“Future Economic Historians” Will Probably Call the Period That Began In 2007 “the L-O-N-G-E-S-T DEPRESSION”
Sure, last year was the first pre-election year stock market loss since the Great Depression.
And admittedly, last week was the worst opening week of any year … EVER.
But that’s not the big news.
The bigger news is that the Baltic Dry Index has crashed.
And a prominent economist – University of California economics prof Brad DeLong – wrote last week:
Economist Joe Stiglitz warned back in 2010 that the world risked sliding into a “Great Malaise.” This week, he followed up on that grim prediction, saying, “We didn’t do what was needed, and we have ended up precisely where I feared we would.”
***
Joe Stiglitz is right.
***
In the aftermath of 2008, Stiglitz was indeed one of those warning that I and economists like me were wrong. Without extraordinary, sustained and aggressive policies to rebalance the economy, he said, we would never get back to what before 2008 we had thought was normal.
I was wrong. He was right.
***
Future economic historians may not call the period that began in 2007 the “Greatest Depression.” But as of now, it is highly and increasingly probable that they will call it the “Longest Depression.”
What’s he talking about? And how could we be in a depression when – until recently – the stock market has been soaring?
Well, the Fed intentionally created a stock market rally so that people would think that the economy was doing well. The wealthy have benefited, but everyone else has been left in the dirt.
But the real economy has been lying in a ditch on the side of the road since late 2007.
Indeed, the world’s most prestigious financial agency slammed the Fed before the 2008 crisis – and afterwards – for pursuing “bubbles, gimmicks and palliatives” instead of doing what was needed to stabilize the economy. So did the head of the World Bank … and many Fed officials.
Now, the Fed itself is starting to admit that all of its policies since 2008 may have been ineffective.
How Bad Is the Real Economy?
So how bad has the real economy been these last 7 years?
We noted in 2009 that more Americans will be unemployed than during the Great Depression.
We noted in 2010:
The following experts have – at some point during the last 2 years – said that the economic crisis could be worse than the Great Depression:
- Fed Chairman Ben Bernanke
- Former Fed Chairman Alan Greenspan (and see this and this)
- Former Fed Chairman Paul Volcker
- Economics scholar and former Federal Reserve Governor Frederic Mishkin
- The head of the Bank of England Mervyn King
- Nobel prize winning economist Joseph Stiglitz
- Nobel prize winning economist Paul Krugman
- Former Goldman Sachs chairman John Whitehead
- Economics professors Barry Eichengreen and and Kevin H. O’Rourke (updated here)
- Investment advisor, risk expert and “Black Swan” author Nassim Nicholas Taleb
- Well-known PhD economist Marc Faber
- Morgan Stanley’s UK equity strategist Graham Secker
- Former chief credit officer at Fannie Mae Edward J. Pinto
- Billionaire investor George Soros
- Senior British minister Ed Balls
We explained in 2011 that many economists agree we’re in a depression … and they only argue about whether we’re facing the “Great” depression of the 1930s or the “Long” depression of the 1870s. We also noted that housing prices fell farther than during the Great Depression.
In 2012, we wrote:
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:
- The housing slump
- The level of inequality between rich and poor (too much inequality destroys economies)
- The interconnectedness of financial systems and economies worldwide (interconnectedness leads to financial instability)
- Runaway spending and greed
*** 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.
We noted in 2013 that the British economy is worse than during the Great Depression, and more Americans are committing suicide than during the Great Depression.
We pointed out in 2014 that Europe is stuck in an economic malaise worse than a depression, that Americans fared better after the Great Depression than the 2008 crisis and that U.S. foreclosure rates are comparable to the Great Depression.
Last year, we noted that an important economic indicator – the velocity of money – has crashed far worse than during the Great Depression, and that the howling winds of deflation are hammering the U.S. just as much as Europe.
The Government Has Made It Worse
We’ve previously explained: “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 world’s most prestigious financial agency said that the government’s attempts to blow bubbles would just make things worse
- An economics professor says we’ll have “a never-ending depression unless we repudiate the debt, which never should have been extended in the first place”
- Fraud was one of the main causes of the Depression, but nothing has been done to rein in fraud today. Indeed, the only action the government is taking is to help cover up fraud
- All leading independent economists have said that the economy cannot recover until the big, insolvent banks are broken up, but the government has just helped them to get bigger
- The Federal Reserve caused the Great Depression and the current crisis, and has done nothing but help the fatcats at the expense of the little guy. And yet the government has given the Fed more power than ever.
- Government policies send manufacturing jobs and dollars abroad
The bottom line is that we – and the wealth of our nation – have been looted. The great redistribution of wealth in history has created a depression.
Corrupt policy has caused medieval, king-and-serf levels of inequality. As we noted in 2011:
The 1% has caused a depression for the 99%.
(21 votes)
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Depression, growth all words use to gloss over one concept.
1% own more than the 99% of all resources globally and you only have one way to rebalance that.
Now somewhere along the line you have to remove a substantial amount from the 1% and put it back into the economic mechanism to keep the mechanism functioning or you just end up creating infinite QE.
This infinite QE in its current form should not be considered a debt, if so whose debt should it be? The 1% because it is being created to keep the economic mechanism going to maintain their value. Not mine, me and ordinary people get wiped out in this game.
Now all the helipcopter in money in the world, sure hand it to me, through the perfect money collecting machine it flows to the 1% yet again but now the debt is put on my head. Fuck that.
Handing the QE over to those more priviliged and then saying I owe some part of this? Bullshit ...
THE ABOVE ALL JUST POINTS TO -> The imbalance and holding the depression is the 1% having so much and the 99% having so little that any tiny bazooka given to the 99% instantly vanishes anyway and this vanishing act is the depression.
DO CENTRAL BANKERS UNDERSTAND (OR KRUGMAN) -> Nope, if you create value and pump it into the system it requires either the slowing of the rate of uptake by the 1% or capping the 1% to get out of this depression.
SO DO THEY GET THIS POINT? Refusal to moderate or change what the central bankers do not seem to understand actually HOLDS US IN THE LONGEST RECESSION, LASTS FOREVER OR UNTIL SUCH TIME AS THE 1% ARE CAPPED OR MODERATED IN SOME FORM.
Choices are so limited and really a slow grind to realism, the next question is not for me ... what is the most a 1%'er be able to have. You need to decide that before you can moderate and get out of this depression.
Economists are such bullshitters when you are trying to cut to the truth of any point.
The system we have operated under for the last few hundred years is collapsing and that means calling this a depression is wrong. Depressions are cyclical events and what is occurring is non cyclical.... The problem we have today is that it is clear that the current system is little more than a giant scam. Private banks create money out of thin air (Counterfeiting) which is accounted for as being deposits (Fraud- the big 4 accounting firms are criminal organisations). The public is then enslaved with debt, which can never be repaid because the system would collapse if this happened, meaning it is a Ponzi scheme as well (which is also illegal). This system could never survive long term and it is now collapsing. What it has achieved is that the scam has transferred almost all wealth into the hands of a few mass murdering private banking families, headed by the Rothschilds. What needs to happen now is that to begin with these families need to be destroyed and the wealth they have stolen needs to be returned to the public.
The sum or result of the "scam" creates depression like conditions or worse, there really isnt much to compare this situation with other than Rome? So I think you both are heading in the same direction. It has lots to do with GREED too.
Your absolutely right, the reason for the lack of velocity or what I call Circulation, is the consolidation of wealth at the top when the top 20 have as much as the bottom poorest half its hard to get any velocity because they simply have most of the money and they have so much it doesnt get spent? Its so fucking obvious, its just those at the top are incapable of looking inward and being honest? They are the GREEDY. They, in my opinion, have officially won. With greed the only way to get money from them is to rip out of their hands? I know some of these guys, they will stop traffic to pick a penny out of the road. They are USELESS. Give a good tip are you kidding me? They are trying to eliminate cash tips? The money needs to make it into the hands of GOOD people. It doesn’t anymore. It all trickles to the top, they dont even realize that if they threw some down to the peasants, it would only act like a magnet and end up back up top? DUH? They need to understand Circulation and the virtuous cycle, they are all crooks so forget educating them. They have their agendas established? There is only one way for change and its not a pleasant path. These people have been brought up and raised to feel entitled, they have no humility. Like I said USELESS and for the most part other than fiat, worthless. No virtues and no Integrity. GREED AND SCUM! It can and will only get worse. My advice is stand up before you cant.
After 20 years of watching the State of the Union, I cant even fool myself into not thinking its complete BULLSHIT, OBAMA has the same goals as his first day 7 years ago, he cant hide it? Did any one really believe his words? Its all lip service? How is TPP going to accomplish all your goals OSAMA? It seems like a contradiction? It always is. I would say we are quite close to spirtually bankrupt as a country. Look at the Murder rate in Chicago 120 in 10 days? Currently lottery 1.5 billion. Thats hope and change? Lots of people Hoping for a Winner? It sure as hell wasnt OBAMA!
I guess the people dont pay as well as the top 20 do?
Gonna add this bit ... if the above is true who has committed the act of treason against the population?
Tip ... It is not me pointing out the fucking obvious, it falls to those who either being so dumb needs sacking or intentional then hanged carrying out the above behaviour. Over and over leads me to believe it is intentional, a fucking donkey does not jump off of cliffs and live to do it again do they?
These donkeys seem to manage it ... all intentional.
From the first point extrapolate and permeate all the other issues, now I add this point, so we can add the points about the law, justice, military, EBT cards, etc. etc. all to preserve the first point and the point nooone will challenge, solve, moderate or change. Somewhere in there is you ISIS terrorism and gov. drone strikes all just more in other forms, all distracting so you never challenge it.
ALL STEMS FROM THE INITIAL CONCEPT 1% > 99%.
There is no question, there are lots of traitors in our Government, I would say we are at an Historic High and especially throughout the world right now! Great stuff THANK YOU! They'll blame it on demographics and they control everything so they will make it look like demographics too...
I think the Fed sees, saw and is still seeing somethng far worse than the economy going bad...they see losing the dollar. That might explain why they have acted as they have. They are not just trying to make the rich richer they are stretching the timeline of currency survival.
Volker was warned in 1979 that the dollar was in trouble then. In just a few days in October 1979 he planned the great interest rate rise that held up almost 30 years. That is no longer an option. The dollar can not be saved. We are watching the death of the dollar. So is the Fed...with nothing left to do...
Long live the new dollar...
He who controls the money wins! If the FED has OWNERS which are some of the richest people in the world along with the biggest private banks. Doesn't this sound like a recipe for disaster for everyone but the bankers.
When bankers suck the purchasing power from the frn away, who gets hurt in this process? The people with the least amount of money that's who. It doesn't matter to the rich bankers if they devalue a currency by 20% (they will still be rich) but it most certainly matters to every one else....and now banks are protected by legislation!
There will be no good come out of this, and there are no REAL poiticians out there telling the truth, the only 2 I can think of are JFK and Ron Paul. and the corrupt took care of them.
As the Rothschild Patriarch said, "I do not care who is in goverment, as long as I have the money supply."
Please tell me what has changed since about !780 - especially about 1812 (the Napoleonic War), when Rothchild front run and took over the Engish central bank
Three words have covered this from the 1780s - The Rothschild Dynasty.
To elaborate:
Sure the Rothschild Dynasty has Associates (as Rockefeller was) and agencies, such as the IMF, World Bank and the BIS ... then there is the Bilderberg get-together, Davros, etc. ... but even if the original power of the Rothschild's is somewhat diluted now, that's where the power lies, like a semi-secret version of the old Aristocracy.
Look, the global financial crisis was NOT brought on by excessive government. It was brought on by lax government and corporate avarice. Further, the idiotic actions of the FOMC are not the actions of our elected government, they are the actions of a financial cabal. Where the U.S. Government has gone wrong is precisely the opposite of where most of the geniuses on this site think it should go. Let me be clear, the U.S. Government should reduce taxes, particularly on the poorest taxpayers and spend money like a drunken sailor (hopefully not on more death machines). Yeah, yeah, inflation, blah, blah. Ain't gonna happen. Please folks, read Randy Wray, read Stiglitz, Mosler, even Keynes (yes, the devil himself). This post shows that loose monetary policy (ZIRP) combined with tight fiscal policy (austerity) creates widely disparate benefits. The poor (who spend every dime they touch) are screwed, while the rich get richer. This is not merely stupid, but counterproductive. While the rich play with their money (speculate) the poor spend theirs. Hence a question for you armchair economists: During a depression, should fiscal policy be tightened (austerity) or loosened (increasing deficits) in a ZIRP environment?
And George, I like your posts. But please acknowledge that the Fed is only nominally a federal agency - the FOMC DOES NOT ANSWER TO ANYONE IN THE U.S. GOVERNMENT. The damned Fed was set up that way - to be independent. No, not independent of its owners, those international banks. It most certainly does their bidding. It is independent from us - like a teenaged child with our credit card. I know you know. I only ask that you not conflate the U.S. Government with the Federal Reserve. The former we elect, the latter bends us over.
You seem to think "government" is something besides the gang of theives and murderers in the first place.
Well stated, Man of steelhead23!
"It was brought on by lax government and corporate avarice."
Specifically, the REIT Modernization Act; the Gramm-Leach-Bliley Financial Services Modernization Act; the Commodity Futures Modernization Act and the Private Securities Litigation Reform Act.
Cannot get any MORE LAXER than that!
Thanks, but the section heading "The Government Has Made It Worse" is a bit misleading. Most of the dumb actions you list were actions of the non-government Fed. But you are right, the U.S. Government has been a willing accomplice in fleecing we the people. In particular, I find Obama's decision to "look forward, not back" and to not prosecute some rather obvious frauds, galling. To be honest, my bitch is mostly with the ZH literati who commented on your post. Also, I am concerned that in a democracy it is very important that citizens perceive the government they created to be "on their side." The opposite perception, Reagan's famous "The government is the problem" is anathema to representative democracy and actually works to empower the elite - quite the opposite of what most folks want. Carry on.
Democracy is quite the con, isn't it? You buy into it, then you feel beholden to the enslavers. But what are you going to do, not have "government"? It's crazy to want to be free of slavery. We all accept that there has to be some level of slavery or there will be Mad Max chaos.
That's the basic litany everyone has been indoctrinated with. Makes the job of owning all the resources and people of the world a lot easier if you convince people that a technocracy is in charge, and that their personal lifelong level of misery is a necessary evil.
But the skinny half breed in the White house says everything is awesome?
hey... they caught "El Chapo"
hey... they caught "El Chapo"
Future historians aren't going to say shit because we're going to get sewn up into a horrible dictatorship for eons.
If they do say something it'll be something lame like, "out of the fire began the age of the golden dick in our ass!" Something like that."
This too shall pass. The old men who are pushing this meme that their system is forever are not going to last much longer.
Their system will go with them, as they have excluded all the heirs.
They damn well better call it SOMETHING. This "recession that shall not be named" is one of the most ignominious periods in our history. This meme on the part of the TPTB is: If we don't give it a name, we can pretend it never happened...... Disgusting.
Long guillotines, flamethrowers, and AK-47's........................................
You mention Ed Balls and expect to be taken seriously ? Gordon Brown's humunculus who destroyed the UK economy !!!
why not quote STEVE KEEN ?
http://www.debtdeflation.com/blogs/
Although Keen is good, the best are Michael Hudson and Michael Perelman where real economics and global finance are concerned (and Dean Baker and Samir Amin on the second tier).
Its not a depression its now a civilization change...
As Stiglitz points out : this is a self fulfilling prophecy like fall of Constantinople in 1453, or fall of Reichstag in 1945.
When Empires do exactly the opposite to what they should do, to avoid what is their worst fear, they achieve exactly what was in the cards and they delusionally denied.
Just this week El Chapo fell for the same trap, to earn himself some immortality via the Hollywood sugar candy bowl.
With the exception of one or two 'experts' on your list GW, Faber for one, this should be a list of 'most wanted' by anyone's low standards.
Take Ed (Bilderberger ) Balls for instance, a right cock-sucking weasel who was at the heart of Blair's Government and would tun any trick for self gain. I'd love to kick him hard in the surname, the traitorous scum leach neocon that he is.
Was it a after-thought that you ended your list with a low-life like him? Can't stand Cambo & Ozzy but at least understand who they represent, however one slimebag fuck is Balls.
what the hell do I know
but it seems like the combination of everything
makes things worse than they have ever been
and probably an innevitable point in history, global history
1) the bad guys grow up to be global
2) so would the problems
3) the money system(s) which must ALWAYS be based on real things would get increasingly divorced from real things
4) the money system would go global (see 1 and 2)
5) the real things would became more scarce as the good, bad and the ugly mulitply on stored resource
6) stored energy, easy to get stored energy, would get scarce
7) lots of things would get poisoned and artificial (see 1-6)
8) the guys that claim to be good guys would all become controlled by the bad guys
9) those leaders left would not have the guts to tell the truth and would continue over the cliff
that sucking sound is your lifestyle as we have crooks sucking the life blood of our economy to far off lands, aided by our "own" .gov,
perhaps owned .gov is more correct..NWO via CFR..and central banks.
already they report the manchurian candidate leaving office next year dreams of heading the UN. why not?? he certainly did not represent the interests of our country while in office.
Hillary at state was willing to sell us out for $600,000 speaking fees for Bill.- I am sure the NYT will put that above the fold on page One.
Probably just wants to eliminate immigration border controls and cry a bit about stuff.
A depression is the onset of conditions in which there's a general inability to obtain sufficient cheesy-poofs. Not quite there yet.
the crash of 2008 will mark the apex of the usa empire and the beginning of the end of the empire.
I would argue the apex was the period between the end of WWII and the moon landing. When the Boomers were coming of age. It's been in decline for almost 50 years, now.
You mean since the coup d'etat of 1963, with the follow-up assassinations of Rev. Martin Luther King, Jr. and Sen. Bobby Kennedy?
Yup, sounds about right . . .
Thank you for naming it. We need to start using capital letters too.
i don't think minsky thought a minsky moment could last for this long.
thats because he hadn't seen the movie : Notorious.
It had the longest kiss.
While I agree with the net effect, I disagree regarding what is causing this condition.
What is happening is manufacturing is being relocated to emerging economies. The concept was that our economy would evolve to a higher level as a service and knowledge economy. The reality is we are left with a walmart economy. The people cannot see what has been done to them while they were busy downloading. It has worked we for a certain demographic.
Uber nwo
The die was cast when Nixon brought China into the mix. That meant the ultimate creation of a level playing field ie., our position would have to be "lowered" as China's "rose". The creation of a Walmart here made it posible for the sheeple to survive on meager incomes and the banksters/execs pocketed the difference while this took place. No one was the wiser for a very long time.
And it was David Rockefeller who flew on those trips to China with Kissinger and Nixon, and Rockefeller established banking operations in both Beijing and Moscow in 1973.
But his brother Nelson, VP for Ford, died "in the saddle...".
Like a true blue Oligarch.
@mendingo:
"What is happening is manufacturing is being relocated to emerging economies. The concept was that our economy would evolve to a higher level as a service and knowledge economy. "
With all due respect, does anyone really think that people believe this 'theory'?
I think I was about 14 ish in maybe 1984 when I pieced this together.
If (when) manufacturing leaves, so goes the economy. I was not a scholar, in fact I quit high school, but even way back then, it was painfully obvious. Just common sense to anyone who looked around. I've never heard this whack theory about a sevice/knowledge economy, and if I did, even at 14 I would tell you that the numbers didn't add up. Sounds like it was a scam (and it worked).
Anyway, just thought I'd say what was on my mind. ..even back then.
Here we are 34ish years later, still fucked, just like I imagined we wld be.
The ONLY dickwad who believed it was Robert Reich.
https://www.youtube.com/watch?v=A_hiEvTNV5k
I agree, that's important:
Government policy ... has encouraged American companies to move their facilities, resources and paychecks abroad.
George, I think we are seeing the confluence or superposition of several factors:
1) offshoring
2) government owned by industry
3) degraded education system
4) productivity
5) china rising
6) us spiral of global military dominance
Two very crucial factors, often overlooked, which occurred AFTER the assassination of President John F. Kennedy during Johnson's administration: signing of an amendment to the Bank Act allowing for US banks to own foreign banks (necessary step for a global banking cartel), and the ending of the financial speculation tax (presently referred to as a proposed "Tobin tax"), which had been in effect since 1914 (Revenue Act).
This completely flipped everything JFK had been working towards.
7. elders not teaching their children
8. MSM owned by the corrupt keeping the masses uninformed
Financialization.
Moving Manufacturing is just one of the outcomes of it.
Rampant criminalisation on WS is another.
Political representation for the highest bidder is another.
And Kardashian's Ass getting bigger is another of those things.
Thanks for including K's Ass!!!
spying-on-your-cellphone/
http://www.zimbio.com/Kim+Kardashian%27s+Most+Outrageous+Outfits?utm_source=outb&utm_medium=cpc&utm_campaign=Outb-ZM-US-Desktop-Specials-Kim-Outfits
http://www1.pictures.zimbio.com/fp/Kim+Kardashian+Shows+Skin+NYC+NmcXOdmKXpVl.jpg
http://www2.pictures.zimbio.com/bg/Kim+puts+on+a+bold+front+Xt-FnFmSb4Ol.jpg
http://www4.pictures.zimbio.com/bg/2014+MTV+Video+Music+Awards+Arrivals+RmpvcY1kWcEl.jpg
http://www1.pictures.zimbio.com/gi/Kim+Kardashian+Celebrates+Birthday+Tao+Nightclub+WZa27j6uZrAl.jpg
http://www2.pictures.zimbio.com/mp/NBDhcfjruBtl.jpg
http://www3.pictures.zimbio.com/fp/Kardashian+Clan+Goes+Shopping+NYC+b2RMQY50TMDl.jpg
http://www3.pictures.zimbio.com/gi/adidas+Originals+x+Kanye+West+YEEZY+SEASON+2EjCUD4MBZMl.jpg
http://www1.pictures.zimbio.com/gi/GQ+Men+Year+Awards+Red+Carpet+Arrivals+6NRtgJjls7ll.jpg
http://www2.pictures.zimbio.com/bg/Rihanna+First+Annual+Diamond+Ball+2oUOk5qwFaHl.jpg
http://www4.pictures.zimbio.com/gi/19th+Annual+ACRIA+Holiday+Dinner+zBH-2eWnWK-l.jpg
http://www3.pictures.zimbio.com/fp/Kim+Kardashian+Steps+Out+NYC+yAUlvlLVOoTl.jpg
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http://www4.pictures.zimbio.com/gi/Kim+Kardashian+introduces+Kardashian+Beauty+WeuyKiBZO5Bl.jpg
http://www4.pictures.zimbio.com/bg/2014+MTV+Video+Music+Awards+Arrivals+RmpvcY1kWcEl.jpg
Trickle down ethics.