Greater Depression Looming?
Baby boomers like me grew up hearing endless stories of the Great Depression. My father’s family was poorest, lacking food and fuel, both of which my father said he had to scavenge. I’d listen to them and ask questions like, “What caused it?” Now I realize that few if any of them knew themselves, but wouldn’t admit it because they figured they should know. Their attempts to answer only added to my confusion.
My own research indicated that, aside from Dust Bowl droughts in the midwest, infrastructure remained intact. Yet economic activity slowed down or stopped, putting many out of work and into breadlines. That’s what baffled me. Why couldn’t it just crank back up and relieve everyone’s misery?
It was around that time that Uncle Joe became a professor of business and economics so I asked him. He offered a long answer about stock market bubbles, margin calls and runs on banks that produced a general lack of confidence. I pictured a car in the driveway that was undamaged, but had a dead battery and needed a jump start. My uncle was a Keynesian and believed strongly in Franklin Roosevelt’s attempts to jumpstart American’s economy through deficit spending. He had no doubt about the prevailing myth that FDR “got us out of the Depression” with New Deal spending. I bought it too - then. Now I’m persuaded that FDR only prolonged it. Worse, the social programs he introduced which were expanded under Lyndon Johnson, George W. Bush and Barack Obama have created a huge entitlement bubble which is about to burst. The effects of that bursting will be worse than the Great Depression stories with which I grew up.
The rest is here.