We noted in 2013 that the British economy is worse than during the Great Depression.
The Washington Post’s Wonkblog pointed out in August that Europe is stuck in a “Greater Depression” … worse than the Great Depression.
Well-known economist Brad DeLong agrees.
Historian, economist and demographer Neil Howe provided the following charts via Forbes last month, showing how dire the situation is in Europe:
The chart for the U.S. doesn’t look as bad …
But as Howe notes:
These figures don’t mean that the Depression was definitely worse. Though it was deeper, it … likely will be shorter than the Great Recession in the United States. The recovery in the ‘30s occurred much faster than it has in recent years.
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What’s more, from 1933 on, U.S. GDP grew at a blistering average rate of over 8% per year for the next eight years. And that includes one recession year: 1938. By 1941, 12 years after the Great Depression began, U.S. GDP was 41% higher than its pre-downturn figure. This is almost certainly a much higher level, relative to 1929, than the United States will see by 2019, relative to 2007.
Indeed, Pulitzer prize-winning economic reporter David Cay Johnston showed last year that Americans bounced back faster after the Great Depression than the “Great Recession”.
As we pointed out in 2012, the much-hyped “recovery” may be a myth:
What Do Economic Indicators Say?We’ve repeatedly pointed out that there are many indicators which show that the last 5 years have been worse than the Great Depression of the 1930s, including:
- The housing slump
- The level of inequality between rich and poor (too much inequality destroys economies)
- The interconnectedness of financial systems and economies worldwide (interconnectedness leads to financial instability)
- Runaway spending and greed
Mark McHugh reports:
Velocity of money is the frequency with which a unit of money is spent on new goods and services. It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling). In a healthy economy, the same dollar is collected as payment and subsequently spent many times over. In a depression, the velocity of money goes catatonic. Velocity of money is calculated by simply dividing GDP by a given money supply. This VoM chart using monetary base should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face:
In just four short years, our “enlightened” policy-makers have slowed money velocity to depths never seen in the Great Depression.
(As we’ve previously explained, the Fed has intentionally squashed money multipliers and money velocity as a way to battle inflation. And see this)
Indeed, the number of Americans relying on government assistance to obtain basic food may be higher now that during the Great Depression. The only reason we don’t see “soup lines” like we did in the 30s is because of the massive food stamp program.
And while apologists for government and bank policy point to unemployment as being better than during the 1930s, even that claim is debatable.
What Do Economists Say?Indeed, many economists agree that this could be worse than the Great Depression, including:
- Fed Chairman Ben Bernanke
- Former Fed Chairman Alan Greenspan (and see this and this)
- Former Fed Chairman Paul Volcker
- Economics scholar and former Federal Reserve Governor Frederic Mishkin
- The head of the Bank of England Mervyn King (and see this)
- Nobel prize winning economist Joseph Stiglitz
- Nobel prize winning economist Paul Krugman
- Former Goldman Sachs chairman John Whitehead
- Economics professors Barry Eichengreen and and Kevin H. O’Rourke (updated here)
- Investment advisor, risk expert and “Black Swan” author Nassim Nicholas Taleb
- Well-known PhD economist Marc Faber
- Morgan Stanley’s UK equity strategist Graham Secker
- Former chief credit officer at Fannie Mae Edward J. Pinto
- Billionaire investor George Soros
- Senior British minister Ed Balls
Bad Policy Has Us StuckWe are stuck in a depression because the government has done all of the wrong things, and has failed to address the core problems.
For example:
- An economics professor says we’ll have “a never-ending depression unless we repudiate the debt, which never should have been extended in the first place”
- Fraud was one of the main causes of the Depression, but nothing has been done to rein in fraud today. Indeed, the only action the government is taking is to help cover up fraud
- All leading independent economists have said that the economy cannot recover until the big, insolvent banks are broken up, but the government has just helped them to get bigger
- The Federal Reserve caused the Great Depression and the current crisis, and has done nothing but help the fatcats at the expense of the little guy. And yet the government has given the Fed more power than ever.
- Government policies send manufacturing jobs and dollars abroad
Quantitative easing won’t help … it will only make things worse.
This isn’t an issue of left versus right … it’s corruption and bad policies which help the super-elite but are causing a depression for the vast majority of the American people.
The government and the banks are doing all of the wrong things. See this and this.
The Economy Is Worse than the Great Depression was originally published on Washington's Blog
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