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Economic Shock as Big As Depression

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April 07, 2009 – Comments (2)

Naked Capitalism has a very good post comparing the depression to today.

 

Conclusion
To summarize: 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.

 

I have done a number of posts where I refer to the depression,

Housing was the problem in the depression

 Cause for Depression

This next one I comment on the difference in mortgages and this is very important.  The structure of the problems that have put the world economy in this mess are different and the are harder to "fix."  Some of the solutions from the depression do not exist because of the difference in structure.

Things are Simply Worse then the Depression

 

2 Comments – Post Your Own

#1) On April 07, 2009 at 10:13 AM, EHoyle80 (< 20) wrote:

Recession vs. depression? How about recession vs. collapse? This is the question Gregor Macdonald asks, and he favors the latter answer. His prognosis? “Based on historical studies, the asset that will survive any endgame of global deflation is gold – with oil also being considered ‘Not as money, but as a store of value.’”

Via Stock Research Portal 

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#2) On April 07, 2009 at 10:17 AM, TMFJake (74.22) wrote:

Great link dwot.  As the article notes, the key difference with the Great Depression and our current environment is the size and scale of government response.  Consumer spending and retail prices have held up way better than I would have anticipated--collapse in the housing market notwithstanding.

I'm watching to see if all of this government intervention continues to be effective in stimulating spending and stabilizing prices.  If not, ouch...  And, if/when we see inflation kick in, I'll be watching whether or not GDP growth is sufficient to offset rising prices. If not, I'd expect us to end up in an environment of hyper stagflation.

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