Forum Post: The Greatest Depression
Posted 12 years ago on Oct. 16, 2011, 2:15 p.m. EST by Cicero
(407)
This content is user submitted and not an official statement
Say what you will about the bailouts, economic stimulus, unemployment insurance and food stamps.
The fact is we would be in a depression that dwarfed the great depression without these things.
When consumer confidence goes down investing and spending goes down.
People start losing their jobs because our economy is producing under capacity and the demand for goods and services falls.
This downward spiral is known as the multiplier effect. I lose my job, I stop buying things, eventually someone loses their job because other people quit spending. Then that person cuts their spending and others still lose their job.
I am not saying that everything was done right or fairly.
All I am saying is that fiscal and monetary policy kept people from losing their jobs and kept GDP from plummeting.
The social safety nets have prevented this depression from being as bad as the last one and yes the stimulus spending has lessened the impact too. Sort of like the CCC did in the '30's.
I am glad someone else knows how the business cycle works and how fiscal and monetary policy are important tools to fight economic downturns!!
The problem is not only that people should learn basic economics. This is not the main issue. The main issue is that people seem unable to become responsible citizens.
For example, I posted to ask what happened with the money donated to OWS and only one person commented. These people are completely unable to control our complex political problems.
Regarding the donations. Someone asked them if OWS doesn't want handouts. Why is there a donation button? lol No answer to that one either.
http://occupywallst.org/donate/
Absolutely true.
Don't forget to add that AMERICANS bought UNPRECEDENTED QUANTITIES of FOREIGN GOODS and BORROWED the money to do so?
See http://occupywallst.org/forum/inconvenient-truths-america/
Very true, had we produced our own goods it wouldn't be that bad to borrow money to purchase them.
But when we borrow from China to buy Chinese goods whats the result.
We have a poor quality Chinese good and a lot of foreign debt.
China gets their money back, sells their goods, their GDP rises, and we still owe them a lot of money.
And had we kept in place the Depression-era financial reforms, we may have greatly reduced the severity of the recession/depression.
Great point, definitely but greed was allowed to prevail. I mean who thinks its a good ideas to put some banker in charge of millions of dollars of other peoples money.
They take risks and make money for themselves and those they work for. If they lose their behinds hey it's not their money.
You are right. People say that only because they are unable to control their government and they put the blame somewhere else.
Unfortunately, the policies most people support would (isolationism and de-federalization) would only return us to the Middle Ages.
exactly
You are right...to a point. Supply is up and demand is down - a reality of supply side economics. But other than that, you are right. The problem is how do we fix it so it doesnt happen again? 1) re-implement Provision Q of the Glass-Steagal Act of 1933 that seperated commercial banks (main street) form investment banks (wall street) to stop the criminals at the top from using our deposits in main street banks and gambling with them, keeping the profits when they 'win' and costing us bail-outs if they 'lose'. 2) Worker-led industry and co-operatives. This system removes the shareholder from the equation, allowing the employee to beneift from the profits and vote on the direction of the business. No employee is going to vote to send his job overseas. This will stabalize the economy, while still allowing private and public business to co-exist. 3) elect officials that are sensetive to both solutions.... If consumer confidence is the problem, then lets stablize the economy with less possibilities of boom and bust economics.
I think you have some good ideas here, especially number 2. What do think would happen to our economy if Unions were allowed to compete for Government contracts? Want to build a Bridge? Hire the Steelworkers Union. Need to reopen a Hospital hire the Hospital Workers Union. Want to repair a road, let the Asphalt Workers of America bid on the job?
I can’t help but believe that a Union can run a project a lot cheaper and a lot better without the owners taking 50% of the profits for themselves. Vilify them all you want, but American Unions will never send American jobs overseas; American Unions will always pay Americans a living wage; American Unions will always provide benefits for their members; and they don’t have a problem training. A Union’s sole reason for being is to save jobs, why can’t we harness that energy to create jobs.
Now-a-days, Corporations improve their bottom line by firing their most productive workers, how profitable would they be if they fired their unproductive management instead? I mean, wouldn’t a Hospital work a lot more efficiently without paying management exorbitant salaries? Wouldn’t our economy work a lot better if workers were getting bonuses for their productivity, rather than management getting bonuses for suppressing their wages?
I think it has become abundantly clear to everyone but the most ardent “Teabagger” that American Corporations either will not, or cannot create jobs in America. It’s also clear that those same corporate interests will not allow their Government to create jobs. So, if the Government can’t create jobs and corporate “Job Creators” won’t create jobs, who will? I respectfully submit that Unions, given the chance, can and will get the job done. And, I’m fairly certain that the President can make the change by Executive Order, and bypass those “Nattering Nabobs of Negativity” in the Congress who would call it Communistic!
I would dearly love to see a public debate on the merits of allowing Unions to bid on Government contracts, because as quiet as it’s kept, Wal-Mart is not the biggest employer in America. The Federal Government is! And when the Federal Government fires people, the American Economy goes into the Dumper. You could look it up!
Couldnt agree more...excellent post. Worker-led industry is unions on a smaller scale/scale for eveyone! It was a sad day for America when corporations were allowed to kill embedded economics for neoliberal economics...
Yes.
I don't know what embedded economics or neoliberal economics is, but I understand Facist Economics when I see it. There is nothing Liberal about these economics. If anything, they are Consirvative Economics and trying to lable them somhow Liberal is a pernicious lie!
Brother, I didnt label them, the world of economics and acedemia did. Neoliberal economics is a conservative form of economics that replaced embedded economics when Reagan came into office. When you find out more about the two and want to debate them, please feel free to call upon me. What I advocate for is worker-led industry that removes shareholders from the equation in favor of voting rights and profit sharing for the workers. This will stabilze the economy, while ensuring jobs stay in America - no worker will vote to send their job oversaeas, where as a shareholder wont think twice about it, because all he sees is the bottom line. Empower the people and at the same time limit the unjustified authority of the federal government - Libertarian socialism.
While I can agree on your basic assumptions, I have to diagree with how academia labels them. Calling a conservative form of economics "Neoliberal" is a pernicious lie that obfuscates the reality of it's underlying Conservative base. It is neither New (Neo) nor Liberal (Open to change).
So, I will not, under any circumstances, debate the relitive merits of "Bumper Sticker" Economics that have no basis in fact or reality!
On the other hand, if you want to debate "Voodoo Economics" Vs. The "Keynesian Economics" that it replace during the Reagan fiasco, I will be glad to do so!
We can agree on one thing though, and that is that a "Worker led Industry" would be beneficial to the Ecomnomy. Which is something that those who use "Bumper Sticker Economics" to win a debate, would call Communism! You might not label them, but you have no problem using those misleading labels to confuse the debate.
And that is what I have a problem with! Focus! If it's a conservative policy, call it that!
We are arguing the same point. Embedded economics is Keynsian economics and voo doo economics is neoliberal economics http://www.stwr.org/globalization/neoliberalism-and-economic-globalization.html go to the home page and read 'This Call to Action' and they refer to it as neo-liberal, mainly because it was the same theory as the 'Liberal' party of the early 20th century in England or the Progressive party in the US. Either way, we are in agreement on the main issues and that is most important. Sorry for the mix up - now lets get worker-led industry out and supported!
Sorry! But, I am offended by the attempt to label a Conservative Idea as Neo Liberal idea , because It's confusing, and I don't like playing on their ball field! Call a Spade a Spade, and we can get along. That's all I'm trying to say. Labels are important it tells you what you're buying, no?
That said, I am sorry if I misunderstood what you were trying to say. I am of the same mindset as Winston Chirchill was, to wit, "We shall fight them on the beaches, we shall fight them on the ground, in the Air..." I will cede no ground to Conservatives, and I will leave no stone unthrown!
Anyway, what would you think of a constitutional Amendment that protects Union Rights???
Something like, "The Congress shall make no law respecting the establishment of a Union, or prohibiting the free exercise thereof, or restricting the rights of workers to petition their employers for a redress of grievances."
It might take a long time to get something like that ratified, but It's worth fighting for in that it puts Conservatives on the defensive, and I think they have been on offense far too long!
Man, you gotta let that go. Neoliberalism is like Neoconservatism. An Orwellian term, certainly, but no less accurate. It's characterized by the "liberalization" of trade (removing barriers), "classic liberal" (18th century enlightenment) ideals, and the synthesis of keynesian and neoclassical economics (taking the worst of both IMO).
Modern liberalism, which is the absolute logical progression of the real classical liberalism from a humanist standpoint, developed around the turn of the 20th century with progressives and came to its peak under FDR.
You are absolutely right!!
1 is good, 2 is disastrous and 3 is impossible. 2 is a receipt for disaster because of the principal - agent problem, in a cooperative everybody steals. I lived through such a disaster, I don't wish you the same. 3 is impossible because the will of elected officials is irrelevant in front of international corporate pressure.
The solution is to have citizens controlling their governments better - not the corporations. This is well described in Alvin Toffler's "The Third Wave" book, which is horribly summarized on Wikipedia.
I disagree. Number two is very much obtainable and I belive is the best way to preserve private industry by empowing the worker. I dont believe that everybody will steal - I hope your experience wont close your eyes to this possibility. For more, please read Howard Zinn's 'A People's History of the United States' or visit Noam Chomsky's website chomsky.info or view him on youtube - just type in noam chomsky's manufacturing consent. Cheers
Number 2: cooperatives and worker empowerment.
In theory, workers will steal, because when they steal $1 from their cooperative, they will gain $1 - $1 * their share in the cooperative > $0.
In practice, workers in a cooperative steal. I have lived in an Eastern European country until the age of 24. My god, how they steal. None of them is responsible.
In my opinion, the solution is for the citizens to gain detailed real-time control over their gov't. When you steal from a cooperative, you can go and spend the money on the private free market. But if you disregard your society there is no place to run. Of course, if a number of people decide to open a firm together, it is their problem how do they get along. But to force change of ownership in large firms, that is a receipt for disaster. You can have unions, you can have unions' observers of the firm's management, strikes, negotiations between workers and owners, but if you just change ownership from owners to workers, that does not work. The first solution worked in Poland. The second completely failed in former Yugoslavia.
Yes, you are right - you cant force existing businesses to change into a worker-led business. However, start -ups can follow a new outline that can be the new norm, while giving existing incentives to improve their efficiency and stability when they see how well it works...hopefully.
Of course there has to be incentive in a co-operative and the people involved have to cooperate. People can not be forced into these situations, but have to believe in the ethos and economics to ensure success.
The citizens must gain detailed real-time control over their gov't. The problem is not that owners abuse their power, but that citizens let large businesses to control their gov't. Citizens should create a solution. They should better understand their gov't and monitor and participate and control gov't decisions in real time.
Of course the solution would imply better regulation of large firms and less overregulations of small and medium large firms, that is, a reverse of the current situation, which is designed to support large firms against the citizens. However, right now many demonstrators want to "end the fed" and our monetary system, end the international trade and close down large companies. Such demands show that they really should be made responsible of their own gov't, they should be part of their gov't, such that they learn how it all works and grow responsible.
Couldnt agree more. However, I would argue that the end-game should be what you described reduced to the local level when community-led govt has taken away the unjustified authoriy of the federal govt. The federal govt.'s main function should be to impose regulations and play referee, but their legislative powers should become subordinate to the laws of local communities and worker-led industry.
We need a federal government and even a global government, because we need common policies at national and global level. The problem is that our national govt's are centralized and work for the few 1%, and the global gov't is almost missing. All of them are dysfunctional.
The federal govt's main functions must also include national defense, currency (we need a common currency), individual rights (a murderer should be pursued in another state, a thief should be pursued in another state), common environmental policies (one can not fight pollution at a state level only), demographic policies (we can't let the population explode in some nations while others are responsible), redistribution of wealth (we can't let some areas go under because of climate change or complete lack of government / education etc), free trade (to avoid trade wars and currency wars like now between US and China and to promote economic efficiency and free and fair competition).
In fact, at every level, local, federal and global similar problems should be addressed as required. And this is the big problem, people don't see their interest to control and to be concerned with higher level governments, while our lives depend on them. The technological advance has created a global society, economy, culture, but our govt's are living 200 years ago.
We shouldn't be chasing a GDP. We shouldn't be chasing "jobs" (i.e. glorified hamster wheel exercises). We should be working with each other and helping each other and focusing on advancing humanity together rather than chasing profits. What is a GDP anyway underneath the official "definition"? What does it mean from the perspective of the universe? Is it anything more than a reason to rape the planet for things people don't really need and many don't really want? Isn't it just an excuse to pit one human against another?
I often say, "where are we all going in such a hurry?". What are we trying to accomplish when we're working 40-100 hours per week? Are we feeding everyone? Are we preparing for planetary disaster? Are we colonizing space? Are we rebuilding towns/cities? Are we curing diseases? What are we doing? Most "jobs" are simply efforts to generate money for someone else really.
We need to shift our focus and our direction. The old ways are not good ways.
Well, if the government measured unemployment in the same way they did during the Great Depression, we would be at roughly 25% now.
We do have 'soup kitchens' today just like you see in the old pictures, only now people are sent a plastic card monthly which they take to the store to get their 'soup'. This makes them less visible.
There is a very valid argument to be made that we are in at least as bad a condition as we were in the Depression, and in fact, a worse condition because we have much, much more debt.
I see your point. Which was my point from the beginning that we would have been worse off than the depression in terms of standard of living and GDP without the automatic transfer programs in the aftermath of the great depression.
I have a feeling we are still headed there, its just that the feds have been proping up all the monetary policy and markets to try and push the crash away, unfortunately it will make the real crash much worse, our country isint as sound fiscally as it was during the depression, it now relies on 40 borrowed dollars for every 100 dollars it spends, can you say unsustainable!
Think we would really need as much of these things if the entire country was operating on solar power? I think not, but people continue not to care.
We wouldn't have to pay for hot water, heat, electricity, something to cook with, something to recharge our future electric vehicles, gas for our previously gas sucking cars... we would walk away with 1/3 of our money, but noooooooooooooooo... if we get nothing else, we surely don't want to keep 1/3 of our money... an extra $700 a month to spend is totally not worth it...
You know... that's only $8,400 a year...
read Wikipedia Encyclopedia article on hyperinflation.
We are in the precarious position of starting to experience this phenomenon--witness the stark increase in food prices.
Oh I know I have been taliking about it for a while....
Go to the National Inflation Association's website there are some good documentaries there!!
I agree that the system needs to collapse..see my post, "in order to form a more perfect union". Lets scrap this crap and start over...we can do it, it will be painful and a little uncomfortable but we MUST put an end to the raping so our children have a chance.
Damn that Keynes and his indisputable logic.
haha
I don't believe that buy buy is the answer. Fundamentally there are major flaws in this system and it needs to collapse. People that feel the need to connect to others will, and a new system will emerge. I am certain that some people may not survive, but this is the cycle of history. it has been a long time since an organic uprising has occurred. It is time in my opinion. We can agree to disagree, but let's find common ground.
I never said it was the answer but had those programs not have occurred we would all be unemployed and the already strained welfare system would have collapsed.
Out of desperation there would be food rioting, looting and violence.
Our system is a good one it just needs a little more oversight.
Lets not throw the baby out with the bath water!!
Consumer confidence in the economy? Or the people running it?
If people perceive that the economy is going to get bad they will cut their spending to save for what they think will happen.
But if enough people believe this regardless of whether it was actually going to happen, it becomes a self fulfilling prophecy.
By preparing (spending less) for the worse they actually create theeconomic downturn!!
"fiscal and monetary policy kept people from losing their jobs and kept GDP from plummeting."
True. But treating symptoms is no cure for a disease.
The point of monetary and fiscal policy is not to end the occurrence of recessions but to "smooth out" the recessions. What this means is instead of GDP and aggregate demand plummeting it goes down in a curve but doesn't bottom out. So we don't have as far to climb back up to where we were in terms of GDP and aggregate demand. Meaning less loss in the economy, in terms of jobs, aggregate demand and GDP.
Okay, but you're defending the band-aid instead of talking about the wound.
There was too much easy money people could borrow very easily. Both the borrowers and the lenders were greedy. The FED didn't help matters by keeping interest rates so low.
I care about how it happened!!
But not near as much as I care about how we move forward? How do we get people back to work?
That's the issue that I take to heart. The issue of my fellow Americans suffering.
Use your head and you will see that the rigged system's reserve currency is worthless and it's value was and is only propped up under violent threat. They are about to collapse the entire economy as a pretext to WWIII. This is happening now.
Seriously? Try reading Studs Turkel http://en.wikipedia.org/wiki/Hard_Times:_An_Oral_History_of_the_Great_Depression Before you make any comparisons like that
You realize Studs Terkel was reverent about the New Deal and called FDR one of the 3 greatest people in the 20th century, right?
http://www.democracynow.org/2005/10/5/legendary_broadcaster_and_author_studs_terkel
Yes because times were so bad in the depression We have food stamps, unemployment payments of $20k/yr for 2 years, free healthcare by showing up at an ER....just to mention a few programs BUT BEFORE you compare the past 2 years with the great depression, do your homework
Wikipedia is not a scholarly source of information
Most college professors won't even allow students to use it as a source!!
It's a link to the book maroon Or try amazon Just read the boom first
You are questioning my intelligence whilst calling me a " A brownish-crimson color."
Well I think your yellow orange.
Its spelled m-o-r-o-n.
Just so you know.
Have you watched bugs bunny? Maroon!
What was your point about the logic and thinking on this thread?
Please don't compare the past 2years to the great depression. This is not even close and that's a fact (look at the statistics)
Did I?
No I didn't I outlined how it would have been worse than the great depression were it not for stimulus and social programs.
Take the time to understand my argument before you attack it!!
Here's what I said...
"The fact is we would be in a depression that dwarfed the great depression without these things."
I said we WOULD be not we are!
I looked up the word Recession during the Reagan Administration, and it said "See Depression!" I kid you not!
The term recession was coined by the Rooseveldt administration when what is about to happen to us now, i.e. "A Double Dip Recession," happening then. They didn't want to say that they were facing another Depression (which until then was what an economic downturn was called!) so they used Recession instead.
When you know that, this economic downturn becomes very scary! Because the "Great Depression" and the last two years are very very similar. If it wasn't for New Deal policies that are still in effect, we would all be on the bread line!
read Wikipedia Encyclopedia article on hyperinflation.
We are in the precarious position of starting to experience this phenomenon--witness the stark increase in food prices.
The total debt of the country has been estimated at over 60 trillion dollars. We know that the federal debt is 14 trillion. Supposedly the private mortgage debt by current homeowners is 10 trillion. Then add in state, county, city, business debt and you can see how massive the debt really is. The pretense is that the country can somehow GROW itself to eliminate this debt. There are only two ways out: massive devaluation and inflation and/or eventually, bankruptcy. The powers that be are pursuing the former because they know eventually, the latter will occur in any case. Meanwhile, the banksters, stock brokers, etc. are making plans to make money when the Collapse occurs which should occur within a year at most. Unfortunately, for most of us, there is nothing we can do except possible withdraw the small amount of money we have to help us survive a few months.
Good point!!!
You're obviously all idiots with 0 understanding of economics. The election of people like you to political office is what got us where we're at. Not Wall Street. Go occupy a job and shut up.
I took many economics classes in college
Macro Micro International Economics Intro to Economics
Which courses on economics have you taken?
What I am pointing to is the theory's and thinking of the father of modern economics John Maynard Keynes.
Tell me that this isn't sound economics simple supply and demand, consumer confidence, and fiscal policy.
If you know so much about economics enlighten us!
All economics taught in school, which is very good, completely disregards one simple condition: the law and the government must actually work as they are supposed to do. This is not our case right now.
What I say, printing money is good, but we should start control our governments if we want to end this crisis.
You're obviously all idiots with 0 understanding of economics. The election of people like you to political office is what got us where we're at. Not Wall Street. Go occupy a job and shut up.
I have a small company and employ about 20 people. But I think it is a rigged system. The largest form of welfare we have going is laws that benefit the few. Whether it is tax laws baking rules, I don't benefit from any of it yet I am in the 250k range and an employer.
So really you don't understand economics you just come on here and attack those that do! Maybe you should get an education!!
Please note, again, that not only that he does not understand economics, but he does not understand politics. People in office do know economics but they had to give in to corporate political pressures.
Good one!!
The solution is for us to control our governments directly in real time using the Internet.
Toffler observes (in 1970!) that the economy is moving into the third wave, characterized by knowledge as the most important factor in the economy, speed, flexibility, modularity, services prevail, and that politics is still designed by the industrial era type of institutions: mass production, standardization, pyramidal structure, most important factor in economy raw materials, coal and oil, and markets. Our politics can not cope. We need to distribute power.
Doruoo1 for President...lol
This is important.