PeakTrader.com

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Chart:

http://2.bp.blogspot.com/_otfwl2zc6Qc/TIkIq1kL2MI/AAAAAAAAOWE/NgFKdoLcS9k/s1600/greatdepression.jpg

PeakTrader said...

The U.S. economy is so different today than in the 1930s that a better measure is changes in real GDP:

"The Great Depression of the 1930s can be seen as two separate events: An incredibly severe depression lasting from August 1929 to March 1933, where real GDP declined by almost 33 percent, a period of recovery, then another less severe depression from May 1937 to June 1938, where real GDP declined by 18.2 percent."

For those who believe the macro-data reported by the U.S. government are skewed, it's only because the government hasn't gone far enough making the appropriate adjustments.

There are "too many" assets and goods in the U.S. and "too much" capital (including from the "balance of payments").

The U.S. workforce is older and more productive today than 30 years ago. A higher level of productivity causes disinflation.

Also, U.S. "terms-of-trade" improved, while much of our trading partners terms-of-trade deteriorated.

So, the U.S. makes up in value what it loses in volume, while our trading partners make up in volume what they lose in value (the U.S. exports inflation and imports deflation, because many U.S. goods have rising prices, while many of our trading partners goods have declining prices).

We have a most productive workforce that can build "too many" houses, autos, etc., while we import much more than export year after year.

When the U.S. is at full employment, we optimize domestic production and the gains-in-trade, to raise U.S. living standards at the fastest sustainable rate.