Another Great Depression?

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An interesting, yet scary, article describes what conditions existed before the Great Depression, and compares them to our own. (link)

The article mentions deflation. Simply put, that’s when prices go down so people stop buying hoping to save money by waiting for prices to fall further. This leads to a deflationary cycle that leads to even lower prices and even fewer people buying and, well, you get the picture.

What it also mentions is the fact that government policies, not just taxes and spending, but regulations can affect the value of individual companies and even the entire world economy. The passage of the Smoot-Hawley Tariff Act devalued companies across the world. Even though there wasn’t much international trade at the time, it was still important enough for several important companies across the world that the passage of the act caused all kinds of bad things to happen.

People try to blame Bush for the market crash in 2007/2008. However, what caused the crash wasn’t the policies of the Bush administration, or even, for that matter, the policies of the democrats in control of congress. What caused it was a sudden realization by a lot of people that there was a good chance that a democrat would occupy the White House in January 21, 2009, and congress would still be run by Pelosi and Reid.

This realization caused people to change their economic forecasts. The value of companies and entire industries changed over night. Although some select industries benefited, the vast majority did not.

President Obama could reverse the market by uttering a few sentences. If he simply announced that he is going to go along with whatever congress the people elect, and it remains clear that the republicans would at least take the House on the platform of less government, then the market conditions across the world would reverse. If Obama would simply apologize for demonizing the rich corporations, and declare that America is open for business and the wealthier you are the more welcome you are to enjoy our freedoms, then market conditions would reverse instantly.

But, being the typical leftist that he is, he can’t see past the nose on his face. He blames everyone else but himself and his government for the problems the world is facing. Even when businesses tell him in plain and simple terms, he looks at them and openly wonders whether they are paying enough taxes and whether we’d be better off without their company after all.

I do see rays of hope. If the Tea Party can maintain its momentum after these elections, and carry it over to 2012 even though they are not going to see much of their agenda implemented, then we should see real economic recover that would make the 80’s look like a speed bump.

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One Response to “Another Great Depression?”

  1. bloodyfootandmouthdisease Says:

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