Friday, August 12, 2011
Bad as the American economy has been, here are a couple of charts that remind us that the Great Recession has been child's play compared to the Great Depression.
Anon Attorney here. I was going to write a comment in response but the poster ewmayer stole my thunder in his 8:15 pm comment in the linked article.
Synopsis: Between 1930-34 the US government borrowed approximately 10% of GDP for Keynesian support. Between 2008-2010 the US government has borrowed approximately 30% of GDP. We are using excessive debt to create the illusion of wealth generation.
Anon Attorney makes a valid point. It's entirely possible that the impending total collapse of American finances will make the Great Depression look like child's play.
What happens when the great sugar daddy on whom everyone is dependent (feds) runs out of sugar?
For a more colorful analogy, what happens to the slaves when the sultan disappears?
I'm not seeing the graphs off the links.
Further to Anon Attorney's point, the absolute numbers are staggering. Do you know what you could do with a trillion, were it well spent?
I just started reading "Inflated" by Chris Whalen, subtitled "How Money and Debt Built the American Dream", point of which is that since our founding the USA has almost always been for free and easy money and credit. I suppose it'll show that we went especially wrong in the Greenspan era when the Fed would never allow even a slow-down, so that we created bubble after bubble, with moral hazard all around.
Our Big Banks have Big Problems. We still haven't dealt with this. It's not just that they're Big, it's because they're Broke, although the former has been a driver of the latter.
Can anyone tell me why its commonplace to have derivatives that are whole number multiples of their reference assets, and that they only trade OTC, so no one really knows the totality of what the fuck is going on? We went insane with this.
We need a Global Debt Jubilee. It's in the Book of Leviticus ... a year in which "slaves and prisoners would be freed, debts would be forgiven and the mercies of God would be particularly manifest". Then we start over ... with little banks ... put in post offices. Lloyd and Jamie can work as tellers.
Over to politics, if George W Bush and Sarah Palin had a baby, it'd be ... Rick Perry!
Perry could win. I'm still trying to figure him out, but the left have made Sarah so radioactive that Perry might be the only choice. (Romney doesn't count, as I've beat on here before). If so, the left would be besides themselves, which is one reason to like him. Imagine a guy who brags about shooting a coyote to protect his dog, while jogging. Who jogs with a gun? Damn!