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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: marginmike who wrote (9428)7/17/2004 1:16:18 PM
From: glenn_a  Read Replies (2) of 116555
 
marginmike.

You stated in your post:

Britain and french debt as % of GDP were much higher then the US Governments is today, and both powers were way overextended in a way we as Americans couldn't comprehend. Britain occupied countries from Asia to the Americas, and justy spent on the most expensive war in History at that time.

Could you provide figures and references for this statement. Frankly, I doubt the veracity of your claims, particularly when the reference point is total credit outstanding in the financial system.

You also stated:

The great depression was more of a result of the reactionary policies that these economic times had caused.

Although this view has been espoused by leading economists, I don't believe it stands up to scrutiny whatsoever. What you are effectively saying here is that the credit and debt structure of the period was not a primary factor, but rather it was simply a matter of inappropriate policy response - which includes protectionist measures. I would argue that the rupture in global trade which occurred upon the onset of debt deflation made it inevitable that protectionist measures would be a policy response to protect local domestic productive and labor interests around the globe, particularly as concerns domestic employment.

To argue that the rupture in global trade was the "result" of protectionist measures, while this may be true to some extent, significantly puts the cart before the horse. It was debt deflation to my mind which caused global trade to slow dramatically, which put severe pressure on domestic political interests of all stripes to turn to defensive mode. If we enter into another period of severe debt deflation again, and half of the labor force of what remains of the American auto industry is unemployed while their jobs migrate to China, we'll see if domestic political forces in the U.S. don't resort to similar "protectionist" measures. Rather like the European and American agricultural sectors have been engaged in for decades ... only much worse.

Respectfully,
Glenn
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