The 2022 crisis will be very different from the 1929/1930s depression so why are people planning to

[MorkandMindy]

The 2022 crisis will be very different from the 1929/1930s depression so why are people planning to respond to it in the same way?


March 22 Edit: the OP was in February and I was busy slanging off Neoliberalism as bound to fail. Well it did in March at least have a massive hiccup. Expert economists were already predicting an economic meltdown at least half the size of the big one of 2009, in 2020 and Coronavirus turned out to be the trigger.

so we are now in something like a 1930s situation, but we need to do at least as well as FDR did back then. He hired a lot of people at the going commercial rate rather than filling offices with Local, State and Federal bureaucrats on really good salaries 'creating well-paid jobs' doing nothing useful.

A screw up bigger than Neoliberalism under the 'New Deal' label is on the way.

 

[JackRT]

The 2022 crisis will be very different from the 1929/1930s depression so why are people planning to respond to it in the same way?

Could you give us a quick précis of the response to the 1929 depression and the planned response to it today?

 

[chevyontheriver]

The 2022 crisis will be very different from the 1929/1930s depression so why are people planning to respond to it in the same way?

And granted that the 2022 crisis will be different, exactly how will it differ? For that matter, when will it actually start?

 

[Yttrium]

Which 2022 crisis where now?

Will the Justice League be involved?

 

[HTacianas]

The 2022 crisis will be very different from the 1929/1930s depression so why are people planning to respond to it in the same way?

How different will it be from the crisis of ought eight?

 

[Desk trauma]

Where are people getting these crystal balls?

 

[MorkandMindy]

And granted that the 2022 crisis will be different, exactly how will it differ? For that matter, when will it actually start?

It becomes a crisis when things start moving very quickly which will be when millions of Middle Class people lose their jobs. The software to automate for example the back office is already on sale so it will be starting very soon. Where I worked the cash office has already been automated cutting the workforce in half.

 

[MorkandMindy]

Could you give us a quick précis of the response to the 1929 depression and the planned response to it today?

The 1929 depression came when as a result of a couple of factors and continued as long as money, liquidity was absent from the hands of pretty much everyone.

One thing I picture was a farm with a huge pile of apples at the end of the drive which people could buy but no one it appears had enough money to buy the pile, load it on a truck and take it to a city.

Conversely I was at a location where in the Depression a Broadway theater cast had performed for food, barter that is, because the people who needed the food in this case had to go to where it was, because the money didn't exist to allow exchange over a distance.

 

[JackRT]

For the record my understanding of 1929 and following is that an almost completely unregulated stock market and monumental greed caused the collapse of 1929. This plunged the USA and other industrialized nations into a recession. However, in its panic to save American industry and jobs, Congress embarked on legislation providing for massive tariffs on imports. The President thought this reckless but did not veto. The other nations retaliated with huge tariffs of their own. The resulting trade war turned the recession into a world wide depression that lasted a decade.

 

[MorkandMindy]

The cure was firstly in the New Deal to print more money and pay it to people who would work on the projects, and then the war started so there was plenty more money printed to work on other projects, like ships and tanks and trucks and aircraft. It was to pump in liquidity.

That is all very Keynesian, but it relies on money that is pumped into the economy staying there and circulating. Now in our global economy that won't happen, it will flow out to Germany, Japan, China, S Korea, Holland, and so on, in that order at present.

 

[Always in His Presence]

What movie is this?

 

[MorkandMindy]

How different will it be from the crisis of ought eight?

One of the reasons for the 1929 crash was faulty accounting and that also contributed in 2008 making both crises worse, but both also had an underlying factor.

In 1929 the town banks were defrauded en mass by the big 5 New York banks, which then ended up with pretty much all the money, and the cure was to print more money to replace what the big guys had stolen.

In 2008 very low interest rates encouraged buyers to buy houses they could not afford and banks to lend out more than they would otherwise have lent. When interest rates went back up a lot of loans were defaulted on, and there was a further contribution of car factories moving out of Detroit and other car building areas leaving a whole bunch of unwanted houses there.

Banks then repackaged their uncollectable debts as good investments and sold these troubled assets World-wide. The US government funded TARP to rescue both US and foreign banks but a lot of troubled assets were not refunded and as I understand it, there are banks all over the World trying to get back into the black.

 

[Ophiolite]

Cowrie shells. That's my answer. Cowrie shells. They worked for my great, great, great grandfather and for all I know he's still doing OK.

 

[MorkandMindy]

Where are people getting these crystal balls?

The economy changed direction around 1982 and has been going in a problematic direction ever since, you might have noticed that returns on invested money exceed the rise in pay for most of the population.

Most people have not paid attention because the big losers have been the working class, mainly manufacturing workers, who then briefly became significant by supporting Donald Trump, and then I guess returned to oblivion leaving the Middle Class baffled as to how Trump could win.

Close a car factory employing 15,000 people and the town it is in may then turn pretty much into a ghost town and nobody cares. In fact you can do it lots of times and it's called 'progress'.

But if you save money and get better results by terminating all the teachers in a district and bring in Vets to keep order and get the teaching done by teachers from other countries and by distance learning and instruction programs on the computers and it might become World news.

 

[Messerve]

Where are people getting these crystal balls?

They create their own crystal balls. It's called self-fulfilling prophecy. Wall Street attempts to do it all the time.

It's like a millionaire planning on a huge mansion being built but then telling the contractor "I don't want you to build my mansion because I suspect you'll go bankrupt soon. So I'm going to withdraw my construction plans and have it built by someone else." So the contractor does go bankrupt, of course.

 

[MorkandMindy]

I hope the 2022 crisis will be only an employment crisis and not also an economic one, we've started having those 'jobless recoveries' already, but they've been small.

What is a jobless recovery?
Hourly-paid worker productivity has been rising, between 1979 and 2018 it increased 70% and pay by 11% and manufacturing employment fell from 19 million to 13 million in the same time frame.

The economic change was some money moved from paying manufacturing workers to increasing company profits, some went to the administrative workers, some in top executive bonuses, and the rest in stock dividends. So it 'trickled up'. The change in employment was some of us moved into government funded projects or into the service industry.

The money did fine and the employment went down a bit. Technically I guess that's called a 'job loss recovery'. This was a slow underlying trend.

As for money, my middle class relatives got very wealthy from investments and my pay got stuck. The economic system has not been readjusted so even now the investments are rising faster than pay from working.

The next change will be more of the same but will also affect many middle class jobs and happen a lot faster. A doubling in productivity and a halving in employment in just 5 years from the looks of things. It will be necessary to change the way the economy works, and that long hoped for 'leisure time' will arrive all at once.

There are two aspects, money and employment

 

[MorkandMindy]

Money New Deal Style
If you follow the 1930 rules and just throw in more money, a lot of what is spent will come out at the top of the system in profit and go to the top execs and shareholders. The next stop for it will be an Italian made yacht, a big one from the Netherlands, or a really huge one from Germany, and of course, German made cars.

What doesn't go out of the country will go around the loop again, and a chunk of it each time will leave until it is all gone.

Money Andrew Yang Style
Transfer the money made by automation to the workers displaced by automation, result, same money flow routes as at present. Crisis solved.

 

[TLK Valentine]

For the record my understanding of 1929 and following is that an almost completely unregulated stock market and monumental greed caused the collapse of 1929. This plunged the USA and other industrialized nations into a recession. However, in its panic to save American industry and jobs, Congress embarked on legislation providing for massive tariffs on imports. The President thought this reckless but did not veto. The other nations retaliated with huge tariffs of their own. The resulting trade war turned the recession into a world wide depression that lasted a decade.

So let's recap: the Depression of 1929 was caused by:

1. lack of regulations
2. tariffs
3. trade wars

Well, thank goodness we've learned from.... *looks around*

Ah, crud.

 

[Pommer]

So let's recap: the Depression of 1929 was caused by:

1. lack of regulations
2. tariffs
3. trade wars

Well, thank goodness we've learned from.... *looks around*

Ah, crud.

We were also on “the gold standard”.
When you backed your currency with specie, the liquidity of the economy is fixed, unless you devalue your currency.
This frees up money but risks inflation (that, if it rises faster than the growth of the economy in general), leaves your country with less than when you started.

 

[cow451]

Where are people getting these crystal balls?

Hobby Lobby