The Economy Is Worse than During the Great Depression

Underneath the Propaganda, the Economy Is In BAD SHAPE …

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. As does Paul Krugman.

Historian, economist and demographer Neil Howe provided the following charts via Forbes last month, showing how dire the situation is in Europe:

Great Depression v. Great Recession, United Kingdom GDP

Great Depression v. Great Recession, Europe GDP

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.

***

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:

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.

[It’s gotten much worse since then.]

(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 than 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:

Bad Policy Has Us Stuck

We 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:

  • The government is doing everything else wrong. See this and this

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.

And Europe is doing all of the wrong things, as well:

If a patient is bleeding out, doctors have to suture the wounds before they decide whether to give more blood or to taper off the amount of transfusions.

But Europe has never treated the wounds …  As we noted in 2011, failing to prosecute financial fraud – on either side of the Atlantic – is extending the economic crisis.

In 2012, we pointed out that European (and American) governments were encouraging bank manipulation and fraud to cover up insolvency … trying to put lipstick on a pig.

Indeed:

  • Quantitative easing hurts the economy. Even the Bank of England and the creators of QE admit that it is “pushing on a string“.  But the UK did tons of QE instead of actually fixing the economy

Heck of a job, guys …

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