Worse Than The 1930s

GREATER DEPRESSION II.

I have long argued that we are in a Greater Depression. See: https://patriceayme.wordpress.com/2011/07/23/greater-depression/

Europe is actually doing worse, GDP-wise, in the aftermath of the 2007 crisis than it did in the Great Depression shock of 1931. Actually these are the early stages of the greatest catastrophe ever known to have struck the genus Homo, I claim, and will so develop, lest drastically new thinking is applied. Krugman is slowly coming on board.

In the 1930s, the word “plutocrat” was well known, & an object of contempt. In the early 1930s, revolution was simmering; the governments had to do something. The USA & UK went into full, Soviet-like, command & control economy to rearm. FDR launched a program of construction of no less than 24 giant (“fleet“) aircraft carriers in 1933!

In “If Only It Were the 1930s” Krugman shows the latest graph of relevant GDPs.

Worse Than 1930s Great Depression

Worse Than 1930s Great Depression

[Germany, UK and USA were not in the Gold Bloc, but applied pretty much the Sterling method: default. France refused to default thus kick back on her armament program… When war against Hitler was already in full swing (1939-1940)]

Says Krugman:  the UK actually had a substantially higher ratio in the 1930s— and even more so after World War II. How did it deal with this debt? Not through the recipe currently being imposed in Europe, of fiscal austerity and internal devaluation. Instead, the UK relied on a cheap-money policy that produced low interest rates and moderate inflation — “financial repression” — with the central bank “subservient” not just to the government, but to government debt-management policies.

Amusingly, but tellingly, Krugman forgets to mention that the USA devalued in 1933 (devalued its debt, that is). That’s one of the first things Roosevelt did, hence the hatred of bankers.

Nowadays, erroneous policies boil down to who owns the world. The world has been colonized by the plutocrats. To service them, they impose slavery on all.

Little economists paid for sleek plutophile propaganda form a crucial, well rewarded, part of the scheme.

(Otto Rehn, by the way is thinking to run as a major extreme right wing politician in the coming European elections; thus the European Commission is led, in economic & financial matters, by a declared right wing extremist, and an ambitious one, indeed, not the cool technician he claims to be… hence his rage against socialist France.)

The radical solution is to default on the debt (I have advocated this long ago in: ”To Save The World, Please Default”). https://patriceayme.wordpress.com/2011/09/14/to-save-the-world-please-default/

Or at least default on interest payments. That could be done right away. Plutocrats would not be happy, they would plot.

To shut plutocrats down entirely, establish a worldwide register of property, and tax plutocracy accordingly.

Using force is not as utopic as it sounds: the Swiss Parliament just denounced a fiscal accord between France & Switzerland. What’s next? France will use force and impose whatever it has decided Switzerland will do fiscally. That involves, among other things, not just taxing French plutocrats hiding in Suisse, but also 190,000 Swiss citizens.

Some will say: “Is not force bad? If France uses force against Switzerland, surely, this is bad.” Well, no. First, force is already used. Plutocracy is satanic violence, the worst side of man, ruling. Second, force in the service of goodness is always good, just as weakness in the service of badness is always bad. The difference? Morality.

At that point the famous John from Hartford, who is paid to sound smart on the behalf of the plutocracy, intervened. Said he: “Default on the debt? Yes I can see that doing wonders for growth and employment when personal and corporate credit in the US economy totals around $60 trillion compared to the less than $3 trillion of cash in circulation.”

John meant to be sarcastic, but he is just idiotic instead. I politely replied: John, thanks for pointing out this misunderstanding. Please pay attention to the context. We are talking about government debt. This is in the name of what the austerity is done. First point. I would be glad if this got cleared up in your mind, all the more since you are probably not the only such case.

Second point: money is created through credit from private banks or dark pools, in normal circumstances. But, for example before and during WWII, this was thrown out of the window, when a command and control system was put in place.

That the USA required Great Britain to pay its war debt after 1945 was hostile to justice, decency, civilization, and highly detrimental to the British economy. That was made possible only by a British elite sold to Washington. That this is still going on today does not mean it will, tomorrow.

All governments’ fiscal problems would vanish if the hyper rich were taxed enough to kill the plutocratic phenomenon. This is a necessity, not to re-establish fiscal balance, but to re-establish civilizational balance.

Oh, by the way, John Hartford is grossly ignorant of what happened in the 1930s. Then all major governments (USA, UK, Germany) but for those on the gold standard (France) defaulted. The non-default of France was a disaster for the French economy.

Patrice Ayme

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25 Responses to “Worse Than The 1930s”

  1. Alexi Helligar Says:

    “No proof for what they say, but they say it together, sing it together, so they believe it. Belief is much comfortable: the charm of tribes.”
    Alexi: I have already called for the deprecation of belief in exchange for awareness. We have far too much belief and too little awareness. I have found that most “true believers” have zero awareness of the stories behind their own belief system, or the possible implied meanings.

    • Patrice Ayme Says:

      Right, Alexi. Fanatics have no idea where their beliefs come from, albeit the consequences of their beliefs are enormous, and that calls for us to disrespect them.

      Belief is unavoidable, and a good thing, a good economy, once established with enough critique…
      PA

  2. John Michael Gartland Says:

    “No proof for what they say, but they say it together, sing it together, so they believe it. Belief is much comfortable: the charm of tribes.”
    John Michael Gartland: Well put Patrice.

  3. Patrice Ayme Says:

    Very serious academics Piketty and Saez’s recent paper ought to be considered: “Rethinking Capital and Wealth Taxation”.

    Link = http://piketty.pse.ens.fr/files/PikettySaezAR2014.pdf

  4. Chris G, Boston Area Says:

    Chris G
    Boston area, MA
    > The radical solution is to default on the debt. Or at least on interest payments. That could be done right away. Plutocrats would not be happy, they would plot.

    I dare say it wouldn’t just be the plutocrats who’d be unhappy.

    It’s one thing to accept a little interest rate risk on bonds. Principal risk is an entirely different kettle fish. I’ll speculate that most people wouldn’t regard a 100% chance of receiving $0.98 on the dollar as equivalent to 98% chance they get all their money back but 2% chance that they lose it all. (The cost function is a nonlinear function of loss.)

  5. Patrice Ayme Says:

    Absent a sufficiently progressive taxation, the exponential growth of wealth guarantees the plutocratic phenomenon: the rich get richer. This comes in two phases: first, an oligarchy confiscates most of the wealth and most of the economy.

    Secondly, this unjust rise of wealth for a few is accompanied by an implosion of the character of the oligarchs, down into the black hole of the Dark Side, as they need ever more devious means to stay in power by force and lies.

    So the first thing to do is to break the enslavement of money creation to Wall Street (instead of Main Street).

    Secondly wealth ought to be detected: put in place a worldwide system to detect where and what wealth is. Break through all these shell companies and holdings.

    Third, tax the hyper rich enough to block the confiscation of all wealth and power by just a few. Republican president Eisenhower instituted a 93% tax on the upper tax bracket.

    https://patriceayme.wordpress.com/2013/12/15/worse-than-the-1930s/

  6. John Hartford Says:

    “John Hartford: Thanks for pointing out this misunderstanding. Please pay attention to the context.”

    Er…you never mentioned public debt. Not that the idea of a federal default is any less economically insane than a general default on private and public obligations

  7. Als, Portland OR Says:

    als
    Portland, OR
    I’ve been trying without success to verify the order of 24 aircraft carriers (which would have been Congress in any case, not a president). According to my sources, the US had 8 aircraft carriers at the outbreak of WW II, one of which was ordered in 1930; it was built as a carrier, several carriers in the fleet were other classes modified with flight decks.

    • John Hartford Says:

      John Hartford to Als Portland, OR
      “I’ve been trying without success to verify the order of 24 aircraft carriers”

      I can’t remember the exact number but total fleet and escort carriers built or ordered during the war was certainly of this order of magnitude. And although congress may have appropriated the funds the orders were placed by the Navy Department and it’s hard to imagine congress refusing such requests from FDR during wartime.

      • Patrice Ayme Says:

        Also I was talking about the huge, fast, armored fleet carriers, not the escort carriers, or carriers meant to support landings, which were little more than floating gasoline barges (one exploded, killing more than 2/3 of its crew).
        Only one fleet carrier survived throughout the war: the Enterprise. But it was damaged several times spectacularly, including at Okinawa.
        PA

  8. Patrice Ayme Says:

    Dear John & Als:
    One should not be paranoiac about default.

    The USA defaulted in 1933 (the year FDR embarked on the giant fleet carrier program). Greece has sort-of defaulted (at 50%).

    The extraordinary gymnastics in Europe have been made to avoid default (except partly for Greece and Cyprus).

    Paul used always to always speak about the pleasure of sudden devaluation. That will not happen in Europe. But devaluation of part of the debt could be engaged.

    The CDU-SPD government program (now on) calls for using no more federal debt within 2 years.

    Ah, those carriers…It takes many years to build a fleet carrier. The USA started the war with 8, but soon enough 7 were sunk. However, Essex class fleet carriers were in the final stages of construction, and replaced them smoothly readily.

    Example: the Lexington, scuttled after fiercely burning and exploding, went down to the bottom of the Coral Sea. Yet, soon enough, the Lexington (CV-16) fled Kwajelein, after a botched attack by a timorous admiral, and got torpedoed in the stern. A miracle? Lexington resurrected? No. Just a new fast fleet carrier.

    History, like all other sciences, is all about precision.
    PA

  9. Alexi Helligar Says:

    My take away:
    “All governments’ fiscal problems would vanish if the hyper rich were taxed enough to kill the plutocratic phenomenon. This is a necessity, not to re-establish fiscal balance, but to re-establish civilizational [sic] balance.”

  10. Dominique Deux Says:

    Dear Patrice, as usual your comment, far from dwelling in Utopia, is full of small seedlings which only need some nurturing and watering to bloom into perfectly feasible programs/policies.

    One such is “Break through all these shell companies and holdings.”

    Merely stopping to consider this opens huge venues.

    First of all, we’re supposed (ordered) to believe that this is a technically impossible task, and stop there. That is pure unadulterated BS. Government spying is both rife and efficient worldwide, but tracing back an oil tanker’s ultimate owner, or a holding’s ultimate paymasters, is claimed to be impossible due to that tired, low-tech trick of shell post boxes with copper plates in tax havens. Aw, come on.

    Fact is, the smart intel and law enforcement community is carefully kept busy chasing red herrings, and barred from joining that specific fray. No means, no results, it’s as simple as that.

    Year in, year out, hundreds of extremely proficient finance professionals are churned out by business schools and universities worldwide. French graduates, due to their high mathematical level, are among the best and at a premium, but they’re not the only ones by far.

    Let Governments start large recruitment programs, with a view to be as replete with financial intel capacity as they are now with anti-terrorist and economic spying capacity. This means decently paid analysts with decent career prospects. Tracing back clandestine ownership should no longer be a judge-ordered effort, using up spare capacities on a few idiots who made the mistake of getting conspicuous, but a blanket policy, with enough hardware and personnel to spare.

    The costs would be offset, by several orders of magnitude, by the obvious fiscal gains. Other advantages would unfold, some unforeseen.

    Of course the bright school and U alumni are all vying to become seven figure traders, sellswords in gilt armour for the masters of the world. Yet a two pronged approach of (a) offering decent earnings, status and government careers, along with the satisfaction of working for the common good, and (b) ruthless and exemplary treatment of the “golden boys” who somehow fall foul of justice, would make quite a lot of these bright young men (and women) think twice before selling their souls.

    (It’s a bit like prostitution: when attractive young women are given a real choice between gratifying work and selling their bodies, only a hardcore minority will keep to the latter. But the choice has to be real – no Wal-Mart till pseudo-jobs.)

    When I say “Governments” I do not mean all of them. A few relevant ones would be enough. Along with international agencies.

    You’re fond of reminding us of the greatness of WWII warriors. So, here it is: “Where there’s a will, there’s a way”.

    • Patrice Ayme Says:

      Dear Dominique: Excellent analysis. I think I am going to quote you entirely in a post.
      Last night two-third of “60 Minutes”, the famous news program, was an ode to the NSA’s exploits against “terrorism”. However laudable, that pales relative to the problems originating from plutocracy (including the usage, by said plutocratically animated governments of mercenaries such as Bin Laden.)
      PA

    • John Rogers Says:

      Excellent, Dominique, just excellent. The way it’s done now it’s like the three-legged race or the sack race at a picnic where the contestants (i.e. the Governments) are deliberately hobbled.

      One of my personal fantasies is to use the US hyper-military might to, say, parachute into the Cayman’s, seize all the financial records, cut thru the shell-company bullshit, and simply forfeit the illegal holdings of all American corporations and persons (you know, for “financial terrorism”). Much better use than killing wedding parties in Yemen with drones.

      • Patrice Ayme Says:

        Hello John, and welcome to the comments. All great minds think alike. One French nuclear attack submarine could shut down the entire Caribbean (and the USA has at least two dozens of these). If agreement about cracking down against tax havens was reached among France, the UK, and the USA, the tax havens could be closed worldwide. However , the problem is that, right now the world’s two greatest tax havens are the UK and the USA!

        I have written several essays on this. I think:
        https://patriceayme.wordpress.com/2013/11/02/usa-den-of-thieves/
        is a recent one.

        France is going to use force against Switzerland. I do not doubt that Germany will follow suit.

        Who used to be the third man at UBS, one of the world’s most prominent plutocrats, appeared today at a court in Florida, in a grey prison uniform, chained hand and foot. He was arrested by the Italian police in a 5 star hotel, and extradited to the USA.

        But that’s still theatrical amusement for the People to be thrilled by. The full plutocratic structure is so far untouched and stronger than ever. The real danger comes from those among plutocrats who respect, and even fabricate the laws, not the small fry that violate them.

        Everybody knows Apple Inc violates at the very least, the spirit of the law, and nobody does anything. I’m not writing this on my McAir, but it’s 4 inches away.

        To a great extent the Jihadism was a deliberate policy started by the time of Lawrence of Arabia, by the UK, in 1915, and even more on the Quincy in 1945. A policy to serve the oil plutocrats.
        PA

  11. Paul Handover Says:

    Just fascinating: post and comments alike.

    • Patrice Ayme Says:

      Thanks Paul! Some of the ladies and gentlemen who grace this site are indeed displaying exquisite thinking into the great efforts they are putting in their comments. I am honored. And gratified, as the aim is to create a forum of advanced thinking.
      PA

  12. Patrice Ayme's Thoughts Says:

    […] Krugman calls it a depression now. I called it a Greater Depression, all along, precisely because the causes are so deep, and so deliberately misunderstood, I expected the […]

  13. Propaganda From Subject Control - NewsCream Says:

    […] Krugman calls it a depression now. I called it a Greater Depression, all along, precisely because the causes are so deep, and so deliberately misunderstood, I expected the […]

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