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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Ilaine who wrote (47067)	3/6/2004 6:19:20 PM
From: AC Flyer	Read Replies (6) \| Respond to of 74559

Good post, CB. Nevertheless, I would like to be able to get you to sign on, at least in part, to the idea that the fundamental cause of economic depressions (qualifier - in developed economies with "sophisticated" central banks) is a secular decline in final domestic consumer demand. Yes, the actions of the monetary authorities must be held up to scrutiny, and yes, there are a whole variety of policy missteps that can contribute to the severity of depressions, but the primary cause is a decline in consumer spending. Since consumer spending constitutes approximately two-thirds of (US) economic activity, it is the tail that wags the economic dog. At the risk of simplifying ad absurdum, middle-aged people spend more than people who are either younger or older, and thus the path of an economy is fated to follow the fortunes, and more specifically the numbers, of the middle-aged. The Great Depression can be very convincingly explained in this way as a result of the enormous spike in immigration to the US that occurred in the first decade of the 20th century, followed by an almost complete cessation of immigration during and following the First World War. The result, a decade long boom (the 1920s) driven by the buying activity of the now middle-aged pre-First World War US immigrants, followed by the economic time bomb that exploded in 1929 when the yawning chasm in the US population pyramid reached the age of 45 to 50 years old (US immigrants, by the way, were and are, on average, 30 years old). Incidentally, the fact that the Great Depression was a peculiarly American phenomenon, with far less impact in the Old World, a fact that has not been satisfactorily explained by any contemporary historian, is thoroughly explained by the demographic argument. The countries of Europe did not see the surge of immigration experienced by the US from 1900 to 1914 and hence fifteen years later did not experience the consequences of the cessation of immigration in 1914. The large and growing number of US citizens in the key age groups of 40 to 45 and 45 to 50 is the reason why the US economy has not busted following the 2000 tech wreck. It is why the US economy will grow solidly through the end of the decade, taking the stock markets to presently undreamed-of profit-driven heights, and it is why, following 2010, the US economy will emulate present day Japan for a period of approximately 15 years. It is also why, some say, when the worst of times follow the best of times for the US economy, we will experience in the US a 15 year Depression exceeding the Great Depression in severity. It is now 1924 (1922 if we’re lucky) for the US economy. Plan accordingly.

To: Ilaine who wrote (47067)	3/6/2004 7:02:21 PM
From: TobagoJack	Read Replies (1) \| Respond to of 74559

Hi CB, I agree with your post. I especially appreciate the summation: <<Money is as necessary for our existence as air and water. When the money goes away, depressions are inevitable. A long time ago, I started out asking the question "where did the money go?" I now know that the proper question is "why did the money go?">> I add a few additional points for folks to ponder over. I first tack my questions to your questions. (a) “what is money?” (b) “can money be simply printed and dropped out of helicopters and still be money?” (c) “what happens when the monetary authorities try to print, helicopter in, and inflate or reflate, or reflate the inflate?” I also offer some age old thinking on the questions, from a time before a helicopter was not more than what Da Vinci figured: achamchen.com ( achamchen.com ) and achamchen.com Chugs, Jay

To: Ilaine who wrote (47067)	3/6/2004 8:01:59 PM
From: elmatador	Read Replies (1) \| Respond to of 74559

CB we used to have no real money but had a real economy. Now there's neither real money nor (according to Jay) real economy. The pieces of colored paper were useless but the economy was churning out real goods and real wealth existed. If the whole infrastructure of a country is already in place -the canals, bridges, power plants, dams, telephone network, hospitals, universities, roads, etc,- there is not much to build. Factories will still be producing and exporting. But economic activity slows dramatically. This happened in the US and by the late 60's Europe and Japan had been already totally re-constructed. Once countries reach this stage -totally built- they end up with more capital than economic activity. As it happened with the British Empire, they had to go out and invest in US, Canada, Australia, Argentina, Brazil and so on. Meaning, the capital has to go tot where economic activity can be created. Today, the Europeans and the US are not following that. They are hogging the capital and being stingy with it and pulling it out to loot. As they did with LATAM in 1982 and with SEA in 1997. Capital is so plenty -just look at how much is wasted in subsidy schemes to make believe that there's economic activities in developed countries- that capital must be dumped every where to create wealth. Put the masses of those poor countries to work hard. The developed countries won't disappear. They have to engage in useful economic activity that they do best. They have to keep developing high tech and forming cool designers. Keep some universities for the world kids go there and get some education. Keep their countries nice and tidy, streets clean and nice. Keep their historical sites, for 2 billion people go there as tourists. They have to become tourits destinations seat down and collect the money in this what is the most green industry of all: tourism.