The Third Depression • Hacker News Board

Re: The Third Depression

#51

Post by startuprules » Mon, Jun 28, 2010, 2:40 PM UTC

We're certainly in a great depression already - with real unemployment close to 20% (shadowstats.com), most of our states having greece-like deficits, people losing 50%+ wealth from the market/real estate crash. We don't see soup lines because we have food stamps and unemployment checks mailed to our home and deposited right into our bank account .

And it's only the beginning. Global austerity is here (except US and Japan is fighting valiantly to steal more honest work from its people via printing). World's biggest consumer, the boomers, are retiring. Automation/Software will keep reducing jobs permanently.

The ancillary point is, boostrap your startup wisely. Hire smartly. Don't spent money on things unless you have to. Don't take money. Keep control of your company.

Re: The Third Depression

#52

Post by effn » Mon, Jun 28, 2010, 2:42 PM UTC

lionhearted wrote: post #2

I click the article. I see it's Krugman. Before I read further, I say, "Ah, Krugman. I bet his solution is to print money." > ...governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. That's Krugman's answer for everything. Dot-com crash? Create more money: 2001 Krugman: “During phases of weak growth there are a…

You are confusing monetary policy with fiscal policy.

Re: The Third Depression

#53

Post by cwp » Mon, Jun 28, 2010, 2:48 PM UTC

lionhearted wrote: post #2

I click the article. I see it's Krugman. Before I read further, I say, "Ah, Krugman. I bet his solution is to print money." > ...governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. That's Krugman's answer for everything. Dot-com crash? Create more money: 2001 Krugman: “During phases of weak growth there are a…

From that quote you conclude that the world followed his advice, and that led to the housing bubble? Now that's cojones.

Re: The Third Depression

#54

Post by effn » Mon, Jun 28, 2010, 2:49 PM UTC

lionhearted wrote: post #20

cia_plant wrote: post #10

Earlier quoted context omitted.

I'm glad to finally find someone who knows exactly what caused the housing bubble and subsequent crash. Could you explain it to me? I find the whole matter very confusing myself, although I've read a lot about it. So: low interest rates caused the housing bubble. Could you explain how that happened exactly?

> I'm glad to finally find someone who knows exactly what caused the housing bubble and subsequent crash. Could you explain it to me? I find the whole matter very confusing myself, although I've read a lot about it. Yeah, it is a complicated topic. What did you want to know specifically, what were your questions? > So: low interest rates caused the housing bubble. Could you explain how that happened exactly? Low inte…

Real mortgage interest rates did not go negative at any point during the housing bubble.

> For the most straightforward, plain English explanations, I'd recommend Peter Schiff - he was correctly predicting the housing crash almost to the letter

Yes, but his predictions after that has been rubbish, anyone who would take his investment advice would have lost a ton of money. You say we should take what Krugman says with a grain of salt since he's been wrong before. Doesn't that also apply to Schiff?

Re: The Third Depression

#55

Post by effn » Mon, Jun 28, 2010, 3:03 PM UTC

lionhearted wrote: post #12

arijo wrote: post #8

Earlier quoted context omitted.

Would you care to explain why printing money is a bad solution for the current scenario? And since economics is not a science who decides what is good economics? And what about criminalizing speculation against sovereign debt - that is the root cause of what is happening in europe right now.

> Would you care to explain why printing money is a bad solution for the current scenario? Sure, housing was overpriced for a few different reasons. There's quite a few causes of it, you probably know a lot of them. But - it was definitely overpriced (in a "bubble"). Now, we're having what's called a "correction" - a correction is where housing prices come back into line with where they'd in a more sensible environme…

What about entrepreneurs (who are currently getting hurt by inflation falling below the long term trend)? Why do they deserve to be punished while people holding cash don't?

Re: The Third Depression

#56

Post by protomyth » Mon, Jun 28, 2010, 3:05 PM UTC

exit wrote: post #5

Retric wrote: post #4

I suspect the real problem is the evaporation of superficial jobs. We have become a nation devoted to our wants, but when things look bad people quickly cut back on such things. A tiny fraction of our population are "farmers" but with the over abundance of food produced and the only way to make money is to either suck on the governments subsidies or create specialty locally grown, free range, Organic etc goods. I thi…

what do you think of basic income? http://en.wikipedia.org/wiki/Basic_income

Maybe in the future, but it sure seems like a disincentive to working. I would prefer we implement a flat-rate tax on income filed as individuals and not as a family. Something like a 20/20 (first 20k exempt then 20% of the rest). I am not sure about the actual numbers (sounds like a big data crunch through the IRS income reporting would be good).

Regardless of policy, it is very important to get as many people in the mode "I am paying for this government" so that fiscal responsibility is desired by most as opposed to a handout mentality.

Re: The Third Depression

#57

Post by yequalsx » Mon, Jun 28, 2010, 3:06 PM UTC

kiba wrote: post #29

yequalsx wrote: post #22

Earlier quoted context omitted.

Your response would be relevant if it addressed the point I made about using WWII as an example and if it lacked the sarcasm. WWII was a massive spending program by the government. It is credited amongst Austrian economists and Keynesians as the reason we got out of the depression. Therefore it is an example of how government spending can get a country out of a depression. It is incorrect to believe that government e…

It is credited amongst Austrian economists That is clearly uncharacteristic of the Austrian school. I never heard of an Austrian economist saying that's the reason we got out of the depression. I have heard the Austrians arguing just the opposite. You will need to produce your claim that Austrian economists believe it to be so. Beside, nobody can detect sarcasm on the internet. There's no body language to detect. Add…

You do not understand the fallacy of argument from authority. I did not engage in this. If you think what I did was an example of the fallacy of argument from authority then you must think that people who insist that the person who performs their heart surgery be a heart surgeon are also engaging in this fallacy.

Re: The Third Depression

#58

Post by fondue » Mon, Jun 28, 2010, 3:13 PM UTC

Retric wrote: post #16

fondue wrote: post #6

Earlier quoted context omitted.

What's a 'superficial job'?

Jobs that don't create long term value AND don't serve a basic human need. We need X farmers, but we have X + Y actual farmers the Y is are optional jobs that have limited long term economic value.

Must all jobs create long term value and serve a basic human need?

I guess pretty much every job would serve a basic human need (to be employed) to someone who needs to be employed in order to make ends meet.

I guess what I'm trying to get at it is that your post read like someone trying to apply what they thought the world should be like and not how it actually is.

For example, if we have an excess of farmers that would be cleared up in the market as those not making enough income to continue being farmers would pack up and leave the occupation or try to get loans to maintain their employment long enough to weather the current conditions. The only time I see problems in employment is when an entity steps in to maintain a job when the market is already dismissing it.

Re: The Third Depression

#59

Post by hga » Mon, Jun 28, 2010, 3:34 PM UTC

mark_l_watson wrote: post #17

lionhearted wrote: post #2

I click the article. I see it's Krugman. Before I read further, I say, "Ah, Krugman. I bet his solution is to print money." > ...governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. That's Krugman's answer for everything. Dot-com crash? Create more money: 2001 Krugman: “During phases of weak growth there are a…

I agree with you. The most important area to save money: we have military bases and/or installations in about 3/4 of the countries on this planet. We need to stop that. We also need to allow state and local governments to go through bankruptcy to renegotiate pensions, etc. Harsh, but necessary. The easy copout is printing money.

The interest we're paying on Federal debt is or soon will equal the total US defense budget (or so the Chairman of the JCS recently noted).

You might also be really upset if the US returns to a pre-WWII isolationist mode (you do remember one of the things that happened as a result...). We keep the peace in large parts of the world and e.g. implicitly prevent a lot of those we're protecting from going nuclear.

The only thing less brutal than a Pax Romana, Britannia or America is its absence.

Re: The Third Depression

#60

Post by hga » Mon, Jun 28, 2010, 3:37 PM UTC

d2viant wrote: post #50

j_baker wrote: post #35

Earlier quoted context omitted.

"A defaulting and clearing of billions, maybe trillions, of unsustainable debt in the system is required." Seriously? What you propose would be the economic equivalent of a nuclear winter. You can't cure a disease by killing the patient. Besides that, it could even come back to bite us. Think of how many other countries are indebted to us. If we can default on our debts, why can't they?

They can and they are. We ARE going to default on our debt, it's inevitable. We can't possibly pay back the money we owe. We're going to do default the hard way by not paying our debts or we're going to default by inflation.

Well, there is one other method: set things up so that zombie banks can earn enough money to become solvent in a decade or so and then do the necessary liquidations.

I'd read this has happened several times before (Japan may be doing a form of it), we seem to be doing it now, it's the best practical outcome of the current Eurozone crisis, but it does really mess things up during the "recovery" period.