Sadly no one can tell any of this to the blissfully stoned masses at large; so they will have to learn these things a day late and many dollars short, as did those who invested with Bernie Madoff...
There is no way to compare today's economic lethality to that of the 1930s. Back then, there existed a gold standard which constrained credit expansion during the 1920s. Austrian-school economists tell us that a credit bubble had formed, likely due to fractional reserve lending, the collapse of which led to the massive credit deflation in the 1930s. Be that as it may, today's bank deposits here in the U.S. of roughly $4 trillion are a minor portion of the $60 trillion in total credit. Meanwhile, there are myriad other derivative instruments having notional value estimated at a ludicrous $700 trillion.
A Globalized Economy
The other major difference, and the theme of this blog is that the U.S. economy is now fully globalized with complex links between resource producers, final goods producing nations, foreign credit flows etc. Back in the 1930s, the U.S. economy was far more autonomous and closed.
Smoot-Hawley Bullshit
We are constantly told that the Smoot-Hawley tariffs of 1930 were a major factor in the Great Depression. Here below however, we see that in the early 1930s, total exports as a % of GDP, fell from ~6% of GDP to ~3.5% of GDP, which doesn't even take into account the GDP bolstering reduction in imports, which was the entire point of the tariffs. How the hell could a reduction in trade affecting roughly 2.5% of GDP lead to a 30% drop in GDP between 1929 and 1933? It's an asinine theory as usual - yet more bullshit.
Gross Exports as % of GDP
Gross Exports as % of GDP
Mind the Output Gap
The real issue of course is that today's real economy has been systematically obliterated by outsourcing for 30 years straight. So as we also see in the graph above, on a relative basis, the U.S. is roughly 3x more leveraged to global trade now it was back in the 1930s. As Ponzi World would suggest, we live in a massively leveraged pyramid economy dependent upon ongoing inbound capital flows from export mercantilist nations (aka. China) to prop up demand. Most/all U.S. demand is concentrated in the hands of an ever-dwindling number of well paid upper middle class "consumers" (and of course billionaires, who save much more than they consume).
These well paid "yuppies", running the economy straight into the ground, are essentially the middle-men to the East-West arbitrage. So when that arbitrage ends, so will the fat bonuses and shopping sprees. Demand will collapse like a cheap tent.
Reversion to Communism
Suffice to say that when the Third World nations realize that they've been paying into a global economic ponzi scheme that stole their savings, then the globalized ponzi will end abruptly to say the least. At that point, those countries will revert back to whatever system offers the best chance of feeding their children as opposed to enriching billionaires.
Reversion to Communism
Suffice to say that when the Third World nations realize that they've been paying into a global economic ponzi scheme that stole their savings, then the globalized ponzi will end abruptly to say the least. At that point, those countries will revert back to whatever system offers the best chance of feeding their children as opposed to enriching billionaires.
Romney's "47%" (of government "dependents")
To add to this point about the already gaping wide potential output gap, this gap has of course been growing for years now. Labor participation peaked 15 years ago. Boomer retirements alone can in no way account for the collapse in labor participation.
This line is already going down and the economy is still above recession. Now picture this going straight down. If the economy is at a 63% labor participation rate now, just think of where it's heading...(To get to his "47% of dependents", clearly Romney was including many working poor, because this shows 37% non-employed, not 47%). Apparently he is against even assisting the working poor.
The "Everyone For Themselves" Historical Experiment. Now Ending Badly.
The United States and the World have never been wealthier than they are today. As I've shown many times, billionaire wealth has grown steadily since the bottom in 2009.
"Global wealth has reached a new all-time high of USD 241 trillion, up 4.9% since last year and 68% since 2003, with the USA accounting for 72% of the latest increase"
Still, despite this unprecedented wealth, and commensurate collapse in employment indicated above, foodstamp aid has now been cut twice by Congress. The "everyone for themselves" mentality is already in overdrive and the fucking markets haven't even tanked yet. What sort of mindset does that portend on the other side of the collapse?
The Lost Boys Are Getting Nervous
Frat boys and various other apologists for abject greed are desperate to spin a specious narrative blaming Keynesian economics as the reason why 85 billionaires now control as much wealth as the bottom half of humanity. These testosterone-depleted boy-men, barely capable of looking after themselves much less anyone else, have no capacity to fully acknowledge that Keynesian economics was hijacked from its originally intended purpose of preventing depression. Few, if anyone alive today actually experienced the Great Depression. Those living in Eastern Europe during the fall of the Soviet Union arguably went through something very similar during the 1990s. According to Dmitry Orlov, the currently configured U.S. will not fare relatively well under similar circumstances. This is not hard to believe given the current abject complacency and the deeply entrenched "everyone for themselves" mentality. Ultimately, it will be that back-stabbing refugee mentality that causes by far the most misery and damage to the U.S. economy in the days ahead.
Who Will Feed the Children?
We can debate all day as to which economy is "the best" in the long-run - and I mean for everyone, not just the handful of billionaires and frat boys who benefit today. However, the real question on the table is how to get from point "A" collapsed ponzi scheme, to point "B" well-run economy. Because that will require much more political and pragmatic finesse than just mindlessly droning on about the fucking Little House on the Prairie.
Level the Playing Field
Let's be real, as long as the coming reset obliterates the self-absorbed frat boys and their dumbfuck ideas, then in my mind it will be successful, regardless of where this all ends. Or as one woman said after 2008 about bankers, "I'm honestly not worried about my own job, just as long as they are standing in the bread line next to me".
That or jumping off of a tall building...
No bailouts. No Wall Street. No problem.
