bobby jindal in 2012?

[rayboyusmc]

First Kenyan President
of the United States

Little minds travel in small closed circles. Approximately the circumfrence of a gnats ass.

 

[glockmail]

Little minds travel in small closed circles. Approximately the circumfrence of a gnats ass.

Does your mommy know that you're on the internet unsupervised?

 

[Toro]

You're the one who has stated that the 1980s and 1990s were a depression. Anything that you say about economics after that is therefore meaningless.

Er, dude, this is what I said

Its not true that US depressions ended earlier. Much of the last two decades of the 19th century was spent in depression.

You realize that the 19th century is the 1800s, right? Or did you just misread it?

The 1980s and 1990s were a time of prolonged expansion and the fewest years in recession ever.

 

[glockmail]

You realize that the 19th century is the 1800s, right? Or did you just misread it?

The 1980s and 1990s were a time of prolonged expansion and the fewest years in recession ever.

Yes, I misread; and I apologize.

What I was referring to was the depression in the early 1800's, where the feds did nothing and the economy recovered quickly.

As I recall, the late 1800's was a period of great economic expansion, "The Gilded Age" is what they called it, no?

 

[Toro]

There were great technological inventions in the late 19th century, or at least expansions of new technologies such as the railroads and new farming techniques. What new technologies do is lower the costs for everyone. That is ultimately a good thing. However, in the near-term, it can result in tremendous dislocations since lowering costs ultimately lowers prices, which leads to deflation. During a deflation, existing institutions and companies often fail at a higher rate because the debt within their capital structure is fixed while prices are falling. This leads to higher unemployment and a slower economy. Eventually, prices for labor find a clearing level at lower prices and people start getting hired back again. However, the dislocation can be wrenching.

This is what happened after the technology bubble of the last decade. Technology lowered the costs of many things. This is ultimately good for everybody, but what it does in the near-term is to encourage over-investment. Lower costs increases profits and entrepreneurs rush in to make that excess profits. However, they overbuild, which leads to overcapacity, which leads to further deflation. This is what happened in Silicon Valley. In 2000-02, the economy was in a recession but the teleconomy was in a depression.

The roots of our problems today can be traced back to that time period. The Federal Reserve attempted to avoid deflation at all cost and flooded the financial system with liquidity. That liquidity eventually made its way into an even bigger bubble known as the housing market. Now, we are paying an even bigger price than we would have had we taken our medicine five years ago.

Looks like I've hijacked this thread...

 

[glockmail]

If businesses fail because they rely on old tech then let them. Same then, same now. Propping up AIG and bailing out banks will only forestall the inevitable. FDR poured money at alphabet programs and raised taxes which simply extended the pain of 1929.