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Learn from history, as much as some would like you to believe it we're not all doomed

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August 27, 2009 – Comments (23)

One of my favorite CAPS players, Sinc.  Mentioned some excellent quotes from Andrew Jackson in his most recent blog post.  It's funny that he mentioned Jackson.  I'm reading great a book about him right now.  No, it's not American Lion.  It is Patriotic Fire by Winston Groom (the author the book that of one of my favorite movies of all time was based upon...Forest Gump).

The book is about Jackson's role in the decisive battle of the War of 1812, the Battle of New Orleans.  The beginning of the well-written book contains a lot of background on the period, including a brief overview of Jackson's life.  He was essentially an orphan who took it upon himself to get his law degree (or whatever it was called back then) and went on to become extremely successful.

One thing that I take away from reading history books like this is, the world has problems.  It always has and it always will.  Today's problems just seem worse than the ones that have happened and were solved in the past because we forget the past and we hear about today's issues over, and over, and over again in the news, on the Internet, etc...

Back during the War of 1812, the United States was literally bankrupt...it couldn't even afford to pay its army.  Not only that, but the U.S. economy was in shambles because of the absurd Embargo Act that Thomas Jefferson passed several years before, which was designed to punish the British, but ended up hurting us much worse.  In the end, we solved these problems...which were at least as bad as the ones that we have today.  I have no doubt that The U.S. will eventually recover from today's problems.

Perhaps we will fall into a situation like that which befell the British Empire, a slow, long decline from being THE global Super Power.  I wouldn't be surprised in the least if that happened, but all of this talk comparing America to the Roman Empire, and about how we are going to face massive social unrest, the complete break-down of society, blah, blah, blah are absurd. 

The snap-back from a serious shock to the system and the resulting inventory build may make this look like a "V-Shaped" recovery, but I don't think that it will be.  I strongly believe that we are headed for a long period of much slower economic growth than we have become accustomed to over the past several decades.  Having said this, as much as some sensationalist fear mongers would like us to believe it...we're not all doomed.

Deej

23 Comments – Post Your Own

#1) On August 27, 2009 at 11:59 AM, ReadEmAnWeep (56.12) wrote:

Nice, people are actually talking sense on here again.

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#2) On August 27, 2009 at 12:12 PM, GNUBEE (25.95) wrote:

Agreed, we will not become a fast track 3rd world nation.

But US is like Rome in that it plunders wealth, just in a backdoor smoke and mirrors way.

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#3) On August 27, 2009 at 1:18 PM, alstry (35.17) wrote:

Why are they absurd?  History has shown us that when a nation goes bankrupt, social unrest is a natural consequence.  History is replete with examples.

From one who advocates to learn from history, it seems absurd not to apply history.

You seem to fail to consider that back when Jackson was President, government was very small and we were on a gold standard.  We were basically not much more than a subsistance economy so adjusting to a slow economy was relatively easy.

Now 150,000,000 American's are dependent on government spending to survive under a paradigm that has existing for over 50 years....and based on the recent "success" of the cash for clunkers program, it seems every car dealer in America is also dependent.

Good luck selling cars next month without the subsidy.

This central issue right now if government is spending twice as much as it is taking in....and the gap is widening as tax receipts evaporate. 

Back in the days when government was responsible, people were forced to do without if it didn't have the money to spend and borrowing was much easier as there was relatively no debt.

If you can explain how 150,000,000 Americans are going to react when they learn that our government is out of money...I would love to listen to your perspective....as there is no historical precedent for this in U.S. History....it will be very interesting to see how this plays out.

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#4) On August 27, 2009 at 2:32 PM, TMFDeej (99.43) wrote:

Say, who was right about auto sales for the year?  My prediction of 9.5 to 10 million units or yours, Alsty? 

Through July sales = 5,806,662 units or around 829,500/month.

829,500 x 12 months = 9.95 million.

Pretty good guess if you ask me.  I called the bottom perfectly.  Blah, blah, blah all you want about cash for clunkers.  It was a known possibility when we had this discussion.

There's a huge difference between a weak economy with slow to no growth and a silly doom and gloom prediction that something HORRIBLE is going to happen over the next month.  I can't wait until nothing happens.  I wonder what your excuse will be?

Deej

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#5) On August 27, 2009 at 2:38 PM, TMFDeej (99.43) wrote:

By the way, Alsty.  You need to check your facts. 

You seem to fail to consider that back when Jackson was President, government was very small and we were on a gold standard.  We were basically not much more than a subsistance economy so adjusting to a slow economy was relatively easy.

We're talking about the period of time from approximately 1807 through 1815 here.  The United States didn't adopt the gold standard until 1834.

Deej

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#6) On August 27, 2009 at 2:43 PM, kirkydu (93.63) wrote:

If by doomed the big bad gloomers mean we're all going to be standing in bread lines, then yeah, they're wrong.  Poverty is only going to roughly double and our overall standard of living is just going to be flat for a generation, that's not so bad- unless of course crime creeps upward and there is growing civil unrest and we start having a hard time defending our interests at home and abroad, then yeah, then we're doomed. 

Hey, what's $50 trillion evaporated plus another $10 trillion spent on little to nothing new equal?  That's right, sixteen years of American politics, 2001-2013.

Hate to say it, but if the Chinese don't start buying more stuff from us, and we don't fix our leaking health care, entitlement, banking and energy systems, we're screwed.

BTW, letter to Herb Kohl re health care:

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#7) On August 27, 2009 at 2:48 PM, kirkydu (93.63) wrote:

ooops, 2017!  I didn't mean to vote Obama out in 2013, well maybe I did, who knows, we'll see if he can impress me, I sure hope he does, but he's got to fight half of his own party to do it.

Long live the Blue Dogs!  Maybe the nation's best hope.

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#8) On August 27, 2009 at 3:12 PM, alstry (35.17) wrote:

Alstry generally checks his facts.....the WORLD was on a gold standard prior 1900 and back a few thousand years.

As far as you call for the bottom (from Cal Risk):

From the Financial Times: ‘Cash-for-clunkers’ sales disappoint Detroit (ht James)

[S]igns are already emerging that overall sales will fall back sharply now that the incentives have expired.
...
[Edmunds.com] estimates that, based on visits to its websites, “purchase intent” is down 11 per cent from the average in June ...
excerpted with permission

It now appears that sales in August were at about a 16 million SAAR (auto sales for August will be released next week).

This follows an 11.22 million SAAR in July. The Cash-for-clunkers program started on July 24th.

If sales in September are 11% below June - that would put sales at under 9 million SAAR - the lowest sales for this cycle, and perhaps at the lowest rate since the early '70s. Of course the program just ended, but it will be interesting to see how much Cash-for-Clunkers cannibalized future sales.

http://www.calculatedriskblog.com/

TIMBRRRRRRRRRRRRRRRRRRRRRRRRRRR

We could be selling over 300,000,000 cars per year if government bought a car for each citizen.....and we could each be making a million per year if government just handed it out.....

in the end a society must be held accountible for its behavior....you seem to be one of those people that just like living off the government dole..........what happens when the government runs out of money????

They must take all you have or stop giving.

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#9) On August 27, 2009 at 3:32 PM, TMFDeej (99.43) wrote:

It's strange that you state that you check your facts, Alsty, when you clearly stated "You seem to fail to consider that back when Jackson was President, government was very small and we were on a gold standard."

Who exactly were you referring to if you didn't mean the United States when you said "We" were on the gold standard when Jackson was President?  Perhaps you were referring to the people that we were fighting with at the time, the United Kingdom?  I don't see why you would call them "we" but they were the only country on the planet that was using the gold standard during this time period.  The Netherlands was the next modern country to adopt the gold standard, and they didn't do so until 1818.

As far as auto sales go, I said that they would fall between 9.5 and 10 million units in 2009.  You said that they wouldn't.  They clearly will, so you lose.  We can wait until January to officially declare a winner if you'd like.  I knew that you'd cry about the fact that cash for clunkers was passed, but as someone who follows the news as closely as you sem to you clearly knew that the potential for the passage of such a program existed when we had this discussion.  It had been rumored for months.  I took it into account in my estimate and you didn't. 

People make mistakes all the time, like stating a country was on the gold standard when they weren't or incorrectly forecasting auto sales.  For some, mistakes are very easy to make...but very difficult to admit.

I'm not sure why you want to bring my personal situation into this discussion, but I can assure you that I'm not "living off the government dole" as you so articulately put it, cough, cough.  I can I pay out way more in taxes than I receive in benefits from our horrible government.

Deej

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#10) On August 27, 2009 at 3:35 PM, wuff3t (97.66) wrote:

This is interesting: TMFDeej states that the US did not adopt the gold standard until 1834, whereas Alstry thinks the world has been using a gold standard for several thousand years.

Guys, in the spirit of a fair contest, who's right and who's wrong? Feel free to explain why you think different dates and economic circumstances might dictate your opinion. I ask in a spirit of genuine interest...

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#11) On August 27, 2009 at 3:38 PM, alstry (35.17) wrote:

If you are in the auto business.....you are now on the govenment dole.....plain and simple.... no matter how much you want to think differently.

As more and more like you become dependent on the government spending for your income......the government will need to tax more and more until there is no more left to tax.

Enjoy your welfare check while it lasts.....your uncle will be collecting soon.

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#12) On August 27, 2009 at 3:44 PM, Option1307 (29.73) wrote:

Glad to have you back Deej!

 I don't always agree with your take on things, but you usually write some nice/informative posts. Hopefully this is a signal that you are going to resume your regular blogging like before.

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#13) On August 27, 2009 at 3:47 PM, JakilaTheHun (99.93) wrote:

Good post, Deej.

Every time I start thinking about how "bad" things are, I remember what my Great Grandfather had to endure.  When he was 18 years old, he was sent off to fight in the most applling conflict in world history ("The Great War").  Even at 90 years old, he still had nightmares from his experiences in World War I.  

But it didn't end there.  He went through the Great Depression when he was still a relatively young man (in his 30's).  He was then sent off to fight in World War II for several years (as an officer).  Then, he was eventually called up to go to Korea.

Things might seem bad now, and in many ways, they are "bad", but "bad" is a relative term and many generations have had their share of suffering.  Ours isn't so bad compared to many of our ancestors'.  

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#14) On August 27, 2009 at 3:55 PM, alstry (35.17) wrote:

Jakila,

Who said things are bad now....they are not even close.  They are actually pretty damn good.  Practically everyone is getting handouts from government.

The only reason things are so good is because government is recklessly counterfeiting currency and bankers are lying about their financial condition.

If government wasn't counterfeiting, we would have 100,000,000 people standing in food lines.

This never occured in your Great Grandfathers days.  That is why he and others sufferedsuffered....he nor our nation did not try to live a life that was fake.  We can only fake it so long...then we will all soon learn to relate to the responsibility your Great Grandfather lived up to....except this time it will be much more severe the longer we run from reality.

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#15) On August 27, 2009 at 4:02 PM, RonChapmanJr (90.50) wrote:

-1 rec

"but all of this talk comparing America to the Roman Empire, and about how we are going to face massive social unrest, the complete break-down of society, blah, blah, blah are absurd."

Not noticing or understanding the parallels between the US and Roman Empire is absurd in my book.  Sometimes people say the worst is coming and it doesn't, but other times people don't think the worst is coming and it does.  You have no idea how bad it is going to get and neither do I, but not considering all the possibilities at this point is extremely naive at best and dangerous at worst.

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#16) On August 27, 2009 at 4:10 PM, TMFDeej (99.43) wrote:

Alsty, I do not make nor do I sell automobiles.  While I clearly know more about the auto industry than you do, I did not directly benefit in any way from the government's CARS program any more than you do as a supposed lawyer and probable taxpayer from a myriad of government policies.  If I'm on the "dole" then you are too.  If you ask me, as someone who is fiscally conservative I see the program as a big waste of money.  It merely pulled ahead sales that would have eventually happened anyhow to a compressed period of time.

Welfare check.  HAHAHAHA.  You haven't changed one bit.  You always like to throw insults and ignore a debate when you are clearly proven wrong.  You were wrong about the U.S. being on the gold standard and your forecast for U.S. light vehicle sales was way off.  End of story.  I thought that Alstyzombics or whatever you call this "stuff" is all about being right.  I guess not.  Feel free to hurl more insults rather than admit that you were wrong...twice in a single post.

Deej

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#17) On August 27, 2009 at 4:16 PM, TMFDeej (99.43) wrote:

Ron, -1 rec for this post...oh and by the way +1 rec for me using doom and gloom to shill my own for-profit website on how to survive the end of the world, right?

Deej

 

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#18) On August 27, 2009 at 5:22 PM, jesusfreakinco (28.83) wrote:

TMFDeej

Deej, I think you are counting your chips related to auto sales way too early.  2009 is far from over...  I am not saying Alstry's predictions are right, but that a lot can happen between now and the end of the year.  Just how much longer the Sheeple will spend remains to be seen.

+1 rec nonetheless - I like the Alstry vs Deej debate :)

JFC

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#19) On August 27, 2009 at 5:51 PM, tonylogan1 (27.87) wrote:

Deej -

I find you right more often than not, but I think you're a bit off base on this one.

The CARS program has IMHO devastated our ability to accurately assess demand for cars and what sales would be without the program. You may end up being correct, but it is way too early to be sure. I'd say we need at least another year to find out if 10 million is the bottom.

On the other main issue, while true we will probably not end up living in underground caves scrounging for cockroaches for dinner, I think the concept that "the world has always had problems, but they always have gotten better"... is an overly simplistic model to use.

The bottom line of what I most care about is the state of the world while I am living in it, and possibly that of my children if I end up having them. In the long run I agree things will be fine... but the short run can be 10-50 years of relative misery if we do not learn lessons from the past on HOW things ended up turning around (such as downfall of roman empire as it parallels USA's downfall)

I think one big frustration that a lot of "gloomers" have is that they way we turned things around in the past is exactly what we are moving away from. Instead of schumpeter's creative destruction, we have Krugman style new Keynesians pushing poor people to buy things they cant afford, etc.

starting to feel rantish... sorry

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#20) On August 27, 2009 at 6:04 PM, bigpeach (28.18) wrote:

Sometimes people say the worst is coming and it doesn't, but other times people don't think the worst is coming and it does.

And most people think spending your life worried and afraid is not worth it just to be prepared for extremely unlikely catastrophic events. Nothing naive or dangerous about that.

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#21) On August 27, 2009 at 6:43 PM, bullnada (< 20) wrote:

Do you know how to take care of your family in a catastrophic event?  Did you know when an unlikely event happens you have 3 days for most  people to run out of water.

Is your 911 going to work? How about your plastic bank card? Or your bank statement.

You people seem so smart yet some seem to think nothing could happen. If you dont think the world is fragile at this point you are truly kookoo. Is it because americans have had it so easy for many many many years?

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#22) On August 28, 2009 at 8:00 AM, isusan (< 20) wrote:

Deej, agree with Option, comment # 12. Welcome back!

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#23) On August 28, 2009 at 9:33 PM, SockMarket (40.11) wrote:

Nice blog deej. Couldn't agree more. 

 

good historical accuracy guys! Here are a couple errors though:

the decisive battle of the War of 1812, the Battle of New Orleans.

The battle was fought 2 weeks after the war ended. The decisive battle was at Baltimore (our national anthem was written there).



You seem to fail to consider that back when Jackson was President, government was very small and we were on a gold standard.  We were basically not much more than a subsistance economy so adjusting to a slow economy was relatively easy.

Wow, lets take that one part at a time:
1) the government was small but our population was too; they still, however, controlled the economy as is evidenced by the Panic of 1837
2) we started on the gold standard 2 years after the election of Andrew Jackson
3) We were on a subsistence economy? Really? I suppose other than our industry and agrarian sector we were, unfortunately not too many people were truly subsistent.
4) A slow growth economy? This is generally not what is associated with America in the 1800’s…


[Jackson was President] approximately 1807 through 1815

I should have been elected in 1824 but due to the corrupt bargain (election resulted in a plurality, went to the house and Clay, an influential senator and aspiring presidential candidate, traded his vote (to John Quincy Adams) for the Secretary of State position) Jackson lost. He campaigned for 4 years and won in 1828. Those dates more closely match James Madison (1809-1817).
 

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