The difference between then and now is debt. Household debt today is 3x what it was in 1946 - the last and the only date in which conditions were at all similar.
Not only is the federal government in as much debt as they were in 1946 and 1947 - so are state governments and local governments. Total debt is up about 50 percent from 1946-7.
The response of the Truman government was to cut back the size of the debt and spending by around 50 percent, slashing the heavy war debt and getting the government on the right footing.
The other problem is this - look at the demographics. We are not only seeing the destruction of the current workforce (especially among those under the age of 50), we are seeing historic lows for the overall employment for this sector.
We haven’t even seen yet when the Boomers start to retire (as they have been for the last 2,3 years. The youngest Boomers are now hitting their peak earning years.
Basically, if you aren’t a boomer, this economy is going to **** you over.
Entitlement growth alone, is projected to consume 100 percent of total US revenues by 2030. This doesn’t include any spending on national defense whatsoever. Entitlements already cover 2/3rds of the entire American expenditures, and rising very rapidly.
This would, unless we see serious cutbacks around 30 percent deficits at this point. At present, under the O regime, we are looking at deficits of around 1.5 trillion dollars off revenues of about 4 trillion dollars. That’s close to almost 30 percent overspending now.
This - bluntly - cannot continue without interest rates on US T-Bills increasing.
We have seen the first move towards a higher t-bill regime with interest rates climbing from 1.5 percent to 2.5 percent. Now this might not seem like much, but this is just the beginning.
When the demographic effects start to bite (and they haven’t yet done so), what then? We are right on the cusp of this.
Who’s going to earn the money needed to pay for boomer pensions when the ratio is 1:1 or even worse, given the terrible employment numbers?
Then you aren't grasping the modern era.
No one in the oilpatch is deciding to drill or frack a new well based on whether or not the U.S. is in a federal budget Sequester or not.