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• Tuesday, April 1, 2008 10:09 PM

  But it's not the same world with the same limitations as 1929

  For example, I would venture to guess that structural full employment is lower now than in 1929 specifically because of social programs. Whereas in 1929 unemployment under SFE was classically in the 4% range as everyone learns in Samuelson, today's baseline is likely to be somewhat higher, even markedly higher because of the higher ratio of transient and part time formal salaried work. So whatever the actual unemployment is, and, that's an extremely hard number to nail down either way, whatever it is, the baseline of what constitutes SFE has got to be much lower than the 96% of 1929. For example in Germany and France today, SFE hovers around 89% which means that the economy tops out at full employment at 89% of the workforce actually working.

  Additionally the FDIC insures that most homeowners deposits up to 100,000 are Federally guaranteed even if they have to print inflationary money to do it. So if the Corn Husker Bank folds, most but not all depositors are protected.

  I really dislike these "It's the GREAT Depression all over again" ideas. You might as well be predicting the Black Death.

  What will happen is what will always happen. The poor will get a little poorer, the middle class will get a LOT poorer. And the Great Marxist happy day of everyone or mostly everyone being the same will return for a while. We can all pick beans, if we're willing to take those jobs from hard working illegal Mexicans.

  —Electro Robot Read Electro Robot's other letters
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