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25 October 2012


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Bill Wiggins

WE need to be told the truth.......which is?

...apologies if this sounds naive...but your article kind of left me hanging in mid-air

ps...you are one of the few ppl who talks any kind of sense.


Worth comparing with the UK experience at the same time, when successive governments that maintained a relatively limited role in the economy helped ensure that economic recovery came much earlier to the UK than to the US or many other economies (the high levels of unemployment in areas that were dominated by the shipbuilding industry (which was hit by both the collapse in trade and in investment) were not typical - the overall UK unemployment rate was much less problematic than in other countries).

Worth noting that - while global economic trade was badly hit by protectionist measures - this effect was dwarfed by the fall in cross-border investments that resulted from capital controls abd collapsing confidence that governments would allow investors to keep the beenfiots of their investments.

Terry Smith

Bill Wiggins: The truth is that the politicians, commentators and economists who think we can borrow and spend our way out of the current crisis are delusional, and the historical parallels they give to events like the Great Depression to justify this are false.

Nick B.

The root of the problem is vote buying using the voters money. Trouble is it seems to be possible to fool a sufficient number of voters that government intervention is in their best interests. Thus we are heading straight for the cliff and a painful end to tax, borrow and spend. The 5.00 pm news now tells me that GDP grew by 1% in the last quarter largely due to money spent on the Olympics. That's the economy fixed then!

WWII clearly did more for the US economy than it did for Europe's, but the real boom came after the war when returning US servicemen got stuck into the better life with new homes, cars and household appliances all made in the US.

It's taken a long time for the decision to export manufacture in favour of high finance and dodgy debt to wield its axe - but here we are.


I agree. So what should they do?

John pd

"The dramatic contraction of the money supply by the Fed which began in 1929, & the rise in interest rates from 1928 helped to cause & then exacerbate the impact of the crash. This was not simply a failure of capitalism or free
markets.It had a lot of help from the govt."

Terry, are you saying that the Fed is part of the US govt?
I thought it was a for-profit private consortium of banks?



As its been pointed out the real boom came after the war. Where did all the money come from to finance that?.

Or was it case of "mass investing in things that produced a return"?. Since all money is made up these days I am not convinced that whether we make up more pretend money or say there is less pretend money, will make any difference. I can see that if the pretend money we have is used to make a real person do something that produces a return, the economy can recover.

The situation now is complicated by the fact that most of the things we need, do not need need people to produce them, its cheaper to use robots than people in China and automated weeding machines and driver less cars are appearing, so how will there be a jobs recovery?

Whereas before if something was manufactured , someone had to produce it and they got paid a wage which was recycled in the economy. Now someone borrows money from a Bank to buy a robot and the Bank gets the money to pay back the loan for the robot and promptly sends it offshore, so how do we recycle the wealth and grow the economy?.

David Lilley

This is good history and it is "objective knowledge" (correspondence with the facts). It was WW2 and not Highway 66 and the Boulder Dam that returned the US to growth. A captive audience of arnaments buyers was the multipier.

The Keynesien multipier: create 100 new jobs and get an extra 80 ancillary jobs for free was always rubbish. The proof is that if it were true we would always have 100% employment.

However, there was logic in government stimulus spending when individuals and companies were disinclined to spend.

All the "fairy dust" folk call for Keynesien spending when it is a rainy day. How about when its not raining?

The answer is that GB did just that in the 1997/2007 decade. Do you remember that government spending was called "investment" and off-balance sheet PFI grew to £316b. but the result was massive debt, low public sector productivity and 36% of the male working age population not in work.

Ian Lauriston

Terry, I am interested in the historical perspective here and would like to explore it further in the hope of getting a far better understanding. Is there a definitive text that assesses the period from this viewpoint - or even better provides an analysis/comparison with the more widely held and perhaps conventional view? Thank you.

Propylene Glycol

Its been six years of financial crisis that hit the world, such a large period and bad phase for every1. What are they doing to overcome this problem.

John pd

Our present crisis is similar to the 1930s Depression in that it is FED caused.
As Terry remarked in his article the FED caused the contraction of the money supply.
Alan Greenspan of the FED held interest rates low, & approved the 'diced & spliced' sub-prime mortgage fiasco which has led directly to the loss of confidence within banks & the present day contraction of the money supply.


Check out UN Agenda 21. It is a UN blueprint for the 21st century. It's goals are a vast contraction in world population, the abolition of private property, & the abolition of the family.
'The New American' 10 july 2012 will enlighten.

Part of the plan of the UN & it's backers is an equalising of wealth between Countries & Continents involving the impoverishment of the First World, & the enrichment to parity of the Third World.
This is what we are seeing now.

We live in interesting times.

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