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Old 06-03-2018, 10:27 AM
 
Location: Pennsylvania
8,952 posts, read 3,114,068 times
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Quote:
Originally Posted by nickerman View Post
My unprofessional take on it is that a recession that goes on and on is eventually called a depression. But there is probably much more to it.
A recession is when your neighbor loses his job.

A depression is when you lose your job.
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Old 06-03-2018, 10:32 AM
 
5,046 posts, read 3,327,862 times
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Quote:
Originally Posted by nickerman View Post
My unprofessional take on it is that a recession that goes on and on is eventually called a depression. But there is probably much more to it.

A recession is like you get punched in the face.

A depression is like you get punched in the gut.
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Old 06-03-2018, 10:40 AM
 
Location: Paranoid State
12,671 posts, read 9,420,097 times
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Q: whats the difference between a recession and a depression


A: About $250K/year
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Old 06-03-2018, 10:40 AM
 
8,277 posts, read 3,452,461 times
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Quote:
Originally Posted by C2BP View Post
FOR EVERY INFLATION THERE IS AN EQUAL AND OPPOSITE DEFLATION .
This is nonsense. Economics isn't physics.

Deflation can certainly happen, but what reason for the duration and intensity to reflect on or equate to any specific past inflation?
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Old 06-03-2018, 03:02 PM
 
Location: Myrtle Creek, Oregon
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Quote:
Originally Posted by Mircea View Post
It's a series of recessions.

If you look closely, the Great Depression actually starts in 1925, with the 1925 Recession, followed by the 1928 Recession, the 1930 Recession, the 1935 Recession, the 1937 Recession, the 1946 Recession, the 1949 Recession, and then the three recessions during the eight-year Eisenhower Administration, with the last ending in 1961.

There was a primary cause, and then a series of aggravating factors or circumstances.

The primary cause was structural unemployment created by technology and changes in industrial engineering.

All manufacturing was piecemeal, that is an individual worker produces a product. Henry Ford changes that in 1912-1913 by introducing the assembly method of production. Over the next 10 years, it is slowly implemented by other manufacturers, then rapidly implemented in the mid-1920s. The assembly line method of production is much more efficient, yet it requires fewer workers.

Unemployment begins to ramp up.

At the same time, manufactures are taking advantage of new technology enabled by electricity. Hand and foot operated lathes, mills, borers, planers and drill presses are now electrified, so that one man operating a electric lathe can do the work of 6 men operating manual lathe that uses a treadle.

The use of this new technology and manufacturing methods is pervasive by the 1930s, generating more unemployed workers.

There were numerous aggravating factors, mainly the failure of the Federal Reserve to act. The fact that the Republican-controlled House and Senate stupidly enacted what was then the highest tax increase in US history (yes, a federal excise tax was even put on chewing gum), plus the Smoot-Hawley Tariffs, and their failure to act in the absence of the Federal Reserve didn't help. The Dust Bowl, which displaced an estimated 2.5 Million people didn't help, either. FDR's policies had adverse effects as well.

What did solve the problem -- only temporarily -- was war.

1936 $24.2 Million
1937 $46.1 Million
1938 $86.3 Million
1939 $143.7 Million
1940 $873.1 Million

Those are the revenues collected by the government solely for fees on war materiel export licenses. In other words, if you wanted to export anything classified by the government as "war materiel" you had to have a license which cost a nice fee. Consider that in 1940 the US government collected $6.5 Billion in revenues, so $873 Million is 13.5% of all revenues collected....just for licenses to export war materiel.

When WW II ends, naturally you go back into recession, since the problem of structural employment was not totally resolved, and end up with four more recessions over the next 10 years.

What ultimately resolves the problem of structural employment is the slow adaptation of military technology for consumer consumption. That results in the creation of numerous new businesses and scores of new jobs, which eventually absorbs the unemployed.

Could it happen again?

A change in agricultural techniques bars the recurrence of a Dust Bow. The Federal Reserve is much quicker to act, and Congress now knows better than to raise taxes during a recession, so aggravating circumstances wouldn't come into play.

If the implementation of automation occurs at the same rate technology was implemented in the 1920s, then, yes, it would create structural unemployment.

However, the rate of automation will be so slow, that structural unemployment will be barely perceptible. People will adjust over a few decades to one-wage-earner families, like it was in the early 1970s, instead of the majority of households being two-wage-earner families as it is now.

There is one aggravating factor I didn't mention and that is Deflation. Throughout US history, all periods of Inflation have been followed by periods of Deflation. Not all periods of Deflation are harmful or particularly evident. Most people didn't notice the deflationary period that followed the Inflation of the 1970s, but it was there. It was slightly worse during the 1930s, and was particularly harmful after the Inflation in the 1860s.

Since I believe there will be a rather severe period of Inflation beginning about 7 years from now, possibly caused by the reaction to the next recession, I also believe there will be a period of Deflation immediately following, but I'm unable to gauge its possible effects.
The dust bowl was not dust storms, it was drought. Cover crops hold the dust in place, and pumping the Oglalla Aquifer would ameliorate a drought, at least in the near future, but an extended drought like the one in the 1930s would turn the Midwest into an economic desert.

Deflation is scary to the big money interests, but generally beneficial to consumers. I took advantage of deflation in the housing market after the 1982 recession, and benefited greatly from stock deflation in 2009. Many people used the opportunity afforded by deflation in combination with economic stimulus policies to move into home ownership with minuscule mortgage interest rates. While growing up, I knew a man who purchased a profitable business for pennies on the dollar in the 1930s that made his family very wealthy. It's hard to feel sorry for financial behemoths when they take a haircut. Historically, periods of deflation have coincided with rapid economic growth.
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Old 06-03-2018, 03:36 PM
 
Location: Ohio
17,991 posts, read 13,233,625 times
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Quote:
Originally Posted by C2BP View Post
How does this insanity since 2001 and especially after 2008 ends? In debt exhaustion, and a real deflation will hit and reduce the society to poverty, equality and soberness. FOR EVERY INFLATION THERE IS AN EQUAL AND OPPOSITE DEFLATION . Remember, good things do not last forever.
Quote:
Originally Posted by Hoonose View Post
This is nonsense. Economics isn't physics.

Deflation can certainly happen, but what reason for the duration and intensity to reflect on or equate to any specific past inflation?
It isn't nonsense. It's reality.

From the Colonial Period through the present, every period of Inflation has been followed by a period of Deflation, without fail, and without exception.

There has never been a period of Deflation without there first existing a period of Inflation, but deflationary periods are hardly equally opposite to inflationary periods.

And I'm not talking about the piddly 2.4% Inflation rate since Year 2000 (it's been 3.2% since 1990, but that's because the rate of Inflation was higher in the 1990s averaging 3.1% per year).

I'm talking about double- and triple-digit Inflation rates.

You had an inflationary period from 1752-1766 followed by Deflation from 1767-1780.

We've been down this road before...A drought lasting about 10 years trashes colonial farmers md-1760s to mid-1770s......now prices are depressed....the monarchy taxes farmers to death.....the colonies declare independence......there's a war.....the Continental Congress needs supplies for Washington's Continental Army.......the farmers sell their crops on credit to the Continental Congress.....the Continental Congress defaults on its debt obligations to the farmers.....the States under the Articles of Confederation, plus the counties, plus local governments levy over-burdening taxes on farmers who hadn't seen a profit since 1759.....the farmer's rebel.....Shay's Rebellion and the other are the most famous, but there were actually dozens and dozens of small scale rebellions.....which led to the Constitution.

The next inflationary period is 1807-1820, followed by Deflation from 1821-1834. Those two periods weren't particularly bad.

But the Inflation from 1861-1875 was horrendous, sometimes 100%-200% annually. Because of the Civil War, you had double-digit Demand-pull Inflation on top of Monetary Inflation, which is a nasty combination. The price of shoes sky-rocketed in both the North and the South, and people complained bitterly about that. The 1860s through the 1880s was probably the worst period economically in the US.

Then you had a period of Inflation from 1916-1930 that fluctuated quite wildly between 10% and 50%, followed by Deflation for about 12 years to 1942.

Your next period is 1971-1984, which wasn't all that bad, with annual rates running only 10%-15% at times, and the deflationary period that followed wasn't particularly harsh, either. I think the earlier experiences allowed Volcker and Co to do a much better job managing it.

I predict the next Inflationary cycle will start in 2025, lasting about 12 years, before Deflation sets in and last maybe 10-15 years. I'm thinking it will be worse than the 1970s, but not as bad as the 1920s, so maybe 25%-35% annually.

The government's response to the coming recession and the duration of that recession might factor heavily.

It would be rather extraordinary for the economy to expand for 132 months, which would be about July 2020.

I'm guessing the Federal Reserve's three planned rate hikes will bring the economy to a screeching halt in first or second quarter 2019.
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Old 06-03-2018, 05:12 PM
 
Location: OC, CA
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A recession = when the other guy loses his job
A Depression = everyone is screwed and lose their jobs.
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Old 06-03-2018, 05:55 PM
 
721 posts, read 398,145 times
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Quote:
Originally Posted by Mircea View Post
It isn't nonsense. It's reality.

From the Colonial Period through the present, every period of Inflation has been followed by a period of Deflation, without fail, and without exception.


One thing we need to face as a nation and as a modern world. Economic Depression is a recurrent fact. We need to deal with it, not paint it up in fancy new language, acronyms, mitigate it with magical QE and ZIRP, like our doctors do when facing the DEATH QUESTION.

THE FED's Low-Interest rate response to the recent (silent) DEPRESSION was SOCIALISM FOR THE RICH. Ok; it worked, sort of. We avoided (delayed?) the Great Depression we feared. Real Capitalists are rolling over in their grave however. What we did is send PUBLIC MONEY (from your and my pockets) to struggling corporations so they could buy back shares, thrust money in shareholders' (and corporate insiders') pockets and camouflage earnings' weakness through retirement of outstanding shares, making weak corporations dependent upon taxpayer money for continuing survival.

It was the ultimate ANTI-CAPITALIST'S government intervention that created this illusion of economic recovery and growth. Did it save Capitalism, or undermine it?
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Old 06-03-2018, 06:58 PM
 
8,277 posts, read 3,452,461 times
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Quote:
Originally Posted by C2BP View Post


One thing we need to face as a nation and as a modern world. Economic Depression is a recurrent fact. We need to deal with it, not paint it up in fancy new language, acronyms, mitigate it with magical QE and ZIRP, like our doctors do when facing the DEATH QUESTION.

THE FED's Low-Interest rate response to the recent (silent) DEPRESSION was SOCIALISM FOR THE RICH. Ok; it worked, sort of. We avoided (delayed?) the Great Depression we feared. Real Capitalists are rolling over in their grave however. What we did is send PUBLIC MONEY (from your and my pockets) to struggling corporations so they could buy back shares, thrust money in shareholders' (and corporate insiders') pockets and camouflage earnings' weakness through retirement of outstanding shares, making weak corporations dependent upon taxpayer money for continuing survival.

It was the ultimate ANTI-CAPITALIST'S government intervention that created this illusion of economic recovery and growth. Did it save Capitalism, or undermine it?
Where is the equal and opposite with modern money?

https://inflationdata.com/Inflation/..._by_Decade.asp

What goes up must come down? Does inflation occur with any regularity after deflation?
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Old 06-03-2018, 08:19 PM
 
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This


Quote:
A proposed definition of depression includes two general rules:
  • a decline in real GDP exceeding 10%, or
  • a recession lasting 2 or more years.


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