Tuesday, September 16, 2008

Will We Have Another Great Depression?

Well, one thing I learned about history is that it always repeats itself.

The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's.

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2 comments:

David Blomstrom said...

I think the chances of experiencing another Great Depression - potentially much worse than the original Great Depression - are very good.

I'm no economist, and, even if I was, so what? Economics is complex, and even the world's most renowned economists often disagree on major issues.

But I understand the basic law of economics: There's no free lunch.

Rampant corruption, senseless wars in Iraq and Afghanistan, job outsourcing, attacks on workers' salaries and benefits, corporatized schools - all of these are taking a continuing toll on the economy. Frankly, I'm amazed that we've survived as long as we have. Is our survival due to the fact that other nations are more or less propping us up?

If so, that's yet another danger sign. Corporate America is due for some major blowback, and if our former friends decide to pull the plug...

And the economy isn't our only problem. If our economy does go belly up, will the government help us, or will corporate interests size the opportunity to engage in more plunder and beat back any attempts to hold them accountable.

Frankly, I think we should have declared war against Bill Gates and other corporate pimps long ago.

David Blomstrom

Tug said...

Yeah, what are those old sayings? History repeats its self, what comes around goes around, what goes up must come down... Sure feels like we are headed in that direction.