The next Great Depression has already been YouTubed. See… [update 2]
In a more rational world, the world would have been out of economic depression in February last year. That would be the sort of world in which those alleged economists whose theories either caused the crash (or blinded them to what was about to happen) would have been kicked to the kerb in short order. Alleged economists like the morons laughing at Peter Schiff three years ago…
Sadly, that hasn’t happened. Instead, those economists who shouted a warning that the first crash was coming—like Peter Schiff & Thorstein Polleit & Robert Blumen—are still being ignored; and all the failed economists who caused that crash are still in the van helping to cause the next one—just as they did in the first Great Depression*. As Tom DiLorenzo and Steven Kates and Caroline Baum explain…
It’s still not too late to stop the next crash, but it will take a radical overhaul of both economics and government to avert it. As George Reisman explains…
But unless that radical overhaul happens—and even if they begin to realise that they themselves are the problem, let’s not fool ourselves into thinking any mainstream economist or politician will get the hell out of the way so it will—unless it happens, a “double dip” recession is all but inevitable, the depth and rapidity of which will be measured by the extent to which the mainstreamers are given power to continue making it worse. Just as they did in the first Great Depression. As Peter Schiff explains,
[They] are not going to let our economy restructure. [They] are going to destroy it. [They] are going to drive it into the ground. [They] are going to wipe out everybody...[Those] are the politics...That is why I remain so negative on my outlook on the United States.
And as they say,when the United States catches a cold…
And since the alleged economists are providing no rational foundation on which non-economists can parse their own future (“they do not understand what it takes to create jobs ... and are flummoxed by their experiment in Keynesian economics not working”) many sane and rational folk are instead finding real economists to listen to—like those I link to above—and doing their own thinking about what’s coming. People like the normally relentlessly upbeat Tony Robbins, who (while still accepting some of the consumerist myths peddled by mainstream economists) begs his followers to get themselves informed about the coming Crash.
That’s the sort of advice you ought to at least listen to…
As they also say—or should—it’s time for even the alleged economists to stop worrying and learn to love depressions. Especially when they do so much to cause them.
* Back in October 2008, before the last election, I warned that all the remedies bandied about by all the alleged economist would be the cause of another crisis, just as they were when the likes of Hoover and Roosevelt used them to extend the 1929 correction for another fifteen years.
When markets need to correct, when real savings are being consumed on malinvestments that urgently need to to closed off, then here's what you can do to make sure the necessary correction won't happen:
- Prevent or delay liquidation by propping up shaky businesses and shaky credit positions. (Better to flush out the malinvestments quickly, so recovery can get under way.)
- Further inflate the money supply, creating more malinvestments and delaying the necessary correction. (Better to maintain the currency’s purchasing power rather than dilute it.)
- Keep wage rates up --or keep money wages constant when prices start falling (which amounts to the same thing) -- which in the face of falling business demand is a sure recipe for unemployment. (Better to take your cut now, and give your business a chance to restructure.)
- Keep prices up (by means of the likes of green-plated building regulations) or add new costs to struggling businesses (such as the dopey Emissions Tax Scam), delaying the necessary corrections that will make businesses profitable again. (Better to let prices fall to the new level they need to post-crash. Trying to help recovery by artificially re-inflating prices is like backing over someone you’ve run over in your car, hoping that it will make the patient better.)
- "Stimulate" demand by spending on "infrastructure" projects just to make it look like the government is doing something -- when what that something actually does is to take money from profitable businesses in order to bid resources away from struggling businesses. (Better if government cuts its coat according to its new cloth, without competing with struggling businesses and raising the prices of now-much-scarcer resources.)
- Discourage saving and investment by increasing government spending (all of which is consumption spending) and maintaining high tax rates. (Better if government cuts its coat according to its new cloth, without taking now-much-scarcer resources away from struggling businesses.)
- Subsidise unemployment with make-work schemes paid out of money from profitable businesses that bid resources away from struggling businesses, delaying the shift of workers to fields where genuine jobs would otherwise be available. (Better to abolish all minimum-wage laws, so everybody who wants to work can work—and work in a job that pays its own way.)
As Murray Rothbard points out in America's Great Depression (from which I draw the above seven points) when you list logically the various ways that government could hamper market adjustments and hobble the adjustment process, you find that you have precisely listed the favourite "anti-depression" arsenal of government policy.
I said in 2008 all these variants of stimulunacy would be used, and would fail. And as Tom DiLorenzo explains above, each of them was and did—just as they were in the First Great Depression. Expect to see them all used here. Again.
No, there will be no double dip. It will be a lot worse. The world economy will soon go into an accelerated and precipitous decline which will make the 2007 to early 2009 downturn seem like a walk in the park. The world financial system has temporarily been on life support by trillions of printed dollars that governments call money. But the effect of this massive money printing is ephemeral since it is not possible to save a world economy built on worthless paper by creating more of the same. Nevertheless, governments will continue to print since this is the only remedy they know. Therefore, we are soon likely to enter a phase of money printing of a magnitude that the world has never experienced. But this will not save the Western World which is likely to go in to a decline lasting at least 20 years but most probably a lot longer…
UPDATE 2: A couple of readers emailed asking me about some reading I might recommend to help them get informed. Here’s some web articles:
And here’s some books (linked, where possible, to online editions):
- Meltdown – Tom Woods
- The Little Book of Bull Moves in Bear Markets: Updated and Expanded, by Peter Schiff
- Economics in One Lesson - Henry Hazlitt [PDF]
- Economics for Real People - Gene Callahan [PDF]
- Economic Sophisms - Frederic Bastiat
- Austrian Economics: A Reader - ed. by Richard M. Ebeling
- Eat the Rich - PJ O'Rourke
- How an Economy Grows, and How it Crashes – Peter Schiff
- The Causes of the Economic Crisis – Ludwig Von Mises [PDF]
- Prosperity Denied: How the Reserve Bank Harms New Zealand - Bob Jones
- America's Great Depression - Murray Rothbard [PDF]
- The Great Depression – Lionel Robbins [PDF]
- Rethinking the Great Depression – Gene Smiley
- Politically Incorrect Guide to the Great Depression& the New Deal – Bob Murphy
- Planning for Freedom – Ludwig Von Mises
- The Denationalisation of Money - FA Hayek [PDF]
- What Has the Government Done to Our Money – Murray Rothbard [PDF]
- Government Against the Economy - George Reisman