deflationary pressures and the freezing of the capital markets. and credit.

We avoided a credit market collapse in 2009 by the skin of our teeth and some fast thinking by Obama in cooperation with the Fed. This cooperation is anathema to someone like Trump. My suspicion is that there was some hope by Trump to actually push the recession into his second term, where he could then impose austerity measures that would benefit the wealthy, but it's coming faster than he'd expected, and is now threatening his re-election.

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