Mish calls it: we're in a depression

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switters's picture
Status: Platinum Member (Offline)
Joined: Jul 19 2008
Posts: 744
Mish calls it: we're in a depression

No surprise here, but Mish has officially called it: we're in a depression.

There is no official
definition of depression. Here is mine: When the U-6 unemployment rate
rises above 12.5 in conjunction with a stock market that is down close
to 50%, the CPI is negative, and nominal wages are stagnant, it's an
economic depression. We are in one. 

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bearing01's picture
Status: Silver Member (Offline)
Joined: Sep 7 2008
Posts: 153
Re: Mish calls it: we're in a depression

Recession is when there's 2 sequential quarters of reducing GDP.

Depression is a deleveraging process where people stop spending money on goods/services and start selling off their assets to raise money to pay off their debt.  Right now we have too much debt and need to pay it off.  Therefore we are in a depression.  The Federal Reserve's policy is to keep inflating the money supply to get prices higher so the asset prices are inflated above the debt we have on them.  That won't help credit card debt or auto loans.  The Fed doesn't want us to pay off our debts, but to just keep spending more and more and taking on more debt.  That's why interest rates are low as they are.

The depth of the great depression in the 1930's wasn't due to the debt.  It would have been over quicker if it weren't for FDR's policies.  He introduced tarrifs on imports, fixed the prices on commodities, raised the upper bracket taxes to 90%, taxed capital rather than let it be invested for production, created jobs like paid people to dig holes and then paid others to fill them in.  He also introduced the minimum-wage law that put a lot of un-skilled people out of work.  Rather than have them start at a low wage and learn on-the-job and get raises they were just put out of work all togehter.  just utter waste of wealth/capital for non-productive gov't jobs.  Socialism at its finest. It was his policies that made the recession/depression last until WWII began.  Without those policies the great depression would have ended much quicker.  Lets wait and see how Obama will mess things up.

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