One solution discussed is to have a "controlled war" (much like the Chinese War which we are losing even though we don't know we are in it as a country) based on building & competition as opposed to destruction. This would be a manufacturing war to bring us out of the current depression much as World War II (a shooting war) brought us out of the so called "Great Depression" of 1929-1936 (you pick the exact dates).
In order to draw this analogy we should have some basis to compare these two situations. The purpose of this log entry is to provide the analogy.
Securities: The great depression was based largely on the 1929 Stock Market Crash. While we have no crash (yet) we do have a real estate crash which is largely analogous in terms of effect on banking. Many predict a stock market crash, but we can stay with real estate in order to keep the analogy.
Bank Failures: We have plenty of "too big to fail" bank failures tied to eal estate. The key is the increasing unwillingness of banks to make loans in 1929 and the similar conservative practices today.
Deflation: The great quote is that "If you don't like inflation, wait till you see deflation." During the great depression they ran movie spots explaining why people needed to get out and buy and why growing prices was a good thing. Those old government sponsored advertisements would be great to see today. While property and implements were under pressure in the great depression, our problems today are EVEN WORSE! We have the same deflationary pressures on real estate, but while we have fairly steady prices on consumer good 40 CENTS OF EVERY DOLLAR IS GOING TO CHINA! This is worse than just losing jobs because people are not buying. We not only lose the jobs like we did in 1929, but we are still sending the money somewhere else, exacerbating our debt problems.
Trade: Tarriffs and protectionism were a primary exacerbation of the Great Depression. In our case, the Chinese War (which only the readers of this blog apparently know about) is much more insidious. In this case only the exports from our country are negatively impacted, both in their diversity (the number of products we export) and in the amount. China controls how many cars we sell to them while they flood our markets with cheap goods putting our companies out of business and increasing the marketplace. They are providing the same recessionary pressures that Tarriffs and protectionism provided; but the failure of our government to recognize this problem for what it is means that the damage is in one direction. Everyone benefits from fair competition. War is an example of unfair competition.
The "dust bowl". Wow! We even have a drought (climate change may be the new lexicon) just like at the time of the Great Depression. Who would have guessed at the similarities. I consider climate change to be one of the many "New War" issues we should address, along with a "manufacturing war" which doesn't require us to bomb China (or get bombed by them).
If we can act quickly, we can use the manufacturing war to head off the worse effects of the current Great Depression Revisited.
More on this later. Everyone have a good weekend.
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