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We had this discussion before and the moderator deleted it all, so I don't want to get too much into it again.
But one difference between the Great Depression and now is that we stimulated the economy back then with saved money (federal government had a huge budget surplus), not freshly printed money. All of the debt was written off when the banks were allowed to crash, so it wasn't weighing down the system.
Also, Americans in the 1950s-1970s were more than willing to pay off the debt incurred from the WWII spending with 70%-90% tax rates, something that's absolutely unthinkable today.
The Great Depression was mainly caused by monetary contraction, because of poor policy-making by the American Federal Reserve System and continued crisis in the banking system. The Federal Reserve, by not acting, allowed the money supply as measured by the M2 to shrink by one-third from 1929–1933, thereby converting a normal recession into the Great Depression. The downward turn in the economy, starting with the stock market crash, would have otherwise been just another recession.
The Federal Reserve allowed some large public bank failures --in particular the New York Bank of the United States-- producing panic and widespread runs on local banks, and the Federal Reserve sat idly by while banks collapsed. If the Fed had provided emergency lending to these key banks, or simply bought government bonds on the open market to provide liquidity and increase the quantity of money after the key banks fell, all the rest of the banks would not have fallen after the large ones did, and the money supply would not have fallen as far and as fast as it did.
Here's a graph of the national deficit. (Notice the actual drops during Carter and Clinton, and the massive increases during other administrations) The US was in considerable debt after WWI, but was getting a handle on it until the Depression. Finally they started issuing money into the economy and pulled us out of 25% unemployment.
Now we have timid half-hearted measures, partly in fear that banks will vacuum up the extra money, and partly in hopes that it will heal, balanced on the backs of regular workers and the unemployed.
The end of a recession doesn't mean that things are back to where they were before the recession started. It just means things have stopped getting worse.
It can take many years for things to recover back to where they were. Or in some extreme cases like Japan, many decades.
You are absolutely correct. While the recession has ended, we haven't made great strides in recovery. We have a president that promised us hope and change.... and he didn't follow through. We have a congress that is not supportive. The only thing functioning properly are our markets.
The Great Depression was mainly caused by monetary contraction, because of poor policy-making by the American Federal Reserve System and continued crisis in the banking system. The Federal Reserve, by not acting, allowed the money supply as measured by the M2 to shrink by one-third from 1929–1933, thereby converting a normal recession into the Great Depression. The downward turn in the economy, starting with the stock market crash, would have otherwise been just another recession.
The Federal Reserve allowed some large public bank failures --in particular the New York Bank of the United States-- producing panic and widespread runs on local banks, and the Federal Reserve sat idly by while banks collapsed. If the Fed had provided emergency lending to these key banks, or simply bought government bonds on the open market to provide liquidity and increase the quantity of money after the key banks fell, all the rest of the banks would not have fallen after the large ones did, and the money supply would not have fallen as far and as fast as it did.
Here's a graph of the national deficit. (Notice the actual drops during Carter and Clinton, and the massive increases during other administrations) The US was in considerable debt after WWI, but was getting a handle on it until the Depression. Finally they started issuing money into the economy and pulled us out of 25% unemployment.
Now we have timid half-hearted measures, partly in fear that banks will vacuum up the extra money, and partly in hopes that it will heal, balanced on the backs of regular workers and the unemployed.
Below is something you may be interested in reading. They also goes into more detail as to why the banks aren't lending this freshly printed money. It's from the Roosevelt Institute, a progressive not-for-profit entity created to forward the legacy of FDR.
They admit that debt is the problem, both on the side of the consumer struggling to pay off their underwater mortgage and the banks who are not making a profit off of that mortgage. While they admit some inflation is good (and I agree), they also admit much of that debt has to be written off first through some form of bankruptcy.
Right, that article is a good explanation. Conservatives have no idea what's really going on, and have things bass ackwards.
In addition to lending held back, there are tens of $trillions locked up in bonds to fund this military buildup. This is like a double-edged sword: the 1% fund the government, which has been bent to create these specious Wars that consume masses of resources... which resources are provided by that very 1%. This is wonderful for the 1%, but a death spiral for the nation.
As it stands now this national debt can NOT be paid back. We now owe $50,000 for each man, woman, and child in the US, in addition to all their personal debt. Conservatives think that it's not The People who pay for this debt. They think that it's OK and that it's handled in some magickal way, maybe with fairy dust, witness the massive buildup of debt during each of their administrations. Why do they Hate America?
But, the only two options now are:
- 'monetize' the debt, ie print so much money that due to inflation the debt shrinks to a manageable amount; or
- declare national bankruptcy.
Personally, I am in favor of the Blue States seceding to form a new nation which lives by our values, something closer to those of northern Europe, and based in their best ideas. Disavow this national debt which we didn't agree to and have always fought. Every other developed nation in the world manages to give all their citizens free university for the deserving, free healthcare, and a dignified retirement for seniors, and yet we (the richest nation in the world) can't afford it. Why? Because we have chosen Guns, not Butter. Let the Red States pay this debt which they argued so vociferously for. TAKE SOME PERSONAL RESPONSIBILITY FOR A CHANGE, REDS! Let the Red States create as regressive a Thunderdome as they can stand, and build 20' walls to keep them out for when they realize what they've done.
Romney’s excursus in Boca Raton was not a gaffe. It was the true intent of these radical Rightists, braised by the fevered extremists in his party who have asserted that today Ronald Reagan himself would not receive their vote.
What to do? Buy as much real estate as you possibly can, and leverage it to the hilt. When hyperinflation came along in post-WWI Germany, debt stayed the same but wages increased to the point where some could pay off their mortgage with one month's pay. And vote Nader.
Right, that article is a good explanation. Conservatives have no idea what's rally going on, and have things bass ackwards.
In addition to lending held back, there are tens of $trillions locked up in bonds to fund this military buildup. This is like a double-edged sword: the 1% fund the government, which has been bent to create these specious Wars which consume masses of resources... which resources are provided by that very 1%. This is wonderful for the 1%, but a death spiral for the nation.
As it stands now this national debt can NOT be paid back. We now owe $50,000 for each man, woman, and child in the US, in addition to all their personal debt. Conservatives think that it's not The People who pay for this debt. They think that it's OK and that it's handles in some magickal way, maybe with fairy dust, witness the massive buildup of debt during their administrations. Why do they Hate America?
But the only two options now are:
- 'monetize' the debt, ie print so much money that due to inflation the debt shrinks to a manageable amount; or
- declare national bankruptcy.
Personally, I am in favor of the Blue States seceding to form a new nation which lives by our values, something closer to those of northern Europe. Every other developed nation in the world manages to give all their citizens free university for the deserving, free healthcare, and a dignified retirement for seniors, and yet we can't afford it. Why? Because we have chosen Guns, not Butter.
Romney’s excursus in Boca Raton was not a gaffe. It was the true intent of these radical Rightists, braised by the fevered extremists in his party who have asserted that today Ronald Reagan himself would not receive their vote.
I agree with most of your points, but you are missing one big thing I am intimately familiar with, being married to a European. Whom do you think has been paying their defense bill in Europe?
The US has been so they have left over money for great social programs. Once they have to start paying for their own guns their butter is going to shrink. That's why I support Ron Paul, and my wife knows this. Yeah America is Emperialistic nation, but Europe got a free ride for the last 50 years paying for no defense budget. Let everyone defend themselves we are broke and frankly I don't care about the Middle East. It's always been at war and will always be at war. I want to be like Switzerland, forget Scandanavia, where there is no sunlight in winter. The Swiss have one of the best standards of living in the world. The country is clean and the people obey the law, almost to a fault.
Europeans learned a long time ago that Butter is better and more equitable for The Public than Guns. They learned a long time ago the ills that massive concentration of wealth into a few tall piles, creates economic and social instability.
I lived in W. Germany for several years in the '70's (intel), and even then I was shocked to find that their standard of living was higher than ours. Over there the national wealth is much more evenly divided amongst the populace, in stark contrast to here where the top 5% OWN 60% of American wealth and the bottom 60% own 5% of the nation's wealth! This is why we used to have progressive taxation, and why we were so successful after WWII; a 92% tax rate on top earnings. Not any more.
Europeans learned a long time ago that Butter is better and more equitable for The Public than Guns. They learned a long time ago the ills that massive concentration of wealth into a few tall piles, creates economic and social instability.
I lived in W. Germany for several years in the '70's (intel), and even then I was shocked to find that their standard of living was higher than ours. Over there the national wealth is much more evenly divided amongst the populace, in stark contrast to here where the top 5% OWN 60% of American wealth and the bottom 60% own 5% of the nation's wealth! This is why we used to have progressive taxation, and why we were so successful after WWII; a 92% tax rate on top earnings. Not any more.
You really think Europe would not have had another major war with out the US occupying as a stabalizing force in 50 years? Or Russia wouldn't have steam rolled them like they did the rest of the Europe that wasn't protected by the US?
And yes I am familliar with German standards of living as I have extended relatives living in Frankfurt at this moment. The only reason Germany has done so well is the Marshall Plan friend and the fact we paid their defense bill. My Czech wife and her country got royally hosed by the US and dished off to Soviets. Why don't you ask her what her standard of living was or those in Romania, Hungary, or Yugoslavia. You need to bone up on your history.
We were needed in the decade after WWII indeed as a stabilizing force.
But you don't seem to know why WWI and WWII started in the first place. Economic instability. I'm not going into detail. We only needed to stay there until the European economies recovered, which happened pretty quickly in the west.
You are frightened that the USSR would have bulldozed into Europe if we weren't there? You resent the fact that Russia made the east satellites? You don't know that Bolsheviks helped us win WWII. You don't know that it was not at all certain we would win. Now it seems like a foregone conclusion to those unstudied. America and the USSR were allies and participating equals, and in fact the USSR sacrificed far more than we did. We didn't like their style of government, but that wasn't the point. Europe was divided by the victors, and that's the only way it could be.
Russia invading post-war Europe? Are you high? When we had the A-bomb? They knew that we would back the west, whether we were there or not. Our presence was not needed once Europe was stabilized.
We were needed in the decade after WWII indeed as a stabilizing force.
But you don't seem to know why WWI and WWII started in the first place. Economic instability. I'm not going into detail. We only needed to stay there until the European economies recovered, which happened pretty quickly in the west.
You are frightened that the USSR would have bulldozed into Europe if we weren't there? You resent the fact that Russia made the east satellites? You don't know that Bolsheviks helped us win WWII. You don't know that it was not at all certain we would win. Now it seems like a foregone conclusion to those unstudied. America and the USSR were allies and participating equals, and in fact the USSR sacrificed far more than we did. We didn't like their style of government, but that wasn't the point. Europe was divided by the victors, and that's the only way it could be.
Russia invading post-war Europe? Are you high? When we had the A-bomb? They knew that we would back the west, whether we were there or not. Our presence was not needed once Europe was stabilized.
Actually I know most of the histoy you speak of, since I was a history major before switch to sociology. That's fine we will agree to disagree.
Europeans learned a long time ago that Butter is better and more equitable for The Public than Guns. They learned a long time ago the ills that massive concentration of wealth into a few tall piles, creates economic and social instability.
I lived in W. Germany for several years in the '70's (intel), and even then I was shocked to find that their standard of living was higher than ours. Over there the national wealth is much more evenly divided amongst the populace, in stark contrast to here where the top 5% OWN 60% of American wealth and the bottom 60% own 5% of the nation's wealth! This is why we used to have progressive taxation, and why we were so successful after WWII; a 92% tax rate on top earnings. Not any more.
What you fail to ignore is why the "1%" has accumulated all the wealth. Americans have been trying to maintain their standard of living with stagnant/declining wages. Same thing happened during the great depression. Debt/credit spending became the main driver of the GDP which essentially violated the principles of the free market. The rich got richer while the middle class loaded up on debt.
Another problem is the housing market... Housing prices have always historically remained the same adjusted for inflation. For some reason or another, people started treating the housing market as an "investment". Housing took off for no reason whatsoever. The Demicraps also reduced regulations and encouraged a bubble in housing. Of course, you can't legislate prosperity, so it came crashing down, just like the credit/debt bubble.
And why does Germany have such a high standard of living? Strong unions, backed by an export driven, rock solid manufacturing sector. The quality of life is maintained because while their manufactured goods are more expensive, they are command enough quality to be worth paying more for. Those with money don't have to shop at Walmart for cheap, breakable goods. America's economy failed to compete in this regard. You can't expect a 1st world standard of living if your products/services are not up to snuff. When our kids start catching up to other 1st world nations in test scores, than we may be able to compete.
Nobody is suggesting the Republicans are perfect, but the other side of the table has plenty of dirt on their hands as well.
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