Economy
Related: About this forumWe're coming up on 1937
http://atimes.com/atimes/Global_Economy/GECON-02-170913.htmlWe're coming up on 1937
Sep 17, '13
By Martin Hutchinson
Five years after the 1929 Wall Street Crash, the US economy was in deep trouble but beginning to enjoy a vigorous recovery from the depths of a very unpleasant depression. The rest of the world, on the other hand, with the notable exception of Britain, was mired in Depression and in several cases Fascism.
This time around, five years after the Lehman crash, we have avoided the Fascism, but the world economy is recovering only feebly. In the 1930s, the US was again plunged into deep depression in 1937, an indication that policymakers had got it wrong. This time around, different mistakes have been made but the likely outcome appears to be very similar.
There is still considerable discussion about the policy mistakes that converted the 1929 stock market crash into the Great Depression, but three failures stand out. First, the 1930 Smoot-Hawley Tariff zapped world trade just as it was in a fragile position, causing its volume to decline by 65% from the 1929 peak.
Second, while the Fed kept interest rates low, they did not adjust properly for the decline in money supply caused by bank bankruptcies from late 1930 onwards. This caused a sharp decline in prices that made real interest rates very high - the debt deflation about which Ben Bernanke has nightmares.
Demeter
(85,373 posts)Doesn't look like it from where I'm sitting. We've just avoided the violent aspects of fascism (by exporting them to the Middle East). Only this time, WE get to be Germany, too. Germany is playing a secondary role, this time around.
Early days, though. There's plenty of time for a full flowering.
stillwaiting
(3,795 posts)It's the behind the scenes stuff that doesn't get much media attention that is pretty brutal for more and more living within its belly.
The ruling elite seem to have learned all the lessons they needed.
The majority/masses of the population don't even know, for the most part, what they are fighting against, and they certainly don't know the prescription to begin to reverse the trend we've been on for the past 3 to 4 decades.
A job well done by the psychopathic elite.
AnneD
(15,774 posts)right out of my mouth. I guess PRISM, Patriot Act, state sanctioned waterboarding, and Drone strikes are quickly forgotten.
I refuse to drink the KoolAid, even if Obama is serving it up.
MannyGoldstein
(34,589 posts)In those years, unemployment halved and GDP rose 8+% per year.
Instead, we got triangulation, appeasement, and a predictable continued decline for the 95%.
Also, the unemployment bump in 1937 is overstated because it traditionally doesn't include the many millions in the WPA and similar government work programs.
Warpy
(111,169 posts)We're coming up on 1929. When the derivatives casino collapses, everything will be taken with it.
roamer65
(36,744 posts)I would actually be increasing QE, probably to around 120 billion per month. Also our Congress should be passing meaningful jobs programs.
We also need another Glass-Steagall Act.