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Depressions are a natural part of the economic system. They are absolutely necessary to bring the system back into balance after decades of excessive debt and declining work and value ethics. To try to avoid the pain of depression only exasperates the moral decay that rewarding irresponsible behavior creates.
Nikolai Kondratiev a Russian economist discovered a cycle now called K waves or long waves explaining this. His work so threatened the soviet system that he was executed in 1938.
Bubbles and depressions are not an economic phenomenon, they are a result of human behavior. Behavior that is influenced by times of prosperity and of poverty. Unless people experience the consequences of irresponsible behavior, they will not learn the lessons necessary to create the next period of prosperity. To attempt to avoid the natural corrections of economics and human behavior shows a basic lack of understanding of both.
The Tea Party has it right. We need to balance our budgets. We did it 1992 without creating a depression, in fact it helped the economy. Economics is not a scoreboard on a football field. It is an interactive supply of money and goods that must be kept in balance. There are always consequences for excess in everything. Debt is no exception
Depressions are a natural part of the economic system. They are absolutely necessary to bring the system back into balance after decades of excessive debt and declining work and value ethics. To try to avoid the pain of depression only exasperates the moral decay that rewarding irresponsible behavior creates.
Nikolai Kondratiev a Russian economist discovered a cycle now called K waves or long waves explaining this. His work so threatened the soviet system that he was executed in 1938.
Bubbles and depressions are not an economic phenomenon, they are a result of human behavior. Behavior that is influenced by times of prosperity and of poverty. Unless people experience the consequences of irresponsible behavior, they will not learn the lessons necessary to create the next period of prosperity. To attempt to avoid the natural corrections of economics and human behavior shows a basic lack of understanding of both.
The Tea Party has it right. We need to balance our budgets. We did it 1992 without creating a depression, in fact it helped the economy. Economics is not a scoreboard on a football field. It is an interactive supply of money and goods that must be kept in balance. There are always consequences for excess in everything. Debt is no exception
I can see how a recession is necessary. But a depression?
The basic theory is that a free market economy causes both prosperity and confidence. Periodic recession’s correct excesses temporarily, but people understand that in the long run investments pay off.
The problem is that at the end of a 60 or 80 year cycle, investor confidence becomes unreasonable due to the fact they have never seen a real serious correction. The reality of a depression is not something they can relate to, so they invest with a great deal of recklessness. Remember a few years ago when people said you could never loose money in real estate? That it always went up?
This overconfidence causes and economic bubbles which ends in depression. The depression makes a lasting impression on the next couple of generations who lay the groundwork for the next expansion. And the cycle repeats. We are all products of our experiences.
The basic theory is that a free market economy causes both prosperity and confidence. Periodic recession’s correct excesses temporarily, but people understand that in the long run investments pay off.
The problem is that at the end of a 60 or 80 year cycle, investor confidence becomes unreasonable due to the fact they have never seen a real serious correction. The reality of a depression is not something they can relate to, so they invest with a great deal of recklessness. Remember a few years ago when people said you could never loose money in real estate? That it always went up?
This overconfidence causes and economic bubbles which ends in depression. The depression makes a lasting impression on the next couple of generations who lay the groundwork for the next expansion. And the cycle repeats. We are all products of our experiences.
Yup, people always seem to think they found the fail-safe plan and the bubble will just keep growing.
depressions are typically not part of the business cycle
Only when extremes happen like in 1928.
Glass Steagall was enacted to prevent situations like that from happening again but Glass Steagall got repealed and we are now right back where we started..extremes.
Only when extremes happen like in 1928.
Glass Steagall was enacted to prevent situations like that from happening again but Glass Steagall got repealed and we are now right back where we started..extremes.
Yes, we can thank the lovable Larry Summers for that. This is an engineered depression so I do not think it is necessary, although inevitable.
Depressions are a natural part of the economic system. They are absolutely necessary to bring the system back into balance after decades of excessive debt and declining work and value ethics. To try to avoid the pain of depression only exasperates the moral decay that rewarding irresponsible behavior creates.
Nikolai Kondratiev a Russian economist discovered a cycle now called K waves or long waves explaining this. His work so threatened the soviet system that he was executed in 1938.
Bubbles and depressions are not an economic phenomenon, they are a result of human behavior. Behavior that is influenced by times of prosperity and of poverty. Unless people experience the consequences of irresponsible behavior, they will not learn the lessons necessary to create the next period of prosperity. To attempt to avoid the natural corrections of economics and human behavior shows a basic lack of understanding of both.
The Tea Party has it right. We need to balance our budgets. We did it 1992 without creating a depression, in fact it helped the economy. Economics is not a scoreboard on a football field. It is an interactive supply of money and goods that must be kept in balance. There are always consequences for excess in everything. Debt is no exception
I agree. In theory, depression don't have to be necessary. After all, human nature could change. But in practice, they are necessary because human nature doesn't change--or if it does, it's only at a glacial pace. I wish human nature was different. But wishing doesn't make it so. I definitely think we are headed for a real depression in my lifetime. I don't think the government is going to be able to prop up the economy like it has been. At some point, the bill always comes due.
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This is an engineered depression so I do not think it is necessary, although inevitable.
