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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: bond_bubble who wrote (39768)	8/25/2005 4:05:32 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

that UK link does not work. Mish

To: bond_bubble who wrote (39768)	8/25/2005 5:32:25 PM
From: mishedlo	Respond to of 110194

The depression futurecasts.com US # Money in circulation rose about $750 million in 1931 to over $5.6 billion - the highest since 1920 - despite plummeting price levels. The continuation of the Great Depression could certainly not be blamed on a shortage of currency. # Bank clearings had declined about 25% in each of the first two full years of the Great Depression. # Wholesale price indexes showed a 14% decline for the year, and the general price level was down about 12%. Commodity price levels were fairly firm in the last quarter, after their sharp declines earlier. Nevertheless, commodity prices were at their lowest level since 1911. # The AF of L estimated that 7.5 of 48.4 million workers were unemployed. UK The value of the pound sterling was cut about 23% in the first three weeks after its devaluation. In spite of extremely high unemployment, English commodity prices soared 7 7/8% in terms of sterling. Since commodity prices all around the world were declining rapidly, the relative price increase - the difference between the cost of commodities in terms of sterling and in terms of gold or currencies that remained tied to gold - was more than 10%. However, austerity took hold quickly in England and prevented the indefinite continuation of this "inflationary depression." Let's see. The pound was devalued 23% but commodity prices only rose 8%? Is that inflation? What did consumer prices do? It is consumer prices that matter as far as I am concerned. Hmmm I also see this in 1932... The English budget failed to contain any provision for payment of the $171.5 million due on U.S. war loans in the next year. In December, 1932, she would make her last full payment, almost the only one of the WW I Allies that hadn't defaulted by that time. Bringing her "emergency" tariffs to an end, England doubled her regular tariffs. The steel tariff was set at 33 1/3%, luxury tariffs at 25% to 30%, building materials at 15%, and many manufactured items at 20%. .... .... In essence, America's WW I Allies were declaring bankruptcy, and giving themselves and Germany the necessary discharge in bankruptcy that was needed for financial and economic recovery. After 1932, only the trade war tariffs and other trade restrictions would remain of the fundamental causes of the Great Depression - but these restraints were becoming even more onerous than before. The United Kingdom, France, Italy, Germany, Estonia, Latvia, Austria, Belgium, Denmark, Japan, and Czechoslovakia all raised tariffs in the first half of 1932. Tariffs? Yeah tariffs will cause a lot of problems. If the US puts a 27.5% tariff on goods from China we might have some serious problems too. Tariffs and protectionism are actually hallmarks of deflationary periods. They do not work either. Remember that it was consumer prices that Japan was trying hard to get to go up in this more current episode of deflation. Sad really, what a waste of money building bridges to knowhere, going 250% of GDP into debt just to get prices to rise and failing at it. The US is curently saving 0%. The implications on demand when we go from 0% to 5% might be staggering. It should be interesting. Thanks for that link. It is interesting but there are only bits and pieces about the UK. In light of tariffs on top of devaluations, commodities rising only 1/3 of the devaluation, and no mention at all of consumer prices, I think it is a mistake to read too much into those few snips about the an inflationary depression in the UK.