PeakTrader.com

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PeakTrader:

Jon believes monetary policy has been a failure.

U.S. per capita real GDP grew at a faster rate after the Fed, in 1913, than before (although large economies tend to grow more slowly than small economies), in large part, because the Fed became increasingly better at smoothing-out both short-term and long-wave business cycles.

Boom-Bust cycles are inefficient both in the boom and bust phases, because resources aren’t employed efficiently.

Also, you can’t blame the Fed for the financial crisis, because Congress created the moral hazard of directing and recycling money into the housing market.

You can blame the Fed for easing the money supply a few months too late in 2007, given the Fed works in the future economy. However, the Bush tax cuts in early 2008 gave the Fed time to catch-up easing the money supply.

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The Long Depression

The National Bureau of Economic Research dates the contraction following the panic as lasting from October 1873 to March 1879.

At 65 months, it is the longest-lasting contraction identified by the NBER, eclipsing the Great Depression’s 43 months of contraction.

In the US, from 1873–1879, 18,000 businesses went bankrupt, including hundreds of banks, and ten states went bankrupt, while unemployment peaked at 14% in 1876, long after the panic ended.

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The Depression of 1893

The Depression of 1893 was one of the worst in American history with the unemployment rate exceeding ten percent for half a decade.

During this period population grew at about 2% per year, so real GNP per person didn’t surpass its 1892 level until 1899.

The depression, which was signaled by a financial panic in 1893, has been blamed on the deflation dating back to the Civil War, the gold standard and monetary policy, underconsumption, a general economic unsoundness, and government extravagance.

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List of recessions in the United States – Wikipedia

Recessions in the Industrial Revolution – 1871-1914

Period – Percent Decline of Business Activity

1873-79 – 33.6%
1882-85 – 32.8%
1887-88 – 14.6%
1890-91 – 22.1%
1893-94 – 37.3%
1895-97 – 25.2%
1899-00 – 15.5%
1902-04 – 16.2%
1907-08 – 29.2%
1910-12 – 14.7%
1913-14 – 25.9%

Recessions in the Information Revolution – 1982-2007

Period – Percent of Contraction

1990-91 – 1.4%
2001 – 0.3%

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PeakTrader:

Along with the Information Revolution came an explosion of misinformation, to create a false reality, which people in countries like Greece are starting to realize.

We’re still floating on $1 trillion annual budget deficits and endless quantitative easings, along with huge trade deficits (i.e. consuming more than producing in the global economy).

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Comments on Social Change:

http://www.aei-ideas.org/2012/10/quotation-of-the-day-camile-paglia-on-capitalism/#comments

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PeakTrader:

Also, a deep four-year economic depression, after a 25-year economic boom, likely improved the environment substantially, along with each $1 in government spending for much less than $1 of “clean energy.”

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Budget Deficits - Charts:

http://www.raymondjames.com/images/monit/121015_1lg.gif

http://www.raymondjames.com/images/monit/121015_2lg.gif

Employment - Chart:

http://www.raymondjames.com/images/monit/121008_2lg.gif

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October 15 – October 19, 2012

In August, the CBO projected that the budget deficit would drop to $641 billion (4.0% of GDP) in FY13, $387 billion (2.4% of GDP) in FY14, and $213 billion (1.2% of GDP) in FY15. However, those projections were based on current law, which assumes the fiscal cliff (and no extension of the fix to the Alternative Minimum Tax, etc.).

Officially, we’ve added 4.726 million jobs since the labor market bottomed in February 2010, and nearly 5.2 million if you take into account the estimated benchmark revision that will be applied in February. That sounds like a lot, but it averages to about 167,000 per month. We need around 120,000 per month to be consistent with the growth in the working-age population.

Government employment has declined since 2008, reflecting pressures in state and local government budgets. Federal government employment is up by 40,000 since December 2008 – not a huge increase, but held back by the contraction in the U.S. Postal Service.

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