Economic Depression On Its Way

by PIM of SPAIN | April 23, 2009 at 07:08 am

669 views | 4 Recommendations | 12 comments

Although from various viewpoints is said that recovery is around the corner at least at the end of this year 2.009 but not later than early 2010, there are astonishingly still more indicators that point in the direction that no recovery is coming any time soon.
As already written two month ago in my article ‘this economic crisis ends in depression’, it now becomes clearer by the day that this financial crisis is not a recession anymore but an economic depression, most likely matching the Great Depression of he 1930s.

If it were a recession, meanwhile lasting for about a year, the surplus in inventories would have been gone. In a recession after a relative short period of time signs of economic improvement should appear. So far nothing significant has showed up.

For the last 60 years the economy was in continuous expansion. At first, there was a healthy expansion. Consumers had built up savings during and after WWII. They were ready to get back to work in the consumer economy and spend their money. In that period the USA was world's leading lender, leading exporter, and leading in manufacturing, in short leading in everything.
By the '70s, under the Nixon administration the gold backing for the dollar, thus also as world’s reserve currency, was abolished. During the 1980s, the US turned from a net creditor into a net debtor to the rest of the world. By the 1990s, consumers were spending more than they earned and stopped saving at the turn of the century. Consumers became depending on the savings of the people in Japan and China that created a consumption economy with a flood of credit that on its turn culminated to living beyond their means.

During the period of two and a half decennia of expansion (1980 – 2005), once a recessionary occurred, the feds tried to stimulate consumer spending accordingly into continued further economic expansion by making more credit available. Consumers became addicted to accumulate more debt. As a result the financial industry expanded in an incredible manner, finally culminating in the financial crisis.

But nowadays it is different. The feds have responded with zero interest rates, pumped about $14 trillion worth of bailouts and boondoggles in the market, with no avail being able to repeat the ‘old magic’ of growth stimulus. To put this huge amount into better understandable perspective, this $14 billion is equal to the size of 2.008th GDP for the USA.
At this time consumers already do have too much of everything and don’t have the extra cash available to pay for additional purchases. There is no other choice left than to cut back on everything by everybody.
So evidently we are not in a temporarily pause within a period of a further expanding economic cycle that can be revived by further increased consumption. Any attempt for revival by pumping additional money in the economy will only initiates inflation and worsen future economic outlook. Debt and speculation at present are characteristics of the past and don’t apply anymore.
Currently we have entered in the reversal of the economic expanding cycle that is called contraction. (See attached graph). This implicates less consumption, less debt and more savings. And under such conditions the economy turns into depression.

We are entering a period of falling prices for everything – assets, houses, etc. – that is called deflation. The economy is heading into a period of restructuring, and when that is completed living standards might have gone down, while the financial industry significantly will have been reduced.

The economy, at least for the foreseeable future, will not expand. Growth will be off the cards for everything. We will enter an economy of sustainability instead of growth. More centered on improvements of people’s well being with changes for better living conditions. One thing is sure it will be a totally different type of economy than we were used to.

For enhanced understanding and becoming further aware that authorities either are not telling the truth or don’t know what is going on, it is recommended to view attached last year’s video:
Talks of Great Depression Coming
http://www.youtube.com/watch?v=dR7h8NBQU3E&hl=es

0 See all footage | View Slideshow

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aurealeus

at 06:02 on April 24th, 2009

I agree with this. Last night in a television interview, Donald Trump was also of the opinion that we are looking at least two more years before the economy even starts beginning to turn around.

Now that the world bankers have sucked even more from the economy through the bailouts, the restructuring that needs to take place will be determined by the amount of time needed to trickle through the hourglass and distributed back to the elites.

In my opinion, only after the sands settle back into the coffers of the world's financiers, and all pennies are accounted for, will the economy be restimulated.

The only way out is for people to realize that fiat currency is not wealth and to work towards creating true wealth that exists within the fruits (products and services) of our labor and to reject the credit (debt) form of society promoted by the banking interests.

PIM of SPAIN

at 06:52 on April 24th, 2009

Thanks aureleus, you correctly have phrased today's economic state of affairs. Indeed if all people take at heart what your write in yr last paragraph above, together we'll create a better financial world and thus society for ourselves but more important for the generations that follow, kids, grandchildren etc.. Meanwhile if people have cash to spare they should buy gold as a hedge against the tremendous inflation that will follow, as result of implementing the wrong medicine, the huge amount of 'fiat' liquidity spent on bailouts a.s.o.

aurealeus

at 12:47 on April 24th, 2009

Thank you Pim, for disseminating worthwhile economic information.

Gold and other precious metals can be key, offering a cushion for those who can afford to buy and stockpile it. (After all, one wouldn’t want to trust this REAL currency in the hands of the banker would they?) Alternatively, what if all gold and precious metals were to be confiscated similarly as in America during 1933? Then what?

What gets me is how someone like myself, without a college degree or background in economics, (as you have), realizes that the main fundamental solution to our economic ills, is to create a debt-free society based on human-resources, not through the exploitation of natural resources or debt-slave resources and all the governmental bureaucratic braniacs, elected officials, media/journalists and think tanks of the world can't even begin to fathom where to start. Even the ones that do know are afraid or unwilling to speak up. Idiots!

I think people in general want to be controlled. Like children, they need to be told how, when, where, who and what for everything in their lives. They are so quick and willing to surrender all their wealth including personal, state and national sovereignty just so they don't have to think, act... or take responsibility for their own lives or that of their family and neighbors, let alone a nation.

It amazes me that people are not interested in the economic matters that direct the course of everything having to do with their lives...as an example, this can even be evidenced here on NowPublic, where stories such as yours that are related to "True Economics," receive few visits or recommendations, with even fewer comments.

People whine about this and that that they consider unjust, unfair, unwarranted, underserved, they whine about brutalities, about crime, about war. Is nobody interested in the truth? Can't they see most of the problems that exist in the world stem from the control (or lack) of money? Does nobody get it or are they really just plain stupid like sheep?

Historical, including current events show that world-wide political movement is headed for one geopolitical government and economy created by the world banking system. I believe it is very possible that this might be achieved within the next several years due to the current worldwide economic crisis propelling it.

Many economic unions have already been set up throughout the world, i.e., Euro, Asian, S. American and African Unions with much talk regarding the formation of a North American Union and laying the roadmap to a one world government, a.k.a., "A New World Order." Go ahead, laugh... This is real folks, as you will soon find out and most unfortunately, only after it is too late. Think = Soviet Union.

Why don't you (my fellow Americans) get it? Why is an assumed free-people so willing to submit and subject themselves to a bunch of crooked bookkeepers who create money out of nothing (including the interest) with just the stroke of a pencil as an entry on their balance sheet with nothing to back it up except the sweat of a brow? This path only leads to fascism and socialism under oligarchic control by an elitist thinking dictatorship.

But what do I know?

Rain Coast Ghost

at 17:48 on April 24th, 2009

I agree. The economies of the world are going to be much more subsistance than discretionary. Growth industries in this new environment will be tutoring the new generations on food preservation; animal husbandry; weaving; knitting; farming; etc. These 'forgotten' skills will make a remarkable recovery! Could this current global economic crises be a blessing in disguise? A return to a simpler place and time when people cared for and had time for each other? We can live in hope. If there is NO world war.

aurealeus

at 03:39 on April 26th, 2009

I don't understand where returning to a simpler place as suggested, can be viewed as a blessing.

Governments and societies are manipulated by bankers and wars are created and funded by them because WAR... is the most profitable industry on the planet. In fact, these war financiers fund BOTH SIDES and pull the strings of government in order to prolong wars, increase profits and force societies into undesirable concessions.

As I see it, economic globalism and facist world dominating control by the world banking cartel will only serve to propel us backwards, subjecting the world to complete submission under a one world government controled by a small group of self-proclaimed elites as our rulers.

PIM of SPAIN

at 01:39 on April 25th, 2009

Aurealeus thank you for your contributively comment on this subject. Indeed it also wonders me that so little interest is showed for subjects like these that severely do influence people’s daily life. People by definition have a herd instinct and mentality. They want to follow their leader of the pack, without considering whether their leader is the best trained and most knowledgeable. But this is inherent to democracy it is the majority that counts and not cleverness. As Churchill once said ‘democracy is the worst form of government, but there is no better’.
You don’t need degrees to understand what is wrong in our society. Common sense is much better as you do show. I know many people with degrees who don’t even have a grasp about what is going on. True Economics is too honest for too many people, apart from the fact that it might not be understood for some under us, but as you correctly mentioned at least they should read such explanatory articles and try to think about for themselves.
What really is amazing that so many people in charge are not capable to deal with this financial crisis. As you can read from my previous articles about this subject, they administer the wrong medicine. Extinguishing fire by putting fuel on it, what they are doing is not helpful in solving this crisis.

About gold: think in terms of buying gold coins like the maple leave from Canada, or the golden rand from South Africa.

You finish with the phrase ‘But what do I know?’ Let me tell you, that you have a lot of common sense and are fortunate to have clever brains. If most people in charge should have been gifted like you (and me) the world would not have been in a dire state as we are in today. This crisis was in the making for the last twenty odd years and no one in charge took sensible measure to avoid it. As long the going was good, why bother you about it? Now people like the 41 year old CFO of Freddy Mae kills themselves, because they were stupid and put in charge above their capability.

People are not honest to themselves nor to their electorate. A bunch of Clowns dealing with boondoggles.

Lets hope that this crisis will bring many back to basics. Avoiding the outlook you described, as fascism, oligarchy or eventually leading to dictatorship. I agree with you there is a severe risk that such could happen.

PIM of SPAIN

at 01:53 on April 25th, 2009

PIM of SPAIN

at 01:53 on April 25th, 2009

Thanks Rain Coast for yr comment. As I wrote in my previous comment, ‘back to basics’ and also in my article about ‘growth’: basics are in and growth is out.
People on the dole do have to become inventive in using skills. The new upcoming society is blessed once people learn to understand how to survive and care for themselves, their family, friends and neighbours. The new economic environment will be concentrated on sustainability by improving the quality of life. With any luck they will discover hope and believe again.

aurealeus

at 04:57 on April 25th, 2009

I'm grateful that I am skilled with my hands as well as my mind as these "back to basic" skills will be most important and key to survival outside of the New World Order, where I intend to stay and without RFID for me.

I wonder what all the geniuses that created and support the current failed system will do once it is time to clean up after the party. Hopefully they will wake up and see through the NWO's sinister plan (pipe-dream) for world domination in time and finally work for us.

It would be wise for the herd to heed the following quotes:

"Permit me to issue and control the money of a nation, and I care not who makes its laws." Mayer Amschel Rothschild, International Banker

“We will have a world government whether you like it or not. The only question is whether that government will be achieved by conquest or consent.” Paul Warburg, International Banker

PIM of SPAIN

at 05:10 on April 25th, 2009

Funny, I had the feeling you are the person as you have described. Those people will survive any change, crisis whatsoever. Congratulated with your gift and hope you are able to transplant your skills and mind to others like yr children, and so on. Perhaps that could be the next NWO? Lets hope and pray for it!
Your remarks and comment made me thinking even further, with your permission I may use some of yr suggestive phrases for a popular article, to undertake an attempt interesting other common people to get them informed and hopefully motivated to think more in depth about their own future. It’s difficult to change the mentality and habits of herd, but not trying it, for sure is not obtaining it.

aurealeus

at 15:07 on April 25th, 2009

No permission necessary! Please let me know when it is published and best wishes to you.

Further exploration into the world banking cartel with its relationship in world governments should also prove to be a helpful resource in writing your article.

In 1802, Thomas Jefferson said:

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered."

Karl Gotthardt - albertacowpoke

at 03:54 on April 26th, 2009

Excellent post BMC. The Bank of Canada set it.s overnight lending rate to 1/4% last Thursday. That makes their influence on the banks limited without printing extra money. Individual Credit Card debt has risen from 260 Billion to 306 Billion in one year. Sooner or later these credit cards will reach their credit levels. Even the Governor of the Bank of Canada, who has been pretty optimistic, has stated that this recession will be with us much longer than first thought.

PIM of SPAIN

at 07:57 on April 26th, 2009

Yes albertacowpoke you see it right, we aren't even halfway through. The next wave of debt failures are CCs and non sub prime mortgages. There still is a lot hidden from us people, see my next article as well. Polpular Economics for Citizen:

http://my.nowpublic.com/world/popular-economics-citizens