Comparing the Great Depression to today

Actually the first efficiency events will be family aggregation....

It used to be normal that the grandparents, their children, and grandchildren lived in the same house....

There will be more family pooling of assets....The first pooling being the roof over one's head....and second the box floating on 4 wheels....and more efficient meals....

In terms of going back to agrarian....this is not a cheap option....

There are a lot more people now....versus the 29 period....with a lot more coming....
Also one has to know something about agriculture....Just like any other profession....agriculture requires know how...and proper equipment and other inputs....These costs would be additions to the above....and are not cheap ......

Jobs are being rationed....perhaps one in 8 will have a means to produce cash for the aggregated families....and it may be one in 16....

At one point over 70% of the US population was agrarian....it is now less than 1% and dropping still....

Why ? Even the largest family farms cannot compete with vertical integration....ie the ADM, Monsanto business models....
 
Quote from drsteph:

Actually, we can. We just haven't had it come to that in over 80 years.
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How can we? Are not farms now large and owned by big land owners or corporations?
 
Monty, thank you for the topic. Great content.

What I would want to ask you.

You say when the stockmarket moves up 20% but the dollar drops 20% you are basically flat.

Agreed.

Now, let's see.

EUR to USD (Interbank rate)

10/26/2000 0.82850

07/16/2008 1.59390

http://www.oanda.com/convert/fxhistory

Thats a euro gaining 100% on the $ this decade.


Dow Jones

10/26/2000 10600

07/16/2008 11600


http://www.google.com/finance?q=INDEXDJX:.DJI

That's barely a 10% rise in nominal US$ gains!

A stockmarket barely up and the dollar crashed to all time lows and now people warn a 'lost decade' as Japan encountered in the nineties could (and they always emphasize could) happen to the US next 10 years?


Hu?


Now forget about comparing the Dow it's performance to the $ of 2000 why not track back and see where the DOW today would be in 1990 $'s.

Could it be the last 3 decades contained few to no real economic growth and it was all money printing or is this just crazy goldbug talk?

Anyway, if the stockmarkets crash again and the dollar with it you could come close to buying the Dow for free in real terms at least so it seems on a historical perspective.
 
Quote from Debaser82:

Monty, thank you for the topic. Great content.

What I would want to ask you.

You say when the stockmarket moves up 20% but the dollar drops 20% you are basically flat.

Agreed.

http://www.google.com/finance?q=INDEXDJX:.DJI

That's barely a 10% rise in nominal US$ gains!

A stockmarket barely up and the dollar crashed to all time lows and now people warn a 'lost decade' as Japan encountered in the nineties could (and they always emphasize could) happen to the US next 10 years?


Now forget about comparing the Dow it's performance to the $ of 2000 why not track back and see where the DOW today would be in 1990 $'s.

Could it be the last 3 decades contained few to no real economic growth and it was all money printing or is this just crazy goldbug talk?

Anyway, if the stockmarkets crash again and the dollar with it you could come close to buying the Dow for free in real terms at least so it seems on a historical perspective.
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Thanks for posting...

The 20% rally in equities and 20% decline in the U.S. dollar is more of a hypothetical example (that is actually occurring). This concept was raised by Jim Rogers who said that the S&P can go back to 1,500 but what does it mean if the dollar crashes with it.

And as with your Euro example, the dollar has been weakening against many other currencies. I posted this chart earlier but may be helpful again:

currency-small1.jpg


The issue you raise about the Dow and essentially buying it for free is a tough question for me to answer. Personally I wouldn't say it is "free" considering it takes capital to invest.... capital you could invest/store elsewhere. In another sense, this is your opportunity cost. So nothing seems "free".

But yes, the FED has been printing money excessively and we face the potential of a severe inflation... just like Japan. Look up any chart on the money supply. The system of fractional-reserve banking also contributes to the problem because banks essentially create money out of thin air every time they make a loan.

This topic, however, is an issue of ideology. There is no right or wrong answer or solution. There is a school of thought that believes that the activities of the FED and the fractional-reserve system are beneficial for our economy. Then there are critiques like myself (mesh of Austrian/Chicago school) who claim this will cause a huge bubble. Returning to the gold standard is the solution of the Chicago school. No one can be certain they are right.

Oh btw... don't listen to economists. If economists could be right 50% of the time and speculated in the financial markets, they would be billionaires. Even if they adhere to Efficient Market Hypothesis they can still make long-term forecasts.
 
GOOD land is still available and (we have family land being worked in Europe so I do not need to scratch for land here, but if you really want you can.. it is a hard life thou.)

A friend found a trailer in CA that the owner just wants to GIVE AWAY!!!

Others are exploring communal arrangements where they pool some resources and share a place....
Fact is, more and more people grow veggies (pot), have animals., chicken etc, it is rather easy and simple.....a food for thought...IT IS A TREND!
Quote from Scataphagos:

How can we? Are not farms now large and owned by big land owners or corporations?
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Quote from monty21:


The issue you raise about the Dow and essentially buying it for free is a tough question for me to answer. Personally I wouldn't say it is "free" considering it takes capital to invest.... capital you could invest/store elsewhere. In another sense, this is your opportunity cost. So nothing seems "free".

But yes, the FED has been printing money excessively and we face the potential of a severe inflation... just like Japan. Look up any chart on the money supply. The system of fractional-reserve banking also contributes to the problem because banks essentially create money out of thin air every time they make a loan.

This topic, however, is an issue of ideology. There is no right or wrong answer or solution. There is a school of thought that believes that the activities of the FED and the fractional-reserve system are beneficial for our economy. Then there are critiques like myself (mesh of Austrian/Chicago school) who claim this will cause a huge bubble. Returning to the gold standard is the solution of the Chicago school. No one can be certain they are right.
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Agreed and this is excactly the point I was trying to make.

It is appealing to compare the DOW crash of 29 to the one we had last year as it is appealing to compare economic circumstances then and now but as you rightfully point out they have a printing press today which could lead to a different outcome both in the stockmarket as in the economy for the best or for the worst that remains to be seen obviously.
 
I'm really not trying to be flip, but didn't the government have the advantage of the printing press back in '29, also?

They may not have flooded the system with money, like we have now, but as I've said many times before, where is that money really flowing?

Hasn't the bulk of it gone to either backstop potential losses of banks and financials (especially those the gov't deems 'too big') into the foreseeable future, to recapitalize the same players' balance sheets, and to assist state, county and city units of government in this time of economic distress (with declining tax revenues and increasing deficits)?

In other words, this money is not flowing to consumers and small businesses so that they are more likely to purchase goods and services.
 
Quote from ByLoSellHi:

I'm really not trying to be flip, but didn't the government have the advantage of the printing press back in '29, also?

They may not have flooded the system with money, like we have now, but as I've said many times before, where is that money really flowing?

Hasn't the bulk of it gone to either backstop potential losses of banks and financials (especially those the gov't deems 'too big') into the foreseeable future, to recapitalize the same players' balance sheets, and to assist state, county and city units of government in this time of economic distress (with declining tax revenues and increasing deficits)?

In other words, this money is not flowing to consumers and small businesses so that they are more likely to purchase goods and services.
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Back in 1929 there was a gold standard. The currency had to be backed up with a higher percentage in reserves. Plus it had greater value being fixed to a commodity.

Now there is just a rampant printing of fiat money and it is not backed by anything of value. It's just paper.

Pull out any U.S. dollar and read any text. It's a FED note...debt. It's just paper without any backed value.
 
In 1929 and into the 1930's the world was a powder keg of various military challenges from balkanazed nations. What international company (e.g. WMT or MSFT) would ever contemplate opening new international operations without guarantee of law and order. Folks talk about Trade Protectionism by FDR, but really the disruptive forces were already there. He could do little to stop it.

On the other hand, today and for past few decades, the U.S. has be the uncontested asymetrical military power. Regardless of your political persuasion, this imbalance has resulted in virtually no challenge to the whims of the U.S. And in this case, the whims have been law and order, and growing international commerce. Yes, WMT, MSFT and hundreds more. This asymetry may change under Obama, but it will take more than a few years.

So, in this respect, the business environment is much different today (and much better), than it was 80 years ago.
 
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