The Recession of all Recessions
Every recession in my lifetime has been quickly followed by an improved economy with the Dow climbing to new record heights. I got to the point were I said “why does everyone sell their stocks when they know next year it will bounce back?”
I wondered what it was that made Wall Street so nervous in the first place. I suppose it was the fear that we may have another melt down like in 1929 and the 10 years that followed.
The Great Depression is worse than what we are going through but what is the difference? They had the roaring 20’s and a tremendous building boom. What followed were a building boom bust, and a stock Market crash.
During that time, there was no FDIC, unemployment or welfare. The banks were not bailed out before collapse. To make things even worse they had natural disasters like the dust bowl. And keep in mind this was all on only a 10% drop in the GDP.
The government was slow to try to stimulate the economy. They did mortgage relief and aid, even 0% interest rates, but they cut government jobs and spending to do it. It wasn’t until WWII that they freely spent money and that was what ended the depression.
So although we may not be eating crickets and sage brush for dinner, the finical cycle is similar; Boom and Bust, Government cutting jobs to pay to make jobs, people and business not borrowing, low interest rates, business downsizing instead of growing and even a few natural and man made disasters.
Right now there are a good percentage of small business that are down 50% to 75% over the last three years. You don’t here about them but were do you think all the unemployment is coming from? You only hear about the publicly traded companies with so much money they can sell at a loss and show it as a profit.
Things are going to stabilize and either improves or we may just get use to it.
This recession is the one that we feared during all other recessions.
We may have already recovered and are just trying to compare it to the boom time.
Things could go either way depending on how we handle these days of automated production lines, automated checkers and tellers, and reduced farmlands.
We need to produce product that others buy. Other countries need the same labor and environmental laws that we have here to help even the playing field. How can we restrict ourselves then buy form those with no restrictions; it’s the same planet, polluting on the other side is still polluting.
To get us moving in our own advancement we do need government assistance. The government can reduce spending but that reduces jobs for customers to your business, it makes things worse. One person losing their job affects everyone he comes in contact with and everyone they come in contact with. The money that one person spends is moved from one person to the next, each person making a profit and each person paying taxes on it, over and over again. The one that actually ends up with the most of the money is the government. If they stop the cycle we all are affected. Unfortunately asking the government to stop spending during a recession is like telling your boss not to pay you because he needs the money.
I suppose with all that said it may make unlikely sense to put the unemployed to work on the farms and go back to at least producing our own food. Or to do meals-on-wheels or something productive. Make solar panels? Basically some one would have to create and organize these jobs; well, that goes back to government spending to create jobs. A sore subject, you bet.