First, thanks to Memory for setting this debate up, and of course to my opponent as well. I have great respect for your posting and I certainly
believe we will be giving ATS a debate to remember!
Economic cycles are hard to predict, in fact, it is not even certain fact that they exist. But what we do know for a fact, is that economies never
grow indefinitely without complication, with out minor set backs and eventually, not without economic depressions.
The United States defies the once traditional explanation of "what is an economic cycle", and this is important if trying to calculate when, why and
how an economic collapse could and will happen. For the United states, at the time of the last depression, was only just emerging as a World Power.
We where a young Nation, not having made our true impact on the World, and not yet a Super Power. Our economy was changing nearly as much as our
politics, and this is perhaps why we had fallen to begin with. One thing is for certain, the United States prior to the collapse in 1929 had grown at
an extraordinary rate, and fell quite suddenly just as quickly.
Since then the United States has come into it's own, dominating the World Scene. We have grown more, faster and developed more information,
technology and militarily then any Human civilization in history combined. We hold more percentage of the World Economy then any empire ever has in
World history. We hold more power as a Nation then any empire the World has yet seen, and we did all of this in a mere 80 years.
Hiccups on the way? Oh sure, small ones, some big ones, some may have felt bigger then they really where, and some where worse then ever truly
explained.. all left their impacts, and they all carry on. The system has not changed, and the kinks in the economic track may have been temporarily
resolved by government intervention, but have never been cured.
It is important to note that America is an experiment in Government and in economics. We cannot match our course to that of past peoples, because our
situation being so unique can never be replicated in the history books.
But the first and foremost law of economics -- paramount growth = eventual paramount collapse.
1929 was bad, this is true, but it happened in an era where the majority of the population did not have public water and sewers, telephones and cars,
did not depend on TV's and air conditioning, refrigerators and gas stoves. An economic collapse in 2008-2028 would lead to confusion, anger,
desperation. In times of desperate measures Humans display the tendency to forsake rationality and adopt instinctual habits of violence, greed and
characteristics of unbecoming beings..
But are we even due a massive economic collapse? Oh, I do believe we are. I believe we are going to face the worst the World has yet seen. And if
we look closely, if we look threw the spoon fed garbage on TV and the nonsense the News throws at us.. if we honestly relate the World scene to that
of the first major World Wars ..
You will see, dire times are ahead of us. We may of thought us witty and genius for avoiding large scale political and economical confrontation, but
in fact they are tied together and in reality, we only put off the inevitable, building the pressure in the hope the constituents would be complacent,
max out their credit cards, and generate enough wealth to keep us afloat if by an inch..
Through paramount debts, maxing the working American's budget paying off debts and interest, servitude of a modern era, we will detail how a society
driven on consumerism is about to exhaust it's only method of continue and perpetual growth.
To banks that never had the money they loaned, who face the brunt of the battle against over extended credit to those whom never should have had
extensive credit granted.
Our financial institutions unraveling at the core, the very foundation the economy of the World's last remaining Super Power is being tested by the
pull of geopolitical influence battles, resource strains and internal financial bankruptcy.
To our own Government that we put so much trust into, which spends it's self into existence, which without the ability to allocate massive amounts of
money to useless and baseless projects, would quite literally cease to exist.
To the principles of how our economy is run, why we are never educated as to why it's run this way, and quite simply how this system, ever expanding
and consuming is about to meet it's final stretch of life.
This Grim discussion will not only shed light into how our economy works, but also disclose why this system must meet this inevitable, gruesome end.
There will be no fear mongering here, only the presentation of factual financial information and the policies that we are bound by. In the end, I do
believe the people will have a clear vision of what has been, and what is to become of our economy, our way of life, our freedoms and the very fabric
of our existence.
So follow me, if you will, as I will take you into the depths of history, into the world of large numbers, CEO's and desperate government regulatory
commission designed to duct tape a defunct experiment in it's final hours. Let us explore and contemplate the extraordinary times we have ahead and
detail how, why, where and when we should expect what everyone before us put off in the hopes that someone else, some other generation would deal with
these problems, and unfortunately that would be my generation here and now.
Challenge Match: Rockpuck vs. TruthWithin: Third World Currency?, page 1
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reply posted on 28-6-2008 @ 10:29 PM by TruthWithin
So, what is a depression?
There is an old joke among economists that states:
A recession is when your neighbor loses his job.
A depression is when you lose your job.
My opponent says this of a depression:
An economic depression is essentially a severe recession. When I say severe, I mean not in measurement but rather in length. A recession that last 3-5 years can be considered either a severe recession or a depression .. if it last over 5 years it is then a depression, and if it last 10 or more like it did in 1929, it is a Great Depression.
A long recession does not a depression make. The answer is much more complex and the hard numbers must be present as well.
So I ask again: So, what is a "depression"?
No one really has a solid definition, but the most consistent thing I could find was that a depression occurs when the GDP (Gross Domestic Product) falls over 10% over a given period of time paired with a recession lasting a long time. GDP gives us a viable reference.
When the ashes finally settled after the Great Depression, the nation's GDP had fallen nearly 33%! I repeat, 33%. So that means between 1929 and 1933, GDP fell that much, thus causing a depression. The closest thing we have had to that since was in 1938 when GDP fell 18% (although most will argue that it was a continuation of the Great Depression). The second world war came along and gave the world, particularly the US, the financial boost that it needed to get back into the game.
Since then, the US has experienced several recessions (about one every ten years or so), but nothing even close to the Great Depression.
The worst recession in the last 60 years was from November 1973 to March 1975, where real GDP fell by 4.9 percent.
Talk about tough times. In '74 there were food lines and lines to get gas. People were unemployed, the government had loaned out too much money and there was a housing crisis. Sound familiar?
Yet, the GDP only fell 4.9% in the worst memorable economic crisis since the great depression. That is 4.9% compared to the horrific 33% loss experienced during the great depression. That is a difference of nearly 28% and was a far cry from a depression, let alone something of the caliber of a "GREAT" depression.
Source
Socratic Question #1 - How can you explain the fact that the US has gone 70 years without suffering another "Great Depression"?
I will now answer my questions.
Question 1. Do you stand by the official government reports?
Not always, and while I agree the numbers are skewed to a degree, the real numbers cannot diverge so greatly from the fictional numbers to show that there is not a depression when there in fact is. Like I mentioned above, the current GDP growth is +.6%. While I agree it might be lower than that by a small margin, there is no way it could be close to the -10% loss in growth that would quantify a 'Depression', let alone a "GREAT Depression.
Question 2. Do you believe that if the Federal numbers are tampered, that it excludes the ability to measure economic viability by the scholarly definition if the factual information is in fact fictional?
No, it does not exclude the ability to measure economic viability, because again, there is simply no way the numbers can be skewed to a point where the reality is not seen on the ground.
Question 3: Do you believe the Inflation Numbers Truth?
Not always (See answer to question one).
Question 4: Truth, do you deny the dollar falling, and world governments moving away from the Dollar Peg?
Sure the dollar is falling, as it is proned to do from time to time. Does that make foreign investors squeamish? SURE!! But will it cause a depression in the next 20 years? No.
Question 5: Will the US economy stand after major world exporters switch from Dollars to other currencies?
Of course it will. Don't forget that the US is one quarter of the entire global economy.
My opponent is cleverly trying to dismiss the fact that numbers speak louder that words in an economy. While the numbers may be skewed slightly from the mouth of the government, the fact remains that the numbers are nowhere close to suggesting a "Great Depression". This is a clever tactic on behalf of my opponent, because if he is able to plant the seed of the governments numbers being completely unreliable, then he could even go as far as to argue that we are in a depression now!
Numbers matter.
In my next post, I will discuss the cause of the Great Depression and the valuable lessons learned from it that will keep out current economy afloat from another depression for years to come.
I open the floor to my opponent.
reply posted on 29-6-2008 @ 11:30 PM by TruthWithin
My opponent has not posted within the 24 hour time limit, so I will proceed with my argument. I hope everything is alright! 
What happened to cause the great depression?
There are tons of opinions as to what caused the Great Depression. The world was struggling, Russia's Economy was failing, Europe and parts of Eastern Asia were still trying to crawl out of the hole that WWI put them into in the first place and no one was strong enough to help anyone get back on their feet. If you take a look at this scenario as a background to what was occurring in the US, you have a a recipe for disaster, or a "perfect economical storm".
There are four major reasons why the economy suffered as it did in the late 1920's.
1. The Gold Standard - This effect probably had the greatest impact in leading the country into a sever depression, because, as we all know, most of the world's currency was backed in gold until, surprise surprise, World War 1 when countries were forced to dig deeper than the gold standard allowed in order to make it through the war. In order to account for all the money that was spent during the war and as countries like Britain and the US began reimplementing the gold standard, there was almost zero flexibility for countries to maneuver economically. As a result, because there was not enough gold to back up the circulation of currency, governments were forced forced governments to raise interest rates. The higher interest rates discouraged conversion of interest-bearing deposits into gold and bolstered confidence that inflation would not break the commitment to gold.
2. Economic Policy - The problem here as that there really wasn't an economic policy. The Fed up until this point assumed that the best thing to do with a nose diving market was to let it correct itself. Since the Fed's inception in 1913, that "policy", if you could even call it that, was to allow businesses and banks to sort things out on their own, and it worked fine until 1929 rolled around.
3. Production patterns - If you can believe it or not, farming used to represent 25% of the US's exports. The US literally lived and died with what the crops did that year. Today, while farming is still vital to the US, it's export only represents 2.5% of the total. Unfortunately for America, the crops during that period were heavily hit with drought. My grandparents actually grew up in the 'Dust Bowl" in Oklahoma during the Great Depression, and needless to say, things were NOT pretty.
4. The impact of World War I - Like I mentioned above, the global economic climate had severe consequences on the US.
The Great Depression for all of its faults was one of the worst tragedies to ever strike the US. Millions were forced to the streets to live in shacks, or "Hoovervilles" and many starved. There was no work and no food. Times were horrible.
One thing that did emerge from the Great Depression was a far better understanding of how a major global economy should function and be maintained.
Certainly the economic boom seen during the second world war helped pull the US out of dire conditions, but it was also the visionary ideologies set forth under the Roosevelt Presidency that ensured stability. These "learned lessons" have kept the US depression free even today.
Do you notice there is no gold standard anymore? Have you seen the Fed's vested interest in keeping banks afloat during tough times? Ever heard or farm subsidies? Farm aid? Welfare? Food stamps? FDIC insurance?
All of the above programs came as a direct result from the depression. These programs provide a serious safety net to ensure that a "Great Depression" would never be seen again.
Then, look at the world economy. China is booming, and while you can argue the ethics of the Chinese economy, it is that very growth that helps keep the US economy buoyant. Add the blossoming economy of the EU and Russia and you have a solvent, viable economic safeguard to keep the US economy from slipping into the abyss. Whether you agree or disagree with foreign trade on any of the above mentioned levels is topic for another debate. One can, however, agree that these economies have a huge stake in a strong US economy. It is that stake that allows the US to forge ahead during recessions.
In my next post, we will examine current economical challenges facing the US and discuss whether or not they pose an economic threat.
I open the floor to my opponent.
SOURCE 1
The Perfect Economical Storm
What happened to cause the great depression?
There are tons of opinions as to what caused the Great Depression. The world was struggling, Russia's Economy was failing, Europe and parts of Eastern Asia were still trying to crawl out of the hole that WWI put them into in the first place and no one was strong enough to help anyone get back on their feet. If you take a look at this scenario as a background to what was occurring in the US, you have a a recipe for disaster, or a "perfect economical storm".
There are four major reasons why the economy suffered as it did in the late 1920's.
1. The Gold Standard - This effect probably had the greatest impact in leading the country into a sever depression, because, as we all know, most of the world's currency was backed in gold until, surprise surprise, World War 1 when countries were forced to dig deeper than the gold standard allowed in order to make it through the war. In order to account for all the money that was spent during the war and as countries like Britain and the US began reimplementing the gold standard, there was almost zero flexibility for countries to maneuver economically. As a result, because there was not enough gold to back up the circulation of currency, governments were forced forced governments to raise interest rates. The higher interest rates discouraged conversion of interest-bearing deposits into gold and bolstered confidence that inflation would not break the commitment to gold.
2. Economic Policy - The problem here as that there really wasn't an economic policy. The Fed up until this point assumed that the best thing to do with a nose diving market was to let it correct itself. Since the Fed's inception in 1913, that "policy", if you could even call it that, was to allow businesses and banks to sort things out on their own, and it worked fine until 1929 rolled around.
3. Production patterns - If you can believe it or not, farming used to represent 25% of the US's exports. The US literally lived and died with what the crops did that year. Today, while farming is still vital to the US, it's export only represents 2.5% of the total. Unfortunately for America, the crops during that period were heavily hit with drought. My grandparents actually grew up in the 'Dust Bowl" in Oklahoma during the Great Depression, and needless to say, things were NOT pretty.
4. The impact of World War I - Like I mentioned above, the global economic climate had severe consequences on the US.
[1] Wartime inflation, when the gold standard had been suspended, raised prices and inspired fears that gold stocks were inadequate to provide backing for enlarged money supplies at the new, higher price level. This was one reason that convertible currencies, such as the dollar and pound, were used as gold substitutes. The war weakened Britain, left Germany with massive reparations payments, and split the Austro-Hungarian Empire into many countries. These countries, plus Germany, depended on foreign loans (in convertible currencies) to pay for their imports. The arrangement was unstable because any withdrawal of short-term loans would force the borrowing countries to retrench, which could cripple world trade.
The Great Depression for all of its faults was one of the worst tragedies to ever strike the US. Millions were forced to the streets to live in shacks, or "Hoovervilles" and many starved. There was no work and no food. Times were horrible.
One thing that did emerge from the Great Depression was a far better understanding of how a major global economy should function and be maintained.
Certainly the economic boom seen during the second world war helped pull the US out of dire conditions, but it was also the visionary ideologies set forth under the Roosevelt Presidency that ensured stability. These "learned lessons" have kept the US depression free even today.
Do you notice there is no gold standard anymore? Have you seen the Fed's vested interest in keeping banks afloat during tough times? Ever heard or farm subsidies? Farm aid? Welfare? Food stamps? FDIC insurance?
All of the above programs came as a direct result from the depression. These programs provide a serious safety net to ensure that a "Great Depression" would never be seen again.
Then, look at the world economy. China is booming, and while you can argue the ethics of the Chinese economy, it is that very growth that helps keep the US economy buoyant. Add the blossoming economy of the EU and Russia and you have a solvent, viable economic safeguard to keep the US economy from slipping into the abyss. Whether you agree or disagree with foreign trade on any of the above mentioned levels is topic for another debate. One can, however, agree that these economies have a huge stake in a strong US economy. It is that stake that allows the US to forge ahead during recessions.
In my next post, we will examine current economical challenges facing the US and discuss whether or not they pose an economic threat.
I open the floor to my opponent.
SOURCE 1
reply posted on 30-6-2008 @ 10:44 PM by Rockpuck
I guess for the same reason that it is not improbable that the US WON'T suffer another great depression.
I think you may have worded that wrong, because you only added a redundant sentence to what I said.. Maybe you mis-read what I typed..
Nope. Sounds like a recession and even if one could go to the extreme of calling it a depression, it most certainly would not be considered another "Great" depression. The US faced the same crisis in '73 with nearly the same problems. Remember the Savings and Loans scandals of the early '80's? Both of those events amounted to a recession.
You simply fail to understand that the only difference between a recession and a depression is merely severity of the situation. A steep recession with higher then normal (for a recession) unemployment and other catastrophes in the economy, simply equate to being a Depression.
Unless YOU can give me a better definition as to what a depression is, we will simply have to rely on the outcome I have deduced from the understanding of what a recession is.
No. Not at all. Why? Because there was no fiscal policy to deal with any of that. Now there is.
Actually there where policies in place before that, and in fact, every economy has always had their own set of rules and guideline that worked until that one fateful day when all the sticks come tumbling down. Had you told someone in July of 1929 that the economy would collapse.. you would have been laughed at.
After all, a man in 1929 would tell you the government keeps it to well regulated....
Sure. Just like it sounds like 1984, or 1991, or 1998, or 2001 or any number of other dates that DID NOT produce a Depression, let alone a "Great" depression.
Each one of course had it's own circumstances, which is why I said we should never try and equalize various economic situations through history and expect them to match up. The Depression of 1929 does have scary simularities between 2008 because of the nearly same exact credit and financial problems.
By the way, the 1980's where in fact, very nearly at the point one might call "depression". Official numbers are of course skewed, but it is fair to say unemployment had not been that high since 1929.
Ladies and Gentlemen, my opponent up until this point has said a lot of very scary things about the US economy, and yet he has used no sources nor has he verified any of his information. Statements like:
My deepest sympathy and apologies sir, I meant not to scare you, but to warn you. And I do apologize for not using sources, I do quite often memorize that which I read and have a tendency to forget you cannot read my mind.
Imaginary GDP? Hardly. I have driven through America numerous times and I have seen a great deal more than just a string of podunk towns.
I suppose that would be where you drive, your state, and your local economy. In Ohio, in the Mid West, this is the case. If anyone drives through the likes of Spring Field, Youngs town, James Town, once great industrial cities, you know what I mean.
I don't think that it is accurate that those numbers are not included. Anything to back that up with?
Ah well I will give you a source, only because it pains me that you doubt me. I would never post false information.
CPI is the main measure of Inflation, the numbers you hear when the Fed tells you it's only 3-4%.. It is the index that measures the price of goods purchased by households, excluding commodities like Oil, and Food. As they are considered to volatile to be added into inflation to give a .. ahem .. fair reading. CPI
If the CPI is the most watched Index of all inflation measurements..
Core Inflation is it's twin sister.. however.. Oil, and Food are not counted in Core inflation either.... Core Inflation Also, every country calculates it's inflation differently.. their is no international standard..
There are in fact measurements to gauge the rise in oil, foods and so forth, however no one ever looks at it, and it is never added into the mix because, as I said, it is to volatile.. HOWEVER. It is included into the GDP .. all those billions we spend on electricity, gas, food .. it keeps the GDP artificially high.
Which begs the question, with a retreating industrial sector, and unemployment rising.. but oil and food doubling every other year.. if you take all expenses related to energy uses, and food .. why, I do believe we would have several straight quarters of negative GDP growth! Officially putting us smack int he middle of a recession. With the worst yet to come!
(PS the Consumer Price Index was implemented int he 1920's, and still used today)
But we must ask our selves, this great nation of ours.. why in the World do we lie to survive? Here is another fun fact for the night about the Consumer Price Index.. if calculated correctly would actually bankrupt the country within 12 months! .. The CPI measurement system is a method to Index the inflation to wages.. so if the CPI included the most expensive part of our lives (food, oil, energy and housing -- also not included) the benefits of government subsidized programs would have to adjust to meet the bare minimums of inflation .. that is to say if you receive 1,000 a month in Social Security, in this economy you are drowning in bills and expenses to survive.. we all know someone suffering like this. This is because the CPI does not actually correlate to the Real Inflation rate in America. If it did, the US Government would have to DOUBLE at LEAST Social Security, also the various Welfare Programs. Social Security alone, if leveled to Real Inflation, would bankrupt the country in 12 months or less. No if ands or buts about it folks.. this country will sacrifice the old and the infirm to live their golden years in a trailer eating bread and powdered eggs with barely enough to survive just so it doesn't have to face up to it's own inadequacies..
Personally, I find it disgusting.
Source
I know, it sounds like a sensationalist rantings on the outside.. but I challenge you Truth, and I challenge the readers of this debate.. to actually look at the policies that run this economy. You will soon find that, like most massive governments, corruption has taken it's toll. We have problems in this government, problems that have not been fixed or even questioned because the people quite simply don't understand how the system works. When we have an economic problem, the first solution I always hear is "why can't we just print more money?" .. If the people KNEW, if they truly and utterly knew and understood and COMPREHENDED the problems we face, the dynamics of the people who put these policies in force, by God we would have a revolution before the sun rose the next day! We can lie and manipulate the economy all we want, holding it up by invisible marionette strings, we do our dance and play our part charging our credit cards and indulging in our over enlarged portions of food.. living it up completely unaware just as they want you to be. Because a complacent and dumb population is far easier to roll over then an all knowing and vigilant population.
We are seeing the failures of an ingrained institution, or perhaps the manipulation of said institution for unknown and subversive means.
I do know one thing, and that's when in times like this the Federal Reserve fire sells a multi billion dollar financial institution wiping billions in low risk investments off the book all in the hopes to calm the storm.. we are witnessing the desperate actions of an ancient beast. Our situation is unique, I know not where we will end up .. but if I follow my instinct and research the fraudulent policies of the Federal Government, and if I read my histories.. I can safely say that we are in store for economic hardships not seen for decades, perhaps not since 1929. Remember American's, you are not invincible, God's hands do not shield you from the World.. this is a Globalist economy, one of which has never failed.. yet.. America has intertwined it's fate entirely with the outside World. All the signs point towards recession, and subtle signs within the signs point to complete and utter catastrophe.. I have shown you the numbers are wrong, they lie, the Federal Government works to deceit at the peril of it's own people..
"I cannot help but raise a dissenting voice to statements that we are living in a fool's paradise, and that prosperity in this country must necessarily diminish and recede in the near future." - E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928
"For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game... Now that irrelevant, alien and hazardous adventure is over."
- Business Week, November 2, 1929
Welcome readers, to the beginning of the next era in Human history..
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