Posted on 02/11/2009 8:06:54 PM PST by databoss
Below is an excerpt from a commentary originally posted at www.speculative-investor.com on 5th February 2009.
In our 3rd December 2008 commentary we explained that the probability of an imminent great depression was uncomfortably high. Our reasoning, in a nutshell, was that the recent credit bubble was much bigger than any previous credit bubble of the past century and that the policymakers of today were blundering much more rapidly and on a much grander scale than their counterparts of the 1930s.
We can't over-emphasise that the Great Depression did not become "great" due to the economic problems signaled by the 1929 stock market crash, but, instead, due to government policies undertaken to counteract the economic problems. The policy errors we are referring to do NOT include the Fed's so-called failure to prevent the money supply from shrinking, but do include government actions designed to boost prices, expand credit, create employment, and re-distribute wealth. These actions delayed necessary adjustments, and as a result it took more than 15 years for the economy to do what it should have done in 2-3 years. As Franklin Roosevelt's own Treasury secretary, Henry Morgenthau, lamented in an address to Congressional Democrats in May of 1939: "We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong ... somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises ... I say after eight years of this Administration we have just as much unemployment as when we started ... And an enormous debt to boot!"*
(Excerpt) Read more at safehaven.com ...
Mr. Little,
Get a freaking grip, there is not going to be a depresion, remember, your view depends where you stand.
If you want to see devastation you will see it.
Man Up and make your own future.
I am To the right of Reagan.
Keep in mind: These people are selling people on selling the economy short. Not saying they’re wrong, just saying that their opinion is motivated by their need to sell gold, not their objective analysis of the facts.
"Finally, forewarned is forearmed. Our economic outlook could prove to be too pessimistic, but if you prepare for a depression -- by, for example, getting out of debt and building up substantial reserves of cash and gold -- and things turn out better than expected, you won't lose much. On the other hand, you will probably lose a lot if you prepare for a rosy scenario and a depression actually occurs."
I'm preparing for the worst.
Meanwhile... put all your gold in this bag and mail it to me, and I promise I’ll pay you several dollars per ounce.
Memo to Pollyanna:
Remember, there are two sides to every coin and you just might be wrong.
It is not foolish to see trouble coming and prepare for it.
Remember the ant and the grasshopper.
.
According to Wikipedia Morganthau wrote this whole passage in his diary, not in an address to Congressional Democrats. Also, despite what he said, unemployment had in fact been cut in half by 1939. Also he should have written "...after *six* years of this Administration ...".
And how many of these were "busy work" jobs by the government?
The communists claimed unemployment didn't exist. And it didn't. However, when shopping you had to go through 4, 5 or 6 people just to check out. Busy work.
Gross Domestic Product (ref. 1929 dollars in millions) Year GDP 1929 101,444 1930 91,513 1931 84,300 1932 70,682 1933 68,337 1934 74,609 1935 85,806 1936 95,798 1937 103,917 1938 96,670 1939 103,736 1940 112,961 1941 126,237 Source: National Bureau of Economic Research, NBER Series 08166.
| Year | Unemployment rate |
|---|---|
|
1923-29 |
3.3 |
|
1930 |
8.9 |
|
1931 |
15.9 |
|
1932 |
23.6 |
|
1933 |
24.9 |
|
1934 |
21.7 |
|
1935 |
20.1 |
|
1936 |
17.0 |
|
1937 |
14.3 |
|
1938 |
19.0 |
|
1939 |
17.2 |
|
1940 |
14.6 |
|
1941 |
9.9 |
|
1942 |
4.7 |
BTW, I believe that a worse depression than the last will be likely now: deflation continuing for unnecessary products, continuing high prices for necessities, followed by a potentially horrid inflationary period.
“Coming?”
ROTFLMAO
You are not an island.
You are not immune to what the idiots in government do.
While I think a “depression” is (or should I say was) unlikely, the geniuses in congress and the White House may well manage to pull one off.
Debt problems are not improved with more debt.
Time will tell.
And how many of these were "busy work" jobs by the government?
Footnote 49 on this page gives the figure that unemployment went from 22% in 1932 to 11% in 1939. But Table 2 on the same page uses different sources to compare unemployment with and without factoring in WPA jobs, so apparently the "cut in half" statement I made may only true if you include those jobs.
I grew up visiting post offices, traveling on roads, and enjoying very nice state parks that were all built by the WPA. I don't consider the work that built this useful infrastructure to have been "busy work jobs". I'm sure that there were some.
People were actually starving during the Great Depression. I don't have a problem with the fact that the New Deal reduced the number of people who were starving.
Well, we certainly won’t have to worry about dams or parks or roads because the Watermelons will see to it that none are built. Not that the 0bama administration would propose any anyhow.
And needed or not, the article wasn’t about how wonderful the New Deal was. Rather that Roosevelt’s policies, including the New Deal, extended the Depression thus starving the same folks you were talking about. Policies that Obama is now implementing. We are going down the same road. And we won’t build anything.
What got us out of the Depression was World War II (though our debt has never recovered since). The Dems don’t understand that.
I have often wondered where all the naysayers and vilifiers of exTexan, I think that was his nick, went after he was proved right. Remember he said housing prices were going down, and every time he mentioned this topic there were tens of people who said some really awful things about him. Where did they go? Do they still post? I would be ashamed to if I so publicly displayed my ignorance.
At one time I thought about keeping a list of the people who were so nasty... Then I could throw their ignorant and mannerless comments back in their faces when next they posted about something of which they knew nothing, Then I figured out they would just get a new nick and keep posting. I see that is happening, the same kind of people who knew nothing of the housing bubble now know nothing about depressions and governments actions being the cause... But does that give them pause to think? Nooooo! Now they post about the banking mess as they believe they are as smart as Mr. Bernanke, like that is a good thing.
Thanks for posting....of course all the Smoot-bashers will be out in full force
Interesting that in 1938, the GDP went down. During 1937...the Smoot tariff was reduced...in ‘38 the GDP dropped again.
The fiscal and spending policies were the real problem with the Great Depression
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