Cold Fury

Harshing your mellow since 9/01

The Great(er) Depression

Coming soon to an economy ruined by government meddling near you.

The Great Depression was not a straight downhill run. There were multiple, widely hailed “recoveries” and stock market rallies, but in 1938 the economy was in worse shape than when Franklin Roosevelt was elected in 1932, and the government was bigger, more intrusive, and more in debt (the same can be said about the government since 2000). Depressing it is to contemplate how government turning a recession into the Great Depression, but consideration of what Japan has done since its stock market topped out in 1989 can leave one pondering the choice of pills, noose, or handgun.

The Japanese have copied every page of the Keynesian and monetarist playbooks: government debt, public works spending, and regulatory expansion, and central bank monetization of assets and interest rate suppression. Multiple recoveries have been punctuated by multiple contractions. Capitalism has remarkable recuperative powers, but screw with an economy long enough and you not only prevent recuperation, you do lasting damage. Japan and Europe—also beset by persistent economic idiocy—have shown little growth or innovation for decades, leaving the economic idiots responsible muttering about supposed, self-exculpatory, secular stagnation. As the US economy glide paths into zero-and-below land, Washington, Wall Street, and the Ivy League’s best are muttering the same thing.

Nothing is more telling than birthrates, and in Europe, Japan, and the US, birthrates are below the replacement rate of 2.1 births per couple. When planned, having babies expresses confidence in the future. The Japanese buy more adult than baby diapers, illustrating the demographic crunch and falling dependency ratios (the ratio of able-bodied and employed workers to the population requiring outside support), which understandably increases pessimism and further decreases birth rates among the young.

They see a bleak future and they’re not wrong.

Elsewhere, Robert posts some good quotes from von Mises on gold, including this one:

The gold standard has one tremendous virtue: the quantity of the money supply, under the gold standard, is independent of the policies of governments and political parties. This is its advantage. It is a form of protection against spendthrift governments.

And we need all the protection we can get. Which would be one reason why, in Bracken’s great Enemies Trilogy, gold is banned right along with guns. Call it an essential step in the establishment and maintenance of any proper, well-ordered tyranny.

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2 thoughts on “The Great(er) Depression

  1. The gold standard was never “true”. Governments as far back as the greeks regularly adulterated the coinage to seek short term gain. Thus, money lenders grew the ability to assay a coin’s real worth before accepting it and merchants regularly used only trusted money changers for any coin or real worth above common metal. In any society where paper money exists, even as certificates of deposit drawn on provable gold reserves, EVERY GOVERNMENT IN HISTORY has printed more paper than they had gold to back. In fact, the only valid gold currency was gold itself, used for international transactions. When the USA was on the gold standard, our currency was no safer than it is now. The idea that it was somehow better back then is a fiction.

  2. Hogwash good sir. One needs only examine the purchasing power of a gold backed currency such as the dollar prior to FDR to note its remarkable stability. In fact until the Supreme Court outlawed gold clauses in contracts inflation only occurred in the US when the government debased the currency by issuing paper money. Inflation became a problem when the US went off the gold standard. Our dollar today has about the purchasing power of 3 cents in 1916.

    The Swiss Franc is the only gold based currency in the world. One only has to note the swngs in the dollar against other currencies vs the rock solid performance of the swiss currency.

    Anyone who believes in the full faith and confidence of the USG deserves what they will get. Buy gold and silver, leave the paper to Prof. Hale.

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"America is at that awkward stage. It's too late to work within the system, but too early to shoot the bastards." – Claire Wolfe, 101 Things to Do 'Til the Revolution

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