“’It’s not as bad as the great depression’ isn’t a great campaign slogan...”
Why isn’t it as bad as the great depression? What’s different this time around? Why, we didn’t let the market crash. We didn’t let things go down, we supported them, kept everything with it’s nose above water.
That’s great for those on the risky end of the curve for investments. We sneer sometimes at those in the pool of investment who have been lifted up to keep them from drowning.
Only problem is: They did it by flooding the market. The water’s rising for all of us, and there’s nothing left to ‘lift’ us up. We can’t ‘switch on the great works’ economy generator as we didn’t let all the inefficient companies die. We didn’t have wholesale culling of the union fed public employee unions - opening that market to lower wages and more employment, so that’s another anchor around our necks.
If Washington tomorrow decided to spend a trillion dollars to ‘bootstrap’ the economy, all that would happen is the same bad companies would get the same contracts they would have gotten before, only it’s being called stimulus now.
We have to let things get worse before they can have any hope of getting better. It means killing the beast called ‘public employee union’, it means culling out benefits, and returning welfare to where it belongs, a private social program run by service groups, including that embarrassment of standing in line for hours for free food.
We have to give people a reason to want to make things better. Or this slow flooding of the market will drown each and every one of us.
Who are your favorite Congressmen?
“Why isn’t it as bad as the great depression? What’s different this time around? Why, we didn’t let the market crash. We didn’t let things go down, we supported them, kept everything with it’s nose above water.”
No, actually, things would have been better then and now had we let things take their natural course. It wasn’t really a matter of letting the market crash back when. That was a surprise. We saw it coming more recently, and nevertheless allowed it to plummet—as if we could stop it—though not to the same low.
It is a falicy, anyway, that market crashes cause depressions. They don’t. They disrupt things, but the same capital, the same savings, in other words the same wealth is around before as after the crash. It only serves to change people’s thinking, and in many cases to change ownership of them. But the point is, even though it makes the ride bumpy it ultimately makes them better, not worse, because it clarifies the situation. It bursts bubbles, and so forth, so that you’re not wasting as much along unprofitable lines.
Had in 1929 and 2008 the U.S. government kept to its own business as it did in the 1890s and 1921 the economy would have corrected itself. It always does, and even now that’s what Washington is waiting around for it to do. How quickly it does so, however, depends upon how much it is messed with. During the Great Depression we messed with it more than we ever had before, what with the Smoot-Hawley tariff, the bank holiday, going off the domestic gold standard, and all the associated wonder falling under the term “new deal.” During this most recent recession we messed with it plenty; perhaps not so unprecedentedly, but in a sufficiently stupid manner.
Therein, though, lies the difference. What we’re doing now is old hat, and therefore leads to less regime uncertainty, the bain of the Roosevelt economy. Also, setting aside for the issue of savings, we are a vastly richer society now then we were then. Going from 50k a year to welfare...err, I mean unemployment “insurance” payments, is not so dramatic as going from a working family farm to starving to death. Also also, and relatedly, we redistribute more wealth than we did back then, and even if this makes for a fundamentally less free and sound economy it as well does make the drop-off less obvious. Oh, if only the nightly news had breadlines to broadcast (blaming Bush, of course, not the current administration).
To get back to savings for a moment, herein lies a big difference. Unlike back when both personal and government savings are at about zero, and we are only able to maintain our standard of living, such as it is, because the dollar for now is the world’s reserve currency. Back when, even after a decade of depression, people were able to dip into their pockets—largely involuntarily—to pay for WWII. We’d never be able to manage that now, though we do manage to pay for war-sized welfare. Bigger than that, actually, since our wars count for at most about 20 percent (that’s for all of defense, which, to be clear, the last few go-arounds included two wars and then some) of the budget compared to the nearly 80 percent spent on “social programs.”
All of which means there’s a depression bigger than ‘29-47 (or whatever it was, precisely) waiting in the vague future.