Skip to comments.Slouching toward the 1930s (We are headed for an unavoidable event worse than the Great Depression)
Posted on 10/31/2011 6:49:53 AM PDT by SeekAndFind
The current economic crisis rivals the one of the 1930s. Despite shameless propaganda by government and its cronies in the media, people understand that the situation is getting worse. Consumer confidence continues to decline as does confidence in the future.
We are headed for an event that history will record as worse than the Great Depression. It is unavoidable.
The Level of Debt
The principal reason for the dire prediction is the level of debt outstanding. Current debt levels are simply not sustainable. Assets and cash flows cannot support or service this debt.
No economic recovery can occur without massive debt reduction. As shown below, current debt is much higher than the 1930s:
As a percentage of GDP, debt is at an all-time high. Immediately prior to the Great Depression US debt was about 200% of GDP. It rose briefly to 300% as a result of massive government interventions to combat the Depression.
At the beginning of the current downturn, debt was about 370% of GDP. It is about 400% currently.
Eyeballing the chart from 1870 forward, debt levels are generally in the range of 150% of GDP. That appears to be the norm for the last 140 years. Only in the 1920s and recently did debt exceed 180% of GDP. Even funding World Wars I and II did not drive debt above 180%.
(Excerpt) Read more at americanthinker.com ...
What can I say about 1981 to 2011?
We had a few periods where the GOP held the Presidency, the Senate and the House. We had many where the GOP held at least one arm of Congress. If I recall correctly, the Dems held the Presidency, the House and the Senate for only 4 of those 31 years. For 20 of those 31 years we had a Republican president.
Whatever happened to the veto pen? The Republicans are more at fault here than the Dems. We all know the Dems would spend us into oblivion in search of the socialist nirvana. We have always elected Republicans to halt that tide.
They failed us.
Is that chart national debt? Or private debt? Or both?
That’s why the current Romney/Perry/Cain/Gingrich circus is just so much noise. No candidate who threatens to actually change the established order will get within ten miles of a major party nomination. In fact, Ross Perot was probably the last credible threat to it.
The Republicans are more at fault here than the Dems. We all know the Dems would spend us into oblivion in search of the socialist nirvana. We have always elected Republicans to halt that tide.
They failed us.
Has to be both
the democrat plantation and the rinos
agree on failure.
This time that base is gone and there will be no way to "rebuild" our way out of it. It's depressing as hell...
There is also no industrial base to sustain a military conflict on a world war scale. No, not every war will nukes be used. Nukes will not be used....
Unless the crack up happens in the next couple years its not going to happen.
Because US trade balance will swing positive five years from now.
The US will stop being a net energy importer.
The cost gap with China will close in a couple years for key industries.
The trillion plus US dollars parked overseas will be reinvested in the US because of changed US policies.
You should sober up before posting.....
I actually have to agree with ckilmer. If the trade balance swings back in our favor we will see a massive economic gain. It is becoming cheaper and better to produce here in the US. A Republican Pres and Senate has a chance to start drilling right here. And, there are trillions in private equity firms just waiting for the right signals to be invested in American businesses as foreign nations have sucked even worse than we have.
I still do not see those trends happening yet but they are a very real possibility.
I doubt that it really matters. The Great Depression wasn't caused by debt. It was caused mainly by a drastic shrinkage of the money supply, and it was exacerbated by the "progressive" fiscal, trade and regulatory policies started by Hoover and expanded by Roosevelt. I believe the high level of debt, whether public or private or both, was chiefly a symptom, not an important cause.
Likewise, the current Great Recession hasn't been caused by debt. It's due rather to:
(1) incredibly terrible housing policies pursued by the feds from the 1990's onward, which culminated in the 2008 collapse of both housing and financial markets;
(2) the huge waste of national resources already caused by the Democrats' naive and outmoded "Keynesian stimulus" program; and
(3) the giant economic uncertainties snd worries engendered by future burdens that will flow from Obamacare and other ill-conceived policies so loved by the Democratic Party's minions.
All of which is not to say that our current level of debt is a good thing. No, whether it's a symptom or a cause, it's extremely dangerous and simply unsustainable -- though I continue to believe that debt (neither public nor private) isn't really the basic "cause" of our current economic pickle.
Moreover, I gotta agree basically with CKilmer and CodeToad that we can get out of the mess by patiently following straightforward pro-market economic policies and by taking the reins off American producers of fossil fuels. It may be a long and hard slog, but a GOP POTUS and a GOP Congress ought to be up to the job.
(That's if we don't suffer a Carrington event or an Iranian EMP attack. But those are items to be discussed elsewhere!)
Of course, there's the opposite side of the record... the Karl Rove/George Bush side where they tried to "triangulate" Democrat positions... Medicare Drug Benefit, Education Bill, Farm Bill, et al.
I'll give the GOP credit for at least mouthing some of the right things... but not for standing up for them.
Here's a chart I did on the subject of political budgeting...
Actually you could employ the same chart in the counter-argument.
Our debt levels are so extremely out of control (and the European charts certainly are worse) that the Saudis and the ChiComs have to be quaking in their boots at the thought of their best customers suddenly being unable to swing a purchase.
At that point all power actually swings to the debtor. It is what gives Donald Trump the illusion of being a wealthy man to this day.
Since our money is worth what we say it is (i.e. not tied to gold or anything tangible) a big, corrupt, smelly deal will eventually be cut to keep the balls in the air. Because neither side can afford to see them fall.
If National debt is around $14.9 trillion and GDP is around $14.5 trillion, then I’m guessing the “Total U.S. Debt” used in this graph must include everything else such as state and municipal debt, business and personal debt, financial debt, credit card debt, kitchen sink....etc.
And with his "on again, off again" campaign, exactly how credible a threat was *HE*?
Like Barack Obama, Ross had the lobes
Democrats see to it that we get all of the government that at least 50% of us want.
Republicans see to it that our taxes are kept relatively low.
The only people that lose are those not born yet. And they don't count.
bump for later
Yep, Federal debt & GDP are about the same right now (~$15 Trillion)...where are they getting the numbers for debt to equal 300% of GDP? Unfunded Social Security & Medicare liability? State and local debt?