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| User Info | The Folly Of A Depression Thesis in forum [Ticker] | |||
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Genesis Posts: 71366 Incept: 2007-06-26 
KD^2 
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http://market-ticker.org/archives/616-Th....
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2008-10-20 06:59:36
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Tat668 Posts: 1700 Incept: 2007-09-09 
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Thank you Karl, history does repeat itself in time. I'm not looking forward for the next 4 years of doom and gloom, but I am urging all my family and friends to listen and at least be ready when the last straw is dropped on the camel. ---------- "Patience grasshoppers.... but your time to eat the bugs is coming......."- KD 9-1-2009 "This marks the beginning of the end."- Barack Obama 2-26-09
2008-10-20 08:27:35
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Alessandro Posts: 1031 Incept: 2008-07-17
Italy
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Excellent post. Unfortunately I have to agree in full. A financial crisis, even as colossal as this one, cannot kickstart a Depression in a by itself. Politicos and bankers will do it, by desperatly tring to keep the failed system in place. This post by London Banker in august was my moment of truth: http://londonbanker.blogspot.com/2008/08.... Last modified:
2008-10-20 08:36:52 by alessandro
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Yaldor Posts: 1430 Incept: 2008-05-17
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BB is like a charcter ina greek tragedy - doing everything to esacpe his destiny but with each such steps he actually get closer and closer to what he is running away from.
---------- For every crash the probability of someone showing that he predicted it is near 1 . For every prediction of an imminent crash the probability of it being correct is almost zero
2008-10-20 08:45:06
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Maddog Posts: 167 Incept: 2008-04-13 
Alabama Online
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Karl once again great . I've had this gut feeling for some time that the American people are being led down a path.This path is both political, social & financial. The "PERFECT STORM"
---------- USA HELP I'VE FALLEN & CAN"T GET UP!!!!!!
2008-10-20 08:58:26
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Mondocondo Posts: 3141 Incept: 2007-12-03
Miami
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Thanks for analyzing the parallels to the Great Depression. I've been reading up on that subject lately in an attempt to do exactly that. From what I've read, your analysis seems to be spot on, as usual.
2008-10-20 09:10:39
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Darknight Posts: 3293 Incept: 2007-08-10
The Wicked Forrest
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typo? Quote:that have spent incredible amounts ---------- The price of apathy towards public affairs is to be ruled by evil men. - Plato
2008-10-20 09:24:53
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Mo Posts: 5501 Incept: 2007-06-26
Florida
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Quote:In fact, one wonders - if Ben was chosen for his expertise on The Depression, was (and is) his intent to cause the second one? I've had similar thoughts. It would have been easy to engineer given information from the 20's bust: concentrate wealth in the financial sector; remove Glass-Steagall; lower consumer and mortgage lending standards and downpayment requirements to zero; wait a few years. It took less than a decade after removing Glass-Steagall. They want a global financial system and the only way to get it is to have Americans begging for mercy. So, what's it gonna mean? Remember Nothing's 'solution'? Modern feudalism. ---------- "The World has been cancelled. It doesn't even look like the world. There is one island that is maintained and is said to be owned by the Sheikh and the rest looks like a pile of muck."
2008-10-20 09:29:25
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Jstanley01 Posts: 2563 Incept: 2008-07-30
San Antonio, Texas
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Even within the storm clouds of your "bad" bullet points, there may be silver linings. First, our resource dependence in energy isn't due to a lack of raw materials, but a lack of political willingness to use them. This latter should fade as the economy contracts. ANWR and offshore drilling may very well provide the transition time needed to develop alternatives. Right now, according to a friend of mine in "da binnis," Conoco is producing oil from oil shale commercially at a rate of 3 barrels of production for every 1 barrel of energy expended. Not to mention nuclear power, which was killed politically in the 70s, but the technology still exists. Second, the inability of our government to borrow in the style to which it has become accustomed may be a blessing in disguise. If self-government survives the transition, that is. Maybe we'll be unable to misallocate resources via FDR-style public works boondoggles. That'd be nice. Third, during the 1930s, it was overcapacity in heavy industries which was the chain that dragged the economy under. Today -- besides bureaucrats and aparatchiks -- our overcapacity appears to be mostly in housing. The way I see it, in the long run, the gap between what we produce and what we consume could well become more of an opportunity than a problem. http://www.focusarts.com/about.htm ---------- ...so in short, my fellow Texans, we must secede. "For the children..." --Me Last modified:
2008-10-20 09:53:11 by jstanley01
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Crossdefaults Posts: 434 Incept: 2007-06-27
Southern California
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Karl, While I feel your insight is brilliant and mostly spot on, I disagree with one of the implications of what you purport. I believe you may be giving the effect of government action too much importance (if I may make an attempt to be ever so slightly witty-you may be, like the Chinese, giving the U.S. government too much credit-ha ha). I am not so sure that the roaring twenties or the recent property bubble were caused by the Fed. Bubbles are huge naturally occurring phenomena that repeat throughout history, caused more by human nature than anything else, in my opinion. Also, while it is interesting that the stock market puked after the "bail out" passed, I think the decline of the week of October 6th was caused by many more forces than the passage of the bill. I do agree that the government is making things worse through their actions, and I appreciate your insights into the parallels with earlier panics. Thanks for all you do. Matt R.
2008-10-20 09:51:20
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Genesis Posts: 71366 Incept: 2007-06-26
KD^2
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For bubbles to really get cranking you need willful blindness to fraud. Only a government can do that. We had it in the 90s with the Internet space, and I was screaming about it then. We had it this time, and we had it in the 20s in the Florida Swampland "boom" too. All of these booms share a common underlying theme - there was massive fraud from top to bottom, and the government didn't give a damn, even though laws were being violated from top to bottom. Without that fraud it is very difficult to get the sort of bubble that we have experienced. Sure, you'll get a "boom", but it is naturally limited unless people are able to cheat. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2008-10-20 09:55:08
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Tesla Posts: 8174 Incept: 2008-04-03
Delaware
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The BIGGEST difference between now and the 30s that no one here has factored in ? The entitlement mentality prevalent today, the very reason the Obamamessiah is ahead in the polls. The pigmen can TRY to corner vast wealth etc, but they'd better control all the media (goodbye unrestricted Internet and other media) and they'd better be ready with lots of handouts, because the wealthy/well-connected elites have fostered an environment where the wealthy are both envied and despised, and it won't take a whole lot, maybe a year or two of misery, to get the entitlement-afflicted out to the voting booth to put an end to it all. If the entitlement hoardes see a small segment of society paying little taxes and partying like its 2005 while they lose homes, drive ****boxes and struggle at finding jobs, things will change. Don't count out Gramps and Granny when SS/Medicare gets cut, when college students find their wages after school won't pay off the college loans, and the ones in the middle have to pony up more. Reform voting happened in 1994 and it happened in 2006. Whether it was effective I leave up to you. Don't bet it won't happen again, tho. ---------- "Neither the wisest Constitution nor the wisest laws will secure the liberty and happiness of a people whose manners are universally corrupt." Samuel Adams I'd rather die on my feet than live on my knees. - Emiliano Zapata
2008-10-20 10:00:49
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Swarf_maker Posts: 19 Incept: 2008-10-18 Ottawa, Ontario, Canada
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Karl, thanks for your insight. How do you manage to do this every day? I've only been following your site for a couple of weeks. Like most, I suspect, I was completely unaware of the depth of the problem. Now I am trying to anticipate the consequences. At the end of the day, we will probably emerge with a banking system and a stock market but with new rules. One possible silver lining to this cloud is that it may repatriate some of the manufacturing industries that have been handed over to China in exchange for cheap labour. ---------- "Eternal vigilance by the people is the price of liberty." Andrew Jackson
2008-10-20 10:08:32
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Garyk Posts: 378 Incept: 2008-08-13
Oklahoma
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Good article
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2008-10-20 10:16:32
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Sharon Posts: 1786 Incept: 2008-02-10 Online
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The history textbook version of the Great Depression goes: The Great Depression was caused by the stock market crash of 1929. Hoover didn't take any action. Roosevelt eased the situation with public works programs. WWII brought an end to the Depression. Proof, once again, that the whole public education system should be closed down, what with it being the chief source of the misinformation, disinformation, revised history, and the floodwaters of mental sewage that seem to have permanently backed up in American society. One of the main reasons that otherwise intelligent people can't understand anything is, they've spent their whole lives reading a catechism of standardized, iconic lies (often in preparation for the test). All the public discourse most people will hear subsequent to graduating high school will be based on this same catechism. Maybe the worst feature of this kind of education is, people come out of school thinking this bull**** is the sacred fire of truth. They've also been encouraged to believe that certified knowledge of this boatload of bull**** is proof of a powerful intellect. Bottom line: It's almost impossible to re-educate them.
2008-10-20 10:27:39
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Themortgagedude Posts: 3928 Incept: 2007-12-17
saint louis
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I think I'll go home now.  ---------- "These are interesting times. We don't trust the government, we don't trust the legal system, we don't trust the media, and we don't trust each other! We've undermined all authority, and with it, the basis for replacing it! It's like a six-year-old's dream come true!"
2008-10-20 10:36:05
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Jstanley01 Posts: 2563 Incept: 2008-07-30
San Antonio, Texas
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Tesla: Good points. In light of which, the greatest danger we face is fascism, American style. Cautionary tale from the left wing (a classic, BTW): http://www.amazon.com/Cant-Happen-Here-S.... Cautionary tale from the right wing: http://www.amazon.com/Liberal-Fascism-Am.... ---------- ...so in short, my fellow Texans, we must secede. "For the children..." --Me
2008-10-20 10:37:13
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Bluecow Posts: 201 Incept: 2007-09-07
England
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Quote:In fact, one wonders - if Ben was chosen for his expertise on The Depression, was (and is) his intent to cause the second one? I have been wondering about this too. I guess he was chosen because it was clear what was coming and they wanted someone who would act predictably - who better than an arrogant academic who claimed he could have prevent the great depression. I recently heard an interview with an ex academic colleague of Bens. He reported how when took the FED job he wished would get a chance to apply what he a learned about the great depression. Are you happy now Ben? ---------- 'This lady is not for turning.'
2008-10-20 10:47:09
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Windu Posts: 1325 Incept: 2007-08-01
ATL, Jawja
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As if right on cue, Bernanke said moments ago:Bernanke wrote..“If Congress proceeds with a fiscal package, it should consider including measures to help improve access to credit by consumers, homebuyers, businesses and other borrowers,” Mr. Bernanke said. “Such actions might be particularly effective at promoting economic growth and job creation.” So many parallels to the drug culture. Hopelessly addicted to credit, always offering it to others. http://www.nytimes.com/2008/10/21/busine.... ---------- The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the Intl Monetary Fund, is that the finance industry has effectively captured our government. Read the "Quiet Coup" article. http://www.theatlantic.com/doc/200905/imf-advice
2008-10-20 10:58:18
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Skip Posts: 82 Incept: 2008-09-30
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Our government is pretty focused on the "print more borrow more spend more" plan to hold on to the good times. The politicos are clearly taking us down the same path as the first great depression. As Karl mentioned though, "Today we require about $2 billion in foreign capital per day to remain solvent as a nation at the government level." This puts us in a similar position as the Weimer Republic of 1922-1923. Continued deflation of the economy will significantly reduce the federal government's revenue this coming year. I see two likely possibilities. 1) the Fed defaults 2) the Fed prints more money causing hyper-inflation then no one accepts dollars for payment of debt (default). What happens when the Fed defaults?
2008-10-20 11:00:11
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Wisc-xc Posts: 4817 Incept: 2007-07-14
outside chicago Online
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Quote:The history textbook version of the Great Depression goes: The Great Depression was caused by the stock market crash of 1929. Hoover didn't take any action. Roosevelt eased the situation with public works programs. WWII brought an end to the Depression. Sharon, Well said. That was about as succinctly put as anything I've read on the subject. You sound a lot like John Taylor Gatto.
2008-10-20 11:07:18
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Tesla Posts: 8174 Incept: 2008-04-03
Delaware
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It's the reason I've said for years that schools will not "work" until we get 2 things: a good curriculum and teachers that can teach it. Everything else is bull****. Re John Taylor Gatto - an American hero in my book. ---------- "Neither the wisest Constitution nor the wisest laws will secure the liberty and happiness of a people whose manners are universally corrupt." Samuel Adams I'd rather die on my feet than live on my knees. - Emiliano Zapata
2008-10-20 11:17:26
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Grumpygirl Posts: 799 Incept: 2008-09-18
Oregon
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"The history textbook version of the Great Depression goes: The Great Depression was caused by the stock market crash of 1929. Hoover didn't take any action. Roosevelt eased the situation with public works programs. WWII brought an end to the Depression. Proof, once again, that the whole public education system should be closed down, what with it being the chief source of the misinformation, disinformation, revised history, and the floodwaters of mental sewage that seem to have permanently backed up in American society." I went to private schools, and what I learned about the Great Depression was no different. As many problems as the public school system has, I think the Mythology of the Great Depression has deeper origins than history textbooks. My relatives who lived through that time believed that Depression Myth. (They were not financially sophisticated at all.)
2008-10-20 11:29:02
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Barberry Posts: 110 Incept: 2008-06-21
connecticut Online
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I had a light bulb moment last night while watching the Ken Lewis interview with Leslie Stahl on 60 minutes. Has anyone considered the $250 billion was forced on the big banks for insurance against a treasury auction failure?
2008-10-20 11:29:23
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Skip Posts: 82 Incept: 2008-09-30
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While growing up and attending the US education system, I heard plenty of rhetoric about how horrible the Chinese education system was. A few years ago I got to spend a few weeks at a University in Beijing studying Chinese. I got to speak with quite a few high school and college students while there. Unlike American students, these kids were motivated to learn and study hard. The parents, teachers, and the entire system encouraged learning. Sadly to say, the kids I talked to in China knew the American political and economic system better than is taught in our high schools. Also, calculus is taught in high school, not college. The downside of course is that not everyone can continue to higher education and must join the workforce. There, education is very highly regarded. In the US, education is another entitlement that has been diluted to the least common denominator.
2008-10-20 11:35:58
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