Amatuer Economist Hour

Well, those who know me or read some of the posts that are archives that are currently not available (and possibly lost to the electron cloud depending on how much my current host can pull out) may know that I enjoy from time to time playing the Amatuer Economist game.

Lately I've been extremely pessimistic about the current state of the Economy and the direction it appears to be heading. First of all, before I continue, I must apologize to fine Economists such as Alan Greenspan for even thinking to publically post any sort of pessimistic outlook on the economy. The economy is very much influenced by mob law and if a panic shall occur and it can be blamed on me, it will.

This post is a filter and rewrite of comments I posted to a piece at Loaded Mouth called The Bush Agenda: Pants, Meet Shit which in turn was a pointer to the Boston Herald article Economic 'Armageddon' Predicted.

The article sounds heavily in line with what I (the Amatuer Economist) have been predicting in private with friends. (Obviously I don't carry as much salt as "Morgan Stanley", so feel free to disagree with me.)

Mainly, the Conservatives are gearing us up to being drenched in the Second Great Depression. First of all, the political model Rove has seemed to be following is the exact same one that gave Republicans control of the US for 30 years and landed us in the first Great Depression. Secondly, I think that the economic signs are almost easy to see... Which the article points out beautifully. The big thing however, I think, is the unprecedently low Employment in the country with Employment *still* declining. "Unemployment" numbers may be dropping, but most of that is due to people dropping out of the system because Unemployment Insurance runs out after 6 months or so in most states.

However, my longer term predictions are somewhat more detailed than the ones in the article (again, amatuer economics):

1. This new depression will make the one in the 80s look like "recession" Bush claims that he helped us climb out of in the last four years.
2. It may not be worse than the Great Depression in terms of the world economy as world trade controls are much better today and I think that the EU and China will both be strong rocks in the global economy.
3. It may not be worse in individual "short term" segments, but I think it will be much more prolonged. Assuming that Republicans are not stupid enough to make any major changes to the FDIC, Fed. Reserve, Welfare, or Unemployment we shall have several "old" new deal pieces in place to serve as semi-decent anchors within the immediate short term in particular.

   Time to start stuffing the mattress again with currency? Or raisins? I'd say gold, but we're full of it up here, and so saturated the market it's lost it's meaning. —Kate S.

   At the moment anything less than $100,000 in a single account is fine. The FDIC insures it for you, so even if your bank should go bankrupt (and with today's "mega-banks" that is almost a ridiculous situation) you'll still be able to reclaim that cash, so no need to stuff mattresses. (If you have more than $100,000 I would suggest investing anything above that in Real Estate or other accounts with other banks.)

   The real worry is that inflation is going to hit (soon, most likely), and it could quite possibly be hyperinflation. You might not have to worry about magically losing your cash, but your cash will definitely not go as far.

   The best investment is still Real Estate. The price of Real Estate will always go up, no matter what happens with inflation or the price of the dollar. The same cannot be said for any mineral (such as Gold) or market investment.

What does this mean? We aren't going to see the Banks and Savings & Loans fail as spectacularly as they did during the great depression (watch "It's a Wonderful Life" for some small idea), but we could very well see the return of Hoovervilles, which I hope the new ones are called Bushvilles, because he deserves nothing less.

Again, I'm thinking it will be somewhere between the 80s Depression and the Great Depression in terms of depth, but could well possibly last much much longer.

The only thing that could possibly shorten such a thing would be a new FDR and a new new deal, but I think at the moment the possibility of finding one could be tough. Especially because this time the Conservatives aren't going to take *any* responsibility for the state of the economy, because bullshit "Reagonomics" tells them they aren't responsible. [sarcasm]After all, it's all Clinton's fault and the sins of the over-eager dot-com boom are merely just coming back to haunt us.[/sarcasm]

Tas, at LoadedMouth pointed out how its the social programs (Welfare, Unemployment, et al) that are always bailing the Economy out and that it helped proved that Capitalism doesn't work. I'm not a socialist, and its interesting to hear the "capitalism failed hard" message. I wouldn't say it failed so much as it "succumbed to a mob mentality", which is more a human failing than a failing of capitalism's basic theory. (Just as Communism neither proved nor disproved basic socialism theory.)

I myself have come away from a lot of reading being something of a "Social Credit" supporter. Social Credit was a part of the seed for a lot of the ideas that modern economics seems to take for granted. The big key to the platform is the idea that neither pure socialism nor pure capitalism have been shown to work in practice. I very much believe that a mixed economy is the only possibility that has been shown to work in the long term as both socialism and capitalism provide excellent checks and balances between each other. (Let socialism handle a market's needs and capitalism a market's wants.)

(Just for anyone curious, the name "Social Credit" fell out of vogue except in Canada where parties of that name were instrumental in that country's economy (and universal healthcare). The name actually stands for one of the more radical ideas that Social Credit supporters had in which some Capitalist excess is skimmed (most of the theories on doing this come from manipulating the credit system which does in fact give banks the power to "generate" money) to provide "basic needs" checks to every citizen (tangent: this radical socialist tactic could well help the conservatives and their hatred of abortion in that babies would also get these checks thus reducing, though not eliminating, the financial burden of having a new kid). A neat sci-fi exploration of some of this theory is in Heinlein's For Us, The Living.)

We're all fucked if I'm right. I'm so hoping I'm wrong and just jumping to conclusions...