Ep. 382 – A Tale of Two Depressions

The Kapital News
The Kapital News
Ep. 382 - A Tale of Two Depressions

While the historians and economists have written plenty about The Great Depression of the 1930s, the pages mainly remain blank as to how this depression will unfold. However, if history is any guide, and it’s usually one of the best, then it may be prudent to study the 1920s-1930s in greater detail.

When reading Murray Rothbard’s, “A History of Money and Banking in the United States,” Rothbard paints a vivid picture of the players, the policies, and the outcomes that existed during this historic time. What is quite an eerie feeling as one reads his pages when covering The Great Depression, is how similar the policies of the late 1920s-1930s coincide with today’s policies from both the government and the Federal Reserve. Whether it’s central bankers standing at the ready to do whatever it takes and willing to expand the money supply, to Congress and The White House, strongly supporting public programs – the only thing(s) that change are the names and the size of the facilities – and sometimes even the names do not change.

A simple exercise can be conducted where one would simply exchange millions for billions and billions for trillions to see how similar The Great Depression is to the here and now. What may be even more disconcerting is that these very policies were the cause of The Great Depression. Had the “authorities” allowed the market to self-correct then what would have been experienced was a recession, perhaps a severe one, but no depression. And this is not simply an intellectual thought experiment. Rather, look at the recession of 1920-1921 and the policies undertaken by the government and the Federal Reserve. More correctly, it would note the lack of policies and intervention. This is because only a decade earlier, the American people, as well as their elected officials, understood the prudent tenants of free-market capitalism and simply allowed for the markets to self-correct. What occurred was a recession and not a depression. But a lot changed in ten short years and books are written not of the 1920-1921 recession, but they surely are for The Great Depression. Want to understand the present and future, then know the past. We discuss this during today’s podcast.

On the economic front, the Fed’s balance sheet now stands slightly above $7 trillion – representing a week-over-week increase of some $103 billion. With respect to initial jobless claims, an additional 2.4 million Americans filed for unemployment insurance during the prior week – taking the nine-week total to around 38.5 million Americans. With a workforce population of 206 million, this would represent about 18% of the workforce. These are staggering numbers that are consistent with April’s jobs report, and also consistent with an economic depression – and more is likely to follow. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Depression #Bailouts #Debt #USA #Recession #EndTheFed #Jobs #Gold

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