The Coming Recession
- Thread starter Kanewpadle
- Start date
During the great depression of 1929 the stock market crashed and people were afraid to spend or invest money so there was little money flowing in American causing things to get worse and businesses laid off employees, factories closed, banks failed, and many companies filed bankruptcy. The Keynesian theory of economics states that when an economy slows down the Federal Government will then borrow and spend money to create jobs and get the economy going again. Once the economy is doing better the Government then starts paying back the borrowed money. Its a genius concept that works quite well, but there's only one little tiny problem. THE GOVERNMENT NEVER PAYS BACK THE FREAKING MONEY THEY BORROWED AND THE DEBT TURNS INTO A MONSTER! Some of the top financial people on Wall Street discussed the $22 trillion national debt recently and they all agreed that America would definitely default on the loans some day. The biggest question of all time is "how bad will that be"? It might be a simple restructuring of loans and payment plans or it might be a recession that makes 1929 look like a trip to Disney Land.
Last edited:
Gentlemen/ladies, please keep up the great thoughts. I'm learning a lot here!!
Exactly right. The nonsense factor has the meter pegged hourly.
Absalom
SWCA Member, Absent Comrade
I oversimplified grossly, as I indicated. But economic behavior is indeed cyclic, and tied to human psychology in such a way that no ideological recipe can offer a "solution". Tinkering and problem-solving is all that can be done, and being prepared. And I don't mean for the fictional doomsdays hawked by gold bugs on late night TV, but the next inevitable downturn.
Keynes died too early. The post-war Keynesians did indeed take what he developed largely as a crisis response and thought they could actually control the economy all the time. I'm not sure it's so much the politicians as the voters who won't LET the politicians do the necessary things in the boom.
[ame]https://m.youtube.com/watch?v=d0nERTFo-Sk&t=339s[/ame]
I get a kick out of the financial talking heads on TV - they all sound like geniuses after something happens, but none of them can tell us when the next significant event will happen.
MY SENTIMENTS EXACTLY.....
- Joined
- Apr 29, 2012
- Messages
- 4,642
- Reaction score
- 7,865
I doubt we'll default on our debt. No need too. Just print money to pay it....they call it "monetizing the debt"....you just inflate it away.
There's no good way out. You can monetize it, or pay it, or default. Paying it would require the Mother of All Austerities for a very long time. More politically palatable to monetize it. Default would cause a severe contraction but it'd be over sooner than any other sceanrio. But that would make the Great Depression look like good times. I think a lot of people would starve.
Just compare it to your household budget. If you spend more than you make you have to borrow the shortfall, and eventually the payment on the debt will consume all your income. Of course if you can go down into the basement and print all the money you need...no problem. But you can't. Only the Government can do that.
In that scenario cash would lose its value rapidly. Keeping cash right now isn't too painful, but it still has a negative real return. What pitiful return you get is still more than eaten up by taxes and inflation.
There is no risk-free investment. Not even cash, which is actually a guaranteed loser. Granted at the moment it is a small loss but anybody who remembers the inflation of the 70's knows what I'm talking about. Inflation was in the middle teens, maybe more, and Government Bonds paying 10% were called "Certificates of Confiscation". Of course that was the bottom and the perfect time to buy.
Where do you think we are now? In spite of stimulus that dwarfs anything in economic history we have paltry economic growth given that we've thrown everything we've got at it. The dollar of growth we get per dollar of stimulus has been falling ever since they started stimulus decades ago. What happens if stimulus fails to generate any growth? Game over.
Of course the $64,000 question is what do you do about it on a personal level.
There's no good way out. You can monetize it, or pay it, or default. Paying it would require the Mother of All Austerities for a very long time. More politically palatable to monetize it. Default would cause a severe contraction but it'd be over sooner than any other sceanrio. But that would make the Great Depression look like good times. I think a lot of people would starve.
Just compare it to your household budget. If you spend more than you make you have to borrow the shortfall, and eventually the payment on the debt will consume all your income. Of course if you can go down into the basement and print all the money you need...no problem. But you can't. Only the Government can do that.
In that scenario cash would lose its value rapidly. Keeping cash right now isn't too painful, but it still has a negative real return. What pitiful return you get is still more than eaten up by taxes and inflation.
There is no risk-free investment. Not even cash, which is actually a guaranteed loser. Granted at the moment it is a small loss but anybody who remembers the inflation of the 70's knows what I'm talking about. Inflation was in the middle teens, maybe more, and Government Bonds paying 10% were called "Certificates of Confiscation". Of course that was the bottom and the perfect time to buy.
Where do you think we are now? In spite of stimulus that dwarfs anything in economic history we have paltry economic growth given that we've thrown everything we've got at it. The dollar of growth we get per dollar of stimulus has been falling ever since they started stimulus decades ago. What happens if stimulus fails to generate any growth? Game over.
Of course the $64,000 question is what do you do about it on a personal level.
Last edited:
bagga
Member
- Joined
- Apr 1, 2012
- Messages
- 317
- Reaction score
- 511
this is exactly what I would tell the guys I worked with. they believed the BS about keeping debt and get the tax deduction. my masters degree supervisor was the biggest proponent of this very idea. I would tell him he was wrong. He couldn't bring himself to believe a underling.
^^^^Belief resists information.
- Joined
- Mar 12, 2013
- Messages
- 5,167
- Reaction score
- 12,906
I guess I'd better load up on tulip bulbs!
ancient-one
US Veteran
I hope that we are never faced with one like in the 1920's. I was very young but faintly remember standing in line with my grandad to get back a small portion of the savings account my grandparents and aunts had set-up
for me. Maybe that is part of the reason that when it became possible, having savings always has seemed necessary to me.
for me. Maybe that is part of the reason that when it became possible, having savings always has seemed necessary to me.
LVSteve
Member
Maybe that's because the true, sustainable amount of growth that can be achieved is rather less than many would have us believe. Not a popular view, I know, and living through the correction will continue to cause angst.
- Joined
- Apr 29, 2012
- Messages
- 4,642
- Reaction score
- 7,865
That's exactly right. So they juice the economy to get votes but it just pulls future demand into the present. That's why recessions are less frequent, but more severe than they used to be.
Brass and copper bullion aren't too bad either.
Yeah 2008 was quite a mess! No small wonder with Mortgage Backed Securities. Giving every Tom, Dick, and Harry money they could never pay back. Hate to see how people would react these days to a Market crash like 1929!
A few folks mentioned John Maynard Keynes. A basic premise is "Buy all the stuff you want now and pay for it with cheaper, plentiful money later.". This presupposes that " it" will be paid back at some point. Joe
A recession is coming! Hilary is going to win the White House![emoji23][emoji23][emoji23][emoji23][emoji23][emoji23][emoji23][emoji23][emoji23][emoji23][emoji23][emoji23][emoji23][emoji23][emoji23][emoji23][emoji1][emoji1][emoji1][emoji1]
Has anyone ever met an economist that was also an optimist?
I haven't.
I haven't.
memtb
Member
I'm "heavily" invested in precious metals. About 1200# of wheel weights! 
memtb
memtb
Grayfox
US Veteran
Live within your means. Simple basic, logic that so many, especially the government, just can't seem to understand.
Have y'all seen that credit card commercial where the young girl gets her new credit card in the mail? She then immediately goes out and starts running up the tab.
That in simple terms if the whole basis of the problem. Freely spending money you don't have.
Like many other problems in this country, the economy can be fixed. But it would be hard and painful. Nobody, and I mean NOBODY is willing face the pain. Especially politicians when doing the right thing would likely cost them the next election. That's why for decades both congress and the people have been putting band-aids on problems that require major surgery. It will come back to bite us all.
I'm not worried about the next recession, I'm more concerned with the distinct possibility that this entire nation could collapse under its own weight.
Have y'all seen that credit card commercial where the young girl gets her new credit card in the mail? She then immediately goes out and starts running up the tab.
That in simple terms if the whole basis of the problem. Freely spending money you don't have. Like many other problems in this country, the economy can be fixed. But it would be hard and painful. Nobody, and I mean NOBODY is willing face the pain. Especially politicians when doing the right thing would likely cost them the next election. That's why for decades both congress and the people have been putting band-aids on problems that require major surgery. It will come back to bite us all.
I'm not worried about the next recession, I'm more concerned with the distinct possibility that this entire nation could collapse under its own weight.
Don't be cynical, guys - our roaring economy and magical tax cuts will eliminate budget deficits and the national debt just as they always do.
Old Arkansawyer
Member
- Joined
- Oct 25, 2015
- Messages
- 2,197
- Reaction score
- 4,750
I don't think many grown men will stand in a 2 block long line
for a watery cup of soup. Not if they have the means to take
something of more value from someone else.
I grew up on an Arkansas farm and can and do grow a lot of
my families food. But, would I be able to turn away a family
with 2 or 3 starving children? Probably not. I just hope I
never have to face a 1929 or worse depression. Plus that was
followed by the dirty 30's were farm families couldn't grow
what they needed, and were losing their lands to failed banks
and failure to pay property taxes.
"I grew up on an Arkansas farm and can and do grow a lot of
my families food. But, would I be able to turn away a family
with 2 or 3 starving children? Probably not."
I'm not sure I could either, but sadly that decision may have to be made at some point.
I'm not willing to go on 1/2 rations long term to support strangers long term.
my families food. But, would I be able to turn away a family
with 2 or 3 starving children? Probably not."
I'm not sure I could either, but sadly that decision may have to be made at some point.
I'm not willing to go on 1/2 rations long term to support strangers long term.
I am still waiting for gold and silver to "double or even triple in value" as the metal purveyor have been predicting for the last ten years. They promise it is probably, maybe just around the next bend.
Stock market has been ready to crash for the last ten years as well. I am still waiting.
Good friend pulled his sizeable piortfolio from the market in 2008 and refused to get back in because he loves dooms day media.
I have done quite well in the market the last 10 years, thank you very much.
Started my business in 2010. We have been averaging 22% growth every year. If I ran my business worried about the next financial doom event, I would not be living the life I am now.
Ignore the talking heads, they would have you hiding in your basement eatting freeze dried food for the rest of your life.
A recession will certainly happen. When and how bad is impossible to predict. Just dont get caught with your knickers around your ankles when it does.
Stock market has been ready to crash for the last ten years as well. I am still waiting.
Good friend pulled his sizeable piortfolio from the market in 2008 and refused to get back in because he loves dooms day media.
I have done quite well in the market the last 10 years, thank you very much.
Started my business in 2010. We have been averaging 22% growth every year. If I ran my business worried about the next financial doom event, I would not be living the life I am now.
Ignore the talking heads, they would have you hiding in your basement eatting freeze dried food for the rest of your life.
A recession will certainly happen. When and how bad is impossible to predict. Just dont get caught with your knickers around your ankles when it does.
Last edited:
islandguy
Member
Actually, IMHO, we in N. America have been in a Recession since 1973. What we are facing now/soon/inevitably is a Super Depression, which will make the 1929-1940's one seem like a "downturn" in the economy. Just sayin, of course. When the SHTF in this one, the downstream velocity of said discharge is going to be hyper-velocity.
LVSteve
Member
Read the novel, "The Death of Grass" by John Christopher to see how that works out.
Similar threads
