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Opinion: Chilling ways the global economy echoes 1930s Great Depression era
marketwatch.com ^ | February 19, 2016 | John Coumarianos

Posted on 02/19/2016 5:55:43 AM PST by John W

One view of what caused the Great Depression in the 1930s is that the Federal Reserve failed to prevent a collapse in the money supply.

This is the famous thesis of Milton Friedman's and Anna Schwartz's A Monetary History of the United States, 1867-1960, and it was, more or less, the view of Ben Bernanke when he was chairman of the Federal Reserve.

The global economy today resembles that of the 1930s in several ominous ways.

Financial author Edward Chancellor recently called attention to a paper written by Caludio Borio, head economist at the Bank of International Settlements, that provides a fuller picture of the causes of the Great Depression. The paper also draws parallels between global economic conditions that led to the rise of protectionism in the 1930s and our situation now.

The paper's thesis is that "financial elasticity" characterizes both the pre-Depression global economy and today's global economy. Elasticity refers to the buildup of capital imbalances such as money flows into emerging markets because of low rates in developed markets.

(Excerpt) Read more at marketwatch.com ...


TOPICS: Business/Economy; Editorial; News/Current Events
KEYWORDS: depression; globaleconomy; greatdepression
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1 posted on 02/19/2016 5:55:43 AM PST by John W
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To: John W

The current crop of socialists will be far more determined to take control for good.


2 posted on 02/19/2016 5:57:06 AM PST by jessduntno (Steady, Reliable, and (for now) Republican - Donald Trump, (D, R, I, D, R, I, R - NY) /s)
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To: John W

The reason it looks that way is because we are in the beginning of a global deflationary depression. Act accordingly.


3 posted on 02/19/2016 6:07:46 AM PST by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped)
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To: John W

IBTSHL - In before the Smoot-Hawley lie.


4 posted on 02/19/2016 6:09:48 AM PST by central_va
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To: Georgia Girl 2

place-hold for later!

Ps. any advice on what acting accordingly includes?


5 posted on 02/19/2016 6:21:44 AM PST by CottonBall
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To: Georgia Girl 2

“The reason it looks that way is because we are in the beginning of a global deflationary depression. Act accordingly.”

How does one act accordingly (besides not rack up debt)????


6 posted on 02/19/2016 6:23:26 AM PST by blueyon (The U. S. Constitution - read it and weep)
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To: CottonBall

During a deflationary cycle cash is king.


7 posted on 02/19/2016 6:24:55 AM PST by central_va
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8 posted on 02/19/2016 6:33:16 AM PST by DoughtyOne (Facing Trump nomination inevitability, folks are now openly trying to help Hillary destroy him.)
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To: blueyon

Stock up on food, ammo and PM. Get a garden going and get some chickens. That’s what we are doing.


9 posted on 02/19/2016 6:43:03 AM PST by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped)
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To: blueyon

Stock up on food, ammo and PM. Get a garden going and get some chickens. That’s what we are doing.


10 posted on 02/19/2016 6:43:04 AM PST by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped)
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To: central_va
During a deflationary cycle cash is king.

That's old school. Electronic enforcement of negative interest rates, will ensure that your "cash" deflates along with everything else.

1. Every withdraw becomes fractional, e.g. you only get 97%.

2. The Feds require every person's pay to be direct deposited.

3. Cash withdrawals are limited and at some point the Fed announces a currency change. Each family can only turn in X-amount of the old currency in exchange for X-amount of the new currency.

This has already been done, just not here yet.

And transacting physical gold/silver will once again be made illegal.

Copper might be a good bet.

11 posted on 02/19/2016 6:45:31 AM PST by SampleMan (Feral Humans are the refuse of socialism.)
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To: John W

The world’s central banks have pumped $12.3 trillion dollars into the world’s economy, since 2008, in quantitative easing to stave off the worldwide depression. Of that $12.3 trillion dollars, $4.5 trillion was from the U.S. government to prop up our economy.

After all that, the world’s economy is still coming apart at the seams.

Hang on, it’s going to be a bumpy ride.


12 posted on 02/19/2016 6:55:42 AM PST by r_barton (We the People of the United States...)
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To: central_va

Simple question. Cash windfall...pay off 28 year mortgage at 4.5 percent or keep cash?


13 posted on 02/19/2016 7:06:53 AM PST by Gadsden1st
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To: Gadsden1st

In a depression you may be able to refi an 1% or even less! The trick is you need to keep your job. It is risky business deflation. I am in debt and vulnerable too.


14 posted on 02/19/2016 7:09:18 AM PST by central_va
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To: central_va

“The trick is you need to keep your job. “

Well, that’s it for us then.

We went Galt, quit working and paying the fascist government, moved to a rural area.

Hope it doesn’t backfire.


15 posted on 02/19/2016 7:42:20 AM PST by CottonBall
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To: central_va

That is the problem. Just retired.


16 posted on 02/19/2016 7:52:49 AM PST by Gadsden1st
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To: Gadsden1st

How many years left on mortgage?


17 posted on 02/19/2016 9:22:07 AM PST by John W (Under One Year And Counting!)
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To: John W

28 years, 75 years old, healthy, wife 63, healthy.

Pay off mortgage and then we both die early...wasted the money paying off a house soon. Live long and faced with paying mortgage when no possibility of earning extra money with part time work.


18 posted on 02/19/2016 9:31:52 AM PST by Gadsden1st
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To: Gadsden1st

Couple years ago we had a buyout offer from a former employer vs. later monthly retirement and decided to take it and pay off our mortgage even though the tax implications for that were poor. We just decided we weren’t going to get rid of all of our debt before retirement any other way. Now we’re working on everything else as I’m still working full time at 60 and she is babysitting and receiving a couple minor pensions and social security at almost 68.


19 posted on 02/19/2016 9:50:32 AM PST by John W (Under One Year And Counting!)
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To: John W

Looks like we will take the same path. Can’t live for today and not worry about debt. I guess that is what makes us who we are. Been retired a couple of months and starting to get restless. It’s a curse!

Thanks for feedback.


20 posted on 02/19/2016 9:57:27 AM PST by Gadsden1st
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