We're Screwed

Jun 6, 2010 at 5:56 PM

By Brian Beyer

Neeraj Chaudhary argues that we will soon be in the midst of a Great Depression much worse than the first. He opens with a frightening but nonetheless true revelation:

With the mainstream media focusing on the country's leveling unemployment rate, improving retail sales, and nascent housing recovery, one might think that the US government has successfully navigated the economy through recession and growth has returned. But I will argue that a look under the proverbial hood reveals a very different picture. I believe the data shows that the US economy is badly damaged, and a modern-day depression has begun. In fact, just as World War I was originally called The Great War (and was retroactively renamed after World War II), Peter Schiff has said that one day the world will refer to the 1929-41 era as Great Depression I, and the current period as Great Depression II.

What do you think? Will the Austrian School finally be redeemed? Or will the Keynesians be able to conjure up another way to delay the inevitable?

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you can only delay the inevitable for so long

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Submitted by Anonymous (not verified) on October 10, 2011.

It would technically be "Great Depression III", as the original Great Depression took place between 1873 and 1879. This was later renamed the "Long Depression", and today largely recognized not as a true depression, but an era of price deflation (although, there was stagnation in real wages and production).

While I think that there is a another drop in employment and production to come, given the distortions in the structure of production being caused by monetary inflation, I'm not sure if we'll have another great depression. The Great Depression was largely a result of interventionism in the form of wage floors, massive deficit spending, and economic programs (such as the NRA), which made recovery much more difficult. One of the major differences between the current "recession" and the Great Depression is that today's Fed is less restricted in the ability to inflate the money base, and as a result we have this veil that leads economists to believe that we're undergoing some sort of recovery.

We will have a Great Depression if and only if this monetary policy becomes no longer effective (that is, people lose confidence in the dollar and there is hyperinflation) and there is government intervention, or if the Federal Reserve decides to freeze monetary expansion and there is government intervention (which will probably lead to another bout of monetary expansionism anyways). This leads me to believe that over the long-run, in X amount of years, the dollar will have to collapse.

If this occurs and the government does not intervene, I don't think there is any reason to have a long-term depression that lasts as long as the Great Depression did (let's put this at October 1939 through 1939, although this should probably be extended to 1944). The discoordination could otherwise probably be cleared in relatively little time.

Submitted by Jonathan M. Finegold Catalán (not verified) on June 6, 2010.

it will probably be more like the chicago school if we had major economic reform. All they need is a disaster to distract the people as they quickly pass laws to cut social programs and privatize everything, all the while claiming that it will help the economy in the long run.....it could happen....

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They are going to try to save the global economy by convincing the G20 to accept a reserve global basket currency to diversify risk. This won't work in the long run, but may allow them to prop up the failed system a bit longer.

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What predicament does this put us, the American people, in? What choices do we now have before us? It is very unfortunate to have ever reached a point like this, but we are ultimately left with just two choices: to stand idle and continue to watch the federal government grow, or to withdraw consent. Both are dangerous but for far different reasons. Continuing to submit to the federal government will inevitably lead to an oppressive regime (or maybe it already has) that neither upholds nor admires individual liberty, free markets, and peace. Here, it is the oppressive regime that is the danger. Withdrawing consent, however, will ultimately lead to a much smaller state, if any at all. The benefits of a small, even nonexistent, state are plenty: individual liberty, free markets, and peace. The danger, if this path is to be taken, lies in the uncertainty of how to achieve these ends. Brother Mfc 7840W | Gateway Lt3119U 11 | Hp Pavilion Dv6 Thanks

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