The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: koan who wrote (202548)	5/16/2009 3:09:22 AM
From: Elroy Jetson	Read Replies (4) of 306849

The story you tell is simply not true. You can have the opinion of your choice, but you can't have your own set of alternate facts. During the Great Depression, as now, consumer and business debt, relative to income, initially rose as income declined - then this ratio declined quickly due to bankruptcies and foreclosures. (yellow line on chart) The WPA did not pay big salaries allowing debt repayment. The debt was liquidated due to non-payment, just as we are beginning to see today. The WPA-like projects kept people from starving while the economy deleveraged -- that's the entire magic of those programs. They can't prevent deleveraging or bring prosperity. While consumer and business debt declined during the Great Depression, government debt relative to income rose sharply, as shown below, peaking in 1945. Then as the economy grew following WW-II, government debt relative to income declined from 1945 reaching a low in 1981 when Regan was elected. (green line on chart) Reagan sent government debt skyrocketing again from 1981 - along with business and consumer debt, all resulting in the current Greater Economic Depression. Stupidity pays deadly dividends.

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