For a recent addendum to my theme presented below, please follow the link below to read Paul Krugman's excellent article on this topic, published today, which I think follows my reasoning very closely: here is the full article link:
the shortened link (from Yahoo) is:
The only salient thing that Krugman ignores in my opinion is that rampant money printing must eventually result in super-inflation.
Here are my comments:
Most political and economic commentators are very reluctant to use the word Depression in their description about the world today. They point to the fact that in the Great Depression, unemployment was 20% or more, and I dread this, but we may get there, and we are nowhere near that now. What they don't calculate is how inter-connected the world economy has become, and how the public's responses have changed. And honestly, how you can actually calculate unemployment...back then, nobody cared in this country about how many people in India were out of work.
So first, I'll give you three personal anecdotes. My maternal grandfather worked for Buick in what was then a lovely town called Flint, Michigan. My mother (long since deceased) used to explain that she hardly knew anything was wrong...her dad went to work every day. Well there is about to be no more Buick and probably no more Flint.
My mother-in-law grew up in a family in Clifton, New Jersey and they had a little land there (a few acres.) Her father was very handy, ergo was constantly employed, and when the crap hit the fan, he decided to build a chicken-coop and stock it with chickens, rabbits, and other small wildlife that could provide sustenance. They also farmed their small estate for vegetables and other foodstuffs and so they never went hungry. As my beloved mother-in-law (an oxymoron for most) tells it, strangers would show up at their doorstep to be fed, and feed them they did...they had it to give out, and so they could afford this generosity. Compare this with this present situation that not only can't I build a chicken coop in West Windsor, New Jersey (it is against the law,) but also, it is unlawful for me to drill a fresh-water well to water my lawn or fill my now-defunct swimming pool. Besides, I wouldn't know how to deal with a chicken or a rabbit as far as food procurement goes. Our present society does not have the "self-help" alternatives that were available in the past. Nor do we have the independent agrarian base that we had back then...the food companies are either giant conglomerates or cooperatives...the small fry has been squeezed out. If people can't eat, they can't survive, and this a major difference between now and then. And if they can't survive then they revolt...this is true throughout history.
My third vignette involves my own family and my father who grew up church-mouse poor in Chicago despite the fact that his own dad arguably invented the modern super-market and was making big bucks (which he subsequently lost (that's another story about why you shouldn't tolerate nepotism)) in the early 1900s. My grandmother made her children clothes from what today would be considered scrap material. In fact, among my most prized possessions are the patchwork quilts that grandma made from old dresses that I remember her wearing. Who the hell knows how to make a quilt these days?
So here we are, and (1) We have less control of our destiny because while our sophisticated skills are more attuned (trading, blogging, writing computer programs, etc.) our basic skills have eroded to the Dark Ages. Who knows how to sew their children's clothes...I don't, do you? (2) How many people know how to grow a tomato or kill a chicken, or even how to find one to kill?
Okay, so there's more. We were not as inter-connected then as we are today. The big rub against America back then is that we were Isolationist. There is a wonderful book that I read (and often re-read) published more than fifty-years ago by David Potter, called "People of Plenty," and written in 1954 it presaged all our responses to crises...we would just find more resources, and Professor Potter warned against this mentality. As a young math-philosophy student at Columbia University, I embraced this way of thinking and I still endorse it today. The issue here is that it is no longer possible to be isolationist. Someone has to work with all the various factions to coordinate efforts, or like a dysfunctional team in any sport we will all fail.
Finally, the "herd-mentality" got us to where we are, it will keep us here or it will tank us further. Unless innovative thinkers like my partners and I keep hammering on the ultimate truths, then we will lack the courage to seek, perhaps unusual, but ultimately effective solutions.