Is U.S. Economy Headed Towards a Depression?
Wednesday November 14, 2007
A reader asks a great question:
I have a relatively simple question. Being a history buff, in particular American History, I read many comparisons to the current stock market turmoil and housing slump and the great depression of the 1930's. There have been many web sites, granted not ones that radiate trust, talking about the coming great depression of the 21st century.A global depression means that, instead of the U.S. economy growing at 2-3%, as it is currently, it would decline 50%. One out of four would be unemployed. Global trade would drop 65%. That is the extent of the Great Depression of 1929.Looking at oil prices, the housing deflation, credit crunch, the commercial paper market distrust, war and geo-political turmoil and considering the fact that during the 1920's the world enjoyed a similar interconnected global reality, is it possible that we are heading into a depression in the United States, not just a recession?
Do I think that is about to happen? No. All the trends you mention are alarming, to be sure, and they may signal a recession, but there is enough liquidity in the global economy to keep us out of a Depression.
For a more detailed analysis of all the pros and cons, see Is the U.S. Headed Towards the Second Great Depression?
Comments
the world is at its econimic end what more can i say, if not for the war AND YOU KNOW WHO (BUSH)!!! The crude oil prices would of never been risen and our gas& produce would still be cheep and the cost to travel would not be at its all time high so what do say mr.bush what do you think ,do you now regret the war?
I think it would be helpful to define recession and depression. There is a long way from two quarters of negative growth to a 50% decline in GDP. Since the US has only been through one depression in the last century plus, when does a recession turn into a depression. Please do not answer a recession is when your neighbor is out of work and a depression is when you and your wife are out of work.
While two or more quarters of negative growth are, indeed, painful it is more of a business cycle and a result of “irrational exuberance” and greed. Economies recover from recessions in a few years.
Depressions, on the other hand, are much more scarring and can last a generation.
As the article I referred to in the blog states, the last depression was actually caused by the Federal Reserve, who mistakenly raised interest rates during a recession – not something that will happen during this Fed administration.
I truly believe that we will have a global depression in two or three years at the latest. Debt brought the first depression around back in the 30’s and it is happening again and it is imminent. I have read and listened to many economists and they all say the same things. My elderly mother who is now deceased predicted that way back in the later 70’s and early 80’s that the big depression was on the way and would be much worse than the previous because of our high standard of living. Now we are starting to see parking lots converted into places for people to live out of their cars in California and other places. This is hardly the beginning. Get ready for what is going to take a wheel barrow of money just to buy a loaf of bread. That is when the Amero replaces the dollar and a New World Order (World Government) coming to fruition by the Global Elites.
I wanted to add something else to this and that is that many countries are suffiering from a housing crisin just now since banks have been handing out mortgages to many people who were not qualified to buy homes in the first place. In the 30’s it was mostly people borrowing money to invest in the stock market and they lost everything including their homes anf farms that they couldn’t afford to pay for. So many people think that the Federal Reserve is a government instituion who have money to back them up but that is not so. The Federal Reserve is a private company that the elite bankers of the US and England formed at Christmas time when everyone was on Christmas break and went to Jeckyl Island in secrecy. All the income taxes paid today doesn’t go down to paying down the debt but goes to the Federal Reserve to pay the very rich bankers. Remember hearing about the Titanic well that was brought down on purpose so as to form the Federal Reserve and the Aster family was killed on the ship. The economy is going down little by little and a country who can no longer produce is in a mighty terrible situation. Our companies are gone over to China and India and other such countries so as the industials can make a greater profit instead of paying us the bigger bucks. Many companies stayed afloat during the former great depression even working for shorter hours and less pay but not this time everything has left and stilll leaving.
Personally, I think we are headed for a depression. In my 59 years I don’t ever recall seeing the economy as bad as it is now. Now, with Ike coming ashore, already sky high gas is going even higher. In my area of Illinois, a nearby town has a price of $5.02 a gallon and the government does absolutely nothing. We can send men to the moon and bring them back, take out people’s hearts and work on them, do heart transplants and kidney transplants, but we can’t build a car that will get 100 mpg that is affordable to the people. Let me rephrase that. We could do it, its just that the powers that be don’t want to do it, they’re making too much money off of gasoline.
I dont think we are heaeded toward a depression. Fear has been placed in the market which is a bad thing. The economy will always go up and down. The realestatre market was over inflated i cant beleive people would buy at those high prices and assume that they would continue to increase in value. We may experience an ajustment however our economy is just to big to drop to zero. Money will always exhange hands and trade of goods will always occur between people with or without cash.
YES, I BELIEVE WE ARE ON OUR WAY TO A DEPRESSION, HOWEVER PEOPLE WILL NEVER BE CONVINCED UNTIL IT HAPPENS. THERE ARE SIGNS, IN THE MEDIA AND ON THE STREET THAT ITS COMING. COMPANIES TRYING TO BUY SCRAP GOLD AND SILVER FROM AMERICAN CITIZENS. NO CREDIT, PEOPLE REMOVING ALL FLUID RESERVES FROM ACCOUNTS. PEOPLE WILL STARVE THIS TIME, BECAUSE WE ARE NOT AN ARIGIAN SOCIETY ANYMORE. MOST FOLKS CAN’T TELL YOU HOW TO FARM AND RAISE FOOD OR BUTCHER MEAT FOR FAMILY CONSUMPTION. RIGHT NOW, THE SMART THING TO DO IF YOU HAVE A JOB, IS TO PAY YOUR DEBTS, AND USE ANY EXTRA MONEY TO START A STORAGE PROGRAM FOR YOUR FAMILY. AS WE SAY IN THE SOUTH, BULLETS, BEANS, AND BACON. YOU CAN’T GO WRONG WITH FOOD STORAGE, ALSO REMEMBER TO TRY AND KEEP AS MUCH CURRENCY IN YOUR POSSESSION AND OUT OF THE BANK’S POSSESSION AS POSSIBLE. WE CAN LIVE WITHOUT, PAGERS, CELL PHONES, COMPUTERS, CABLE TV, X-BOXS, BASS BOATS, SUV’S, AND OTHER TRIVAL THINGS, BUT WE NEED FOOD, SHELTER, AND SOME MANNER OF PROTECTION FOR OUR FAMILIES……..
We are now in a soft/mild DEPRESSION!
What would you call this? A freaking vacation? And despite all of the horrible Bush comments before this one, look at how jacked up things have been since “President Obama” took over! LOL We’re in for a scary, bumpy ride all . . .Hang on!
Why do you put President Obama in quotation marks? This president has inherited the worst national crisis every, from an utterly inept and corrupt administration. He is not to blame for this rolling stone.
No, he is not to blame for it but he’s making it worse with these bailouts and stimulas plans. In this age of lightening fast technology people are in the habit of having things fixed quickly. However, there is no quick fix for this type of situation. They should have allowed for some of these insolvent corporations to fail in the first place. It’s not the taxpayer who is responsible for their mess.
The government is just trying to keep the economy from capitulating. It is buying time and propping the economy up. We won’t have a real recovery until banks are lending again. Not likely to happen soon, with commercial real estate a ticking time bomb.
See Still Worst Recession, Despite Government Revisions
Kimberly
Too much government, too much debt, not enough income. It’s really that simple. Stop borrowing money and stop printing it. You’re just delaying the inevitable.