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The Economy Is Worse than During the Great Depression

George Washington's picture




 

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 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:

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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Thu, 12/11/2014 - 15:04 | 5541040 VWAndy
VWAndy's picture

Just think how bad the real numbers are. As bad as these are the actual numbers are off by what say 5% at least. Pretty scary right?

 Math is useless if you dont have an accurate measurment to start from. How much of the economic data that is parasitic is being counted as if it was productive? Yes boys and girls this is gonna suck bad. Fully half the houses on my block have a parasitic income stream ie they have jobs that produce nothing of real value. So what if the real numbers are off by 50%?

I would be very interested in seeing actual real production per capita # nation wide over the last fifty years.

Thu, 12/11/2014 - 13:32 | 5540696 SAT 800
SAT 800's picture

Now, George, don't go getting all depressive and stuff. Couldn't we have a little Christmas Cheer, here ?

Thu, 12/11/2014 - 12:51 | 5540544 the grateful un...
the grateful unemployed's picture

the velocity of money will go negative. (the volume of money printed is greater than the money being taken out of circulation) the part that puzzles me is suppose people start converting their electronic cash into real cash and taking that money out of circulation. that would be inflationary, only by definition inflation is too much money chasing too few goods, and this money isn't chasing anything. i suppose that increasing the money supply actually hastens the arrival of negative velocity because you have expanding volume with constant or declining flow. by analogy the patient hasn't had a bowel movement in a week, but they keep stuffing their face with doughnuts. kabloooie!!! (shtf)

Thu, 12/11/2014 - 13:30 | 5540692 SAT 800
SAT 800's picture

Hey, it's breakfast time here; do you mind ? Yuck.

Thu, 12/11/2014 - 12:14 | 5540424 sam site
sam site's picture

 

Speaking of fraud and the Great Depression,  In 1934 House Banking Chairman Louis McFadden called for the arrest of the Fed for stealing America's gold, causing the 30s Depression and shipping it to Europe (later found to be funding Hitler).

Fellow house members were scared shitless as just like today, politicians know they can be assassinated for opposing our hidden EU Organized Crime rulers that took over America in 1913 in the Fed Act.  McFadden was assassinated on their third attempt three years later.

Louis McFadden Calling for the Arrest of the Fed from the Congressional Record (suppressed by the controlled media even to this day).

http://www.afn.org/~govern/mcfadden.html

 

Thu, 12/11/2014 - 11:49 | 5540347 Comte d'herblay
Comte d'herblay's picture

Still short, eh, George?

GO chop a cherry tree; embrace the chaos.

Thu, 12/11/2014 - 11:37 | 5540313 IrritableBowels
IrritableBowels's picture

Well I'm not wiping my ass with magazine pages.

 

 

Yet...

Thu, 12/11/2014 - 12:06 | 5540402 Jumbotron
Jumbotron's picture

Long corn cobs.

Thu, 12/11/2014 - 11:26 | 5540278 Goldbugger
Goldbugger's picture

They didn't have Trillions in derivatives staring them down in the 30's like we do today.

Thu, 12/11/2014 - 11:23 | 5540269 heat death
heat death's picture

Erm....

 

Vom = GDP/money supply

They have increased money supply massively so .......?

Thu, 12/11/2014 - 11:11 | 5540216 the not so migh...
the not so mighty maximiza's picture

good article

Thu, 12/11/2014 - 11:08 | 5540199 JRobby
JRobby's picture

Hello!

"Folks" are out in droves shopping this season..................for cheap food, clothing and oh yea! gas.

 

Thu, 12/11/2014 - 11:04 | 5540189 antidisestablis...
antidisestablishmentarianismishness's picture

Yeah, the Great Depression was like a day at the beach compared to the hell we are living through.  Just yesterday my internet connection went down and I was plunged into the Stone Age.

Thu, 12/11/2014 - 10:49 | 5540120 moneybots
moneybots's picture

Washington's Blog: "It is well known that excessive leverage was one of the primary causes of the Great Depression."

 

Ergo, Bernanke was an extremely poor student of the Great Depression, as QE increased leverage.

Thu, 12/11/2014 - 11:57 | 5540373 Comte d'herblay
Comte d'herblay's picture

Excessive leverage was one fraction, not a primary one, of the cause of the Depression. 

Excessive leverage was certainly the cause of many suicides, during the panic.

But there were several other ones more directly the 'cause' of it:

 

  1. Debt liquidation and distress selling
  2. Contraction of the money supply as bank loans are paid off
  3. A fall in the level of asset prices
  4. A still greater fall in the net worths of business, precipitating bankruptcies
  5. A fall in profits
  6. A reduction in output, in trade and in employment.
  7. Pessimism and loss of confidence
  8. Hoarding of money
  9. A fall in nominal interest rates and a rise in deflation adjusted interest rates.[

 

Thu, 12/11/2014 - 12:56 | 5540566 the grateful un...
the grateful unemployed's picture

then money disappeared and the only people who had money were those who had been hoarding it. there was also a problem with price controls, as farmers could not sell their crop, and plowed them back into the soil. they could not pay their taxes and the banks foreclosed. corporations took over the mostly private held farm land.

Thu, 12/11/2014 - 10:46 | 5540103 Felix da Kat
Felix da Kat's picture

The system was mortally flawed from the start. It failed to provide for the natural progression of entropic forces concerning morality. Every political system in the history of the world has fallen victim to the inevitable degradation of man's character. Historians will assess how well and for how long, leaders were able to supress necessary changes. But my guess is only for a generation or two at most.

Thu, 12/11/2014 - 11:22 | 5540260 numapepi
numapepi's picture

That is the premise of my book The Fourth Branch. Which offers a solution to that very problem.

80% is free to download in any e format you want...

https://www.smashwords.com/books/view/277193

Fri, 12/12/2014 - 07:13 | 5543459 Comte d'herblay
Comte d'herblay's picture

WADR, books, pamphlets, written words, words and more words only do one thing:  Postpone Action.  ALL the effort you have put in reading, reading, reading reminds me of myself.

If I could take all the time I have spent reading, and I mean reading that is worthwhile, not the true crime books I read, if I recaptured all those thousands of hours and focused them instead on DOING something about even one of the problems the human beans face in this country, my city, town or township, I would have done more to make the changes essential to a better life for us all.

And that action means Vigilantism.  That is the only thing that is going work.   An armed bunch of Muslims, wielding only a Box cutter did more to cause a revolution in the way this country works, costing us ongoing trillions in lost time, money and duty by crashing three jets into the buildings and soil on the North American Continent than all the words ever written.

So I will not be buying your book.   IF I were you I would stop the reading and writing, if you are dead serious about the NUMA changes, move to action.  IF you happen to be great with a sniper rifle or can otherwise take out a few of the top echelon, be they in Banking, elected Government workers at any of the branches, or just a lowly lying scumbag like Chuck Schumer, or any candidate who seeks office, lying and not anwering the tough questions, or the media mavens, all the better.

The time to read and write is long past.

Shedding of blood to nourish the tree of freedom is the necessary element that is missing, all the rest, even your book is just conversation. And will produce exactly the same results as all others.

Thu, 12/11/2014 - 10:37 | 5540071 livefreediefree
livefreediefree's picture

And yet Washington pols pass an Omnibus package which further incrementally institutionalizes the status quo.

Thu, 12/11/2014 - 11:37 | 5540309 hootowl
hootowl's picture

Joo greed + power+ corrupt politicians= FED= mass impoverishment+ moar power+ moar corruption= guillotine+ many mounds of greedy, dead dirt.

 

Starve The Beast!

Thu, 12/11/2014 - 10:35 | 5540067 Pol Pot
Pol Pot's picture

1930: all for one and one for all

2014: all for one percent and one percent for one percent

Thu, 12/11/2014 - 10:56 | 5540147 mr1963
mr1963's picture

Yeah. The biggest difference though is the amount the government is pushing in food stamps, EIC, WIC, SSDI, etc. There's a lot of money they're creating to keep this pig afloat. That's not going to change anytime soon.

Thu, 12/11/2014 - 11:51 | 5540339 hootowl
hootowl's picture

It will change when the government extortion/taxes/property confiscations, will not produce enough to pay the interest on the "national debt" and the fiat becomes so worthless that citizens cannot feed themselves or their families out of the garbage dumpsters and soylent green provided by government bureaucrats.  That's when the war between the U.S. Government and the armed homeless american citizens will finally begin.  When the pain, hunger, and humiliation finally becomes too great for the citizens to deny or bear.........Out of my cold, dead, hands.....Keep your powder dry and learn to track and hunt bureaucrats and politicians and banksters and root them from their hiding places.

Starve The Beast!

Thu, 12/11/2014 - 13:39 | 5540720 Pol Pot
Pol Pot's picture

Let the Hunger Games begin.....

Thu, 12/11/2014 - 13:39 | 5540719 Pol Pot
Pol Pot's picture

Let the Hunger Games begin.....

Thu, 12/11/2014 - 10:30 | 5540039 moneybots
moneybots's picture

"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."

 

We have yet to see the worst of the current depression.  Credit bubbles burst and deflate and the current one has still not burst.

Thu, 12/11/2014 - 10:18 | 5540007 Son of Captain Nemo
Son of Captain Nemo's picture

Difference between now and 1933?...

The word multinationals didn't exist and even if they did exist they weren't in sufficient numbers to cause the level of unemployment due to a no-holes barred immigration policy while we fight a "war on terror" in a security state?!!!

Some thresholds 81 years ago that even CBs would never have crossed in that day and age!!!

Thu, 12/11/2014 - 10:02 | 5539941 Rainman
Rainman's picture

The banksters are about to score a MAJOR WIN ... for themselves !

Tucked inside the goobermint's $1 Trillion spending bill is a provision to allow the big bank's derivatives book to continue being backstopped by the taxpayer.

This guided missle is aimed directly at the taxpayer .. again ! (  Bwaney Franks is pissed ! )

http://www.bloomberg.com/news/2014-12-09/u-s-spending-plan-talks-unresolved-days-before-funding-ends-1-.html

 

Thu, 12/11/2014 - 09:34 | 5539888 unplugged
unplugged's picture

But wait!  The O-man (kenyan thug) said most folks are experiencing Recovery, and the job market is picking up, etc.  I just don't get it. 

Thu, 12/11/2014 - 13:19 | 5540652 Colonel Klink
Colonel Klink's picture

Best referred to as the Kenyan cocksucker

Thu, 12/11/2014 - 09:37 | 5539863 forwardho
forwardho's picture

George, as always thanks for time and effort on article.

That being said, the premise of the post is flawed. Time, technology and Central Banks have rendered the comparison pointless. Though we live on the same planet, it's a different world. In 1929 we measured productive capacity in terms of "goods of value produced", now it's linked to a supra-leveraged market, (real vs paper). But the real world change  came in 2008. The market that existed prior to 2008 died with TARP, never before had a Govt stepped in and dumped almost a Trillion dollars in order to create the illusion that "all was well". The last 6 years have been a CB purchased fantasy. 

Comparing the Real to the Make believe is a pointless task. 

 

Thu, 12/11/2014 - 10:40 | 5540084 moneybots
moneybots's picture

"That being said, the premise of the post is flawed. Time, technology and Central Banks have rendered the comparison pointless."

 

Technology and central banks do not change the mathematical fact that 1+1 ALWAYS = 2.

Greenspan and Bernanke doubled down on 1920's FED policy.  They also doubled down on 1930's outcome.  Leverage increases losses when the cycle phase inverts. It is what crashed LTCM and investment banks.

If anything, a comparison to the 1930's is pointless because the credit bubble hasn't even burst yet, unlike the 1930's.  Post bubble needs to be compared to post bubble and we haven't reached post bubble, yet.

 

Thu, 12/11/2014 - 09:20 | 5539848 Fix It Again Timmy
Fix It Again Timmy's picture

We have a Potemkin economy, at best and on a good day...

Thu, 12/11/2014 - 09:11 | 5539826 My Days Are Get...
My Days Are Getting Fewer's picture

Excellent presentation

Thu, 12/11/2014 - 09:53 | 5539935 Stuck on Zero
Stuck on Zero's picture

I would like to see the charts show economic gains of the 0.1% over these years.  I believe it would look a lot rosier.

Thu, 12/11/2014 - 08:56 | 5539800 Tsar Pointless
Tsar Pointless's picture

It's Thursday bitchez! Are you ready for some football? 

Now watch this drive.

Thu, 12/11/2014 - 08:56 | 5539798 KnightTakesKing
KnightTakesKing's picture

Critical thinking is gone from the sheeple class. Nothing will change until the entire system collapses.

Thu, 12/11/2014 - 12:02 | 5540383 Jumbotron
Jumbotron's picture

 

Instead of the Great Depression we should start comparing this to the Long Depression of the late 1870's-1880's. 

 

Until this Depression goes on even longer.  Then we can just call it The Great Normal.

 

Thu, 12/11/2014 - 11:08 | 5540204 Questan1913
Questan1913's picture

The sheeple class have ever been as they are now; it is the utter criminality of the ruling class, from the billionaire oligarchs to their retainers in CONgress that has worsened.

Thu, 12/11/2014 - 13:14 | 5540616 zuuma
zuuma's picture

"The sheeple class have ever been as they are now"

I'm not so sure about that.Or, maybe the same only different.

If you ever read som history about early US elections - like 1820's & 30's, for example - you discover that the electorate was mostly illiterate.

Votes were routinely purchased at the poling place with cash, like a dollar [actually a fair amount of money, then], or a couple whiskey shots.

Not much fact-checking going on, so if the local newspaper printed stories about Andrew Jackson roasting puppies & hosing slave girls [or men], well, then, there you had it. Must be true. The few litereate people in town would read this "news" in the local tavern and opinions got set.

The real problem, which seems to be eternal, is the complete lack of interest in most people about these things.

Tv works?  Check!

Something to snack on? Check!

Some sort of chemical to abuse? Check!

We're done here.

Leave me alone & let me float away.

........ and that scenario plays out every day right up through the middle class and beyond.

We're into our own little worlds and very much asleep.

How to wake 'em up?  I have no idea.

Also, do we want to wake 'em up?

Thu, 12/11/2014 - 10:45 | 5540097 marathonman
marathonman's picture

Unfortunately, the collapse is planned and the solution that will be trotted out is far worse than the situation that caused it.  You got to break some eggs to make a New World Order SDR omelette.

Thu, 12/11/2014 - 09:09 | 5539819 Bossman1967
Bossman1967's picture

they will not let it get beter the collapse won't happen for a long time. the forecast for 2015 pain with a small chance for happiness

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