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It's a depression alright

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  • #1

    It's a depression alright

    Article by Eichengreen & O'Rourke

    Conclusion
    To summarise: the world is currently undergoing an economic shock every bit as big as the Great Depression shock of 1929-30. Looking just at the US leads one to overlook how alarming the current situation is even in comparison with 1929-30.




    World trade:


    Money supplies (19 countries) :


    Govt. budget surpluses:
    It's Economics vs Thermodynamics. Thermodynamics wins.
    Tags: None
  • #2
    Re: It's a depression alright

    awesome. thx.

    what if you go back to the crash of 2000... and take 2002 - 2007 as a mirror of 1934 - 1937 reflation?

    Comment

    • #3
      Re: It's a depression alright

      Sounds more than a bit like Nero3 here. ... Mix and match in past stock markets to find an equivalent price progression with a plausible parallel backdrop. You weren't keen on this entirely straightforward approach when Nero3 was floating it though. Gann Global use this straightforward technique also, as one of the core parts of their work (they use a very big market database spanning 250 years to do just this), but you weren't keen on their method too much either. Hmm.

      Originally posted by metalman View Post
      awesome. thx. what if you go back to the crash of 2000... and take 2002 - 2007 as a mirror of 1934 - 1937 reflation?
      Last edited by Contemptuous; June 05, 2009, 10:51 PM.

      Comment

      • #4
        Re: It's a depression alright

        Originally posted by metalman View Post
        awesome. thx.

        what if you go back to the crash of 2000... and take 2002 - 2007 as a mirror of 1934 - 1937 reflation?
        I don't think it's as good a parallel as world trade etc didn't collapse at that point, the consumer debt deflation process was different. The GD parallel is qualitatively justified (as a process) rather than just numerically matching the markets.

        jmho
        It's Economics vs Thermodynamics. Thermodynamics wins.

        Comment

        • #5
          Re: It's a depression alright

          Italy and Japan are being hit especially hard...

          Cheap vacation packages soon?

          Comment

          • #6
            Re: It's a depression alright

            Originally posted by *T* View Post
            I don't think it's as good a parallel as world trade etc didn't collapse at that point, the consumer debt deflation process was different. The GD parallel is qualitatively justified (as a process) rather than just numerically matching the markets.

            jmho
            that's the key... they slect two periods when similar (never the same) processes occurred (financial crash and debt deflation) then compared the periods in charts.

            post financial crash differences.... and possible reasons...

            stock markets



            steeper losses this time. why?

            Road to Ruin: Final stretch
            We are getting a 1930 to 1933 financial system and debt deflation collapse but in Internet time. The Internet that operated so efficiently for ultra efficient transmission of pricing information and execution of transactions is accelerating the financial and economic crisis process far more quickly than governments can respond to it. A 20th century international regulatory and trade institutional framework is no match for 21st century computer networked financial markets. No administration can correct 30 years of errors in a few months. Unfortunately, a few months is all we have because of the accelerated rate of change we are experiencing.


            faster decline... why? just in time inventory = less inventory, better communications and forecasting, faster cuts?

            output...



            similar rate... why? other differences equalized?

            big difference in response... gov't 'learned' from 1930 - 1933!!! :eek:

            Money supplies (19 countries) :


            Govt. budget surpluses:


            conclusion...

            short term? printing $$$ and gov't spending stops deflation.

            long term? too early to say.

            Comment

            • #7
              Re: It's a depression alright

              Originally posted by metalman View Post
              conclusion...

              short term? printing $$$ and gov't spending stops deflation.

              long term? too early to say.

              That so, why didn't government printed more money in 1930? Taking an analogy, can you cure a person of cancer by tripling the dosage of chemicals used for chemo treatment?

              Comment

              • #8
                Re: It's a depression alright

                Originally posted by touchring View Post
                That so, why didn't government printed more money in 1930? Taking an analogy, can you cure a person of cancer by tripling the dosage of chemicals used for chemo treatment?
                some days i think my role here is to remind everyone of things they used to know 10 years ago but forgot.

                on the off chance that you're not joking...


                reflation w/o constraint of gold standard

                vs


                reflation with constraint of gold standard

                The truth about deflation

                this is why we bought gold here in 2001... gov't w/o the gold standard can reflate. it was the correct theory. the deflationists were wrong.

                Comment

                • #9
                  Re: It's a depression alright

                  Price inflation in USD. What if the Chinese decide to back the euro instead?

                  Comment

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