Great Depression Chart
- Thread starter Darshan
- Start date
All thanks to idiots that tied Federal Reserve credit creation to incredibly stupid regulations that required partial gold backing of credit in the form of Federal Reserve demand notes. When people redeemed Federal Reserve gold, it then reduced the Fed's limit on allowable credit. As a result, the unemployment rate went to 24%
If there is anyone that understands this incredible economic contraction, it is Ben Bernanke.
Haha
That sounds good... but in reality you will lose ALL your assets (that's what a depression is!) and won't have 2 dimes to rub together....that is, if history repeats itself.
bush has been a disaster for the economy. he will go down in history as socializing the american economy.holding your finger crossed or putting your head in the sand hoping things will work out is not a policy.
it will prove the old political saw that only somebody from the opposite of the political spectrum can achieve your dreams. nixon going to china Begin giving land to arabs in a peace deal. etc.
Well, I've got no reason to doubt your facts, so I agree.
But lets be fair. A Depression was made inevitable by the loose credit build-up during the Roaring 20's.
And it'd be better if Helicopter Ben studied the Japanese Lost Decade rather than the Great Depression.
If the Treasury props endlessly, which it looks like, we're going to see a multi-year recession with little-to-no growth in equity markets and broader economy = inflationary recession. At least 4 - 6 years. And look what the Nikkei did after those endless bailouts. We're on the same path, IMO. Asset got totally mispriced once Greenspan dropped the hammer on FED funds in 1995. 0-6%, for the past 17 years = huge credit tsunamis, bubbles and crashes.
Back to present day, current estimates (Marc Faber), are discounting a 5 TRILLION dollar rescue when its all said and done.
That is hardcore debasement and ridiculous credit that will eventually spill over into the real economy via price inflation.
Even after the Banks clear their junk (many months), they've still got to recapitalize their tens - if not hundreds - of billions in losses.
I think the consumer/business lending spread could remain relatively high, for 12-24 months, thereafter = ongoing liquidity trap
The derivative unwind is something completely massive and altogether opaque. Counterparty exposure, leverage, offsetting assets - all unknowns. And in the tens of trillions.
How the Lehman settling went off without a hitch is still beyond me. 270 Billion in payouts and it goes down without a hiccup or bankruptcy? In this market? In this industry?!? Doesn't make any sense.
The only solution to Big League CDS exposure is Nationalization or FED Clearing house. Both are identical and super-inflationary.
Imagine if 5% of those CDS get triggered - we're talking payouts in the Trillions. Who knows, maybe more.
And the FED's gonna honor that and just print the money? Or auction it (and then print to redeem)....??