General Question

daniel89x's avatar

Do you think the United States will go through another depression?

Asked by daniel89x (280points) March 26th, 2008
Observing members: 0 Composing members: 0

16 Answers

soundedfury's avatar

There is nothing in our system that prevents a depression, but there are now numerous safeguards to help soften the impact of a depression. Frankly, I think we’re heading into a depression now, but it’s unlikely that anyone will call it that. There is a belief in economic circles that as long as we call it a recession, it is a recession.

It’s highly unlikely that we’ll ever see something like the Great Depression again.

SquirrelEStuff's avatar

I think a depression is coming. I think the federal reserve has scientifically created a depression, so that Americans will beg the government to help, willfully bringing socialism to the Us. When you give the power to establish what money is worth to a small group of people, you are bound to get man made depressions for power.

robhaya's avatar

No. The conditions present in the back then were much worse than we are experiencing now with the economy. Back then you had a series of natural disasters like the Dust Bowl, the 1926 hurricane that hit Miami, and unemployment reached to 20% or approximately one quarter of the US Population during that time. The unemployment rate gradually increased from 3% upwards of 20% over the course of the depression.

Currently we are nowhere near that happening again, nor is there a likely hood of it occurring. If anything, we are already in a recession.


cwilbur's avatar

I think the United States is having significant economic problems now, and has been for the past several years. Even without conspiracy theories, real wages have been dropping for some time, and it’s harder and harder for the average person to make ends meet.

The past 10 years of growth in the economy have been largely based on spending beyond our means, both individually and collectively, and now that’s coming home to roost. We can’t spend beyond our means indefinitely, and now that the market is correcting itself, we find that we shouldn’t have spent beyond our means in the first place.

And as far as unemployment goes—how do you count the underemployed, who are only not counted as “unemployed” because they’ve got a 20-hour a week minimum wage job, or the people who have been unemployed so long that they’ve given up looking?

soundedfury's avatar

@robhaya – We’ve had other depressions, not just the one. It has a semi-precise meaning, and it can be argued that we’re coming close to the edge between recession and depression.

A_man's avatar

well look at this….

Debt is up
unemployement is up
inflation is up
The American dollar is down
forclosures are WAY up
and corporate trust is down

…..the same as a ‘depression’ the only difference is debt. No debt exzusted

robmandu's avatar

Folks, it’s simple, in macroeconomics, a recession is defined as “a decline in a country’s gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year.”

In the US, the Bureau of Economic Analysis has this to say in a preliminary report about the last quarter of 2007:

Real gross domestic product—the output of goods and services produced by labor and property located in the United States—increased at an annual rate of 0.6 percent in the fourth quarter of 2007, according to preliminary estimates released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.9 percent.
[emphasis mine]

So, we’re not there yet. Even if you were to say the first quarter of 2008 was in decline, it’s STILL not a recession as the last quarter of 2007 was on increase.

Yah, everyone’s got their own anecdotal stories to the contrary… but that doesn’t change the definition. And we ain’t anywhere’s close to a full-on depression, which is defined as “a severe or long recession.”

cwilbur's avatar

@robmandu: it sure feels like a recession to the people who aren’t on top of the heap. The overall GDP may be increasing ever so slightly, but the benefits of that growth are not being shared equitably.

robmandu's avatar

@cwilbur, you mean shared equitably like this?

Sorry, not trying to harsh you out here.

But liberty in America is based on equal opportunity, not equal result. Of course the benefit isn’t shared equitably. No one ever said it would be.

soundedfury's avatar

@robmandu – If you had gone on further down the page you quoted, you would see that there is considerable debate among economists as to whether the GDP is the primary indicator of recession and whether we are in one now.

“Alan Greenspan ex-Chairman of the Federal Reserve and Lyle Gramley, a former board member of the U. S. Federal Reserve, stated in the week of March 17, 2008, that the 2008 financial crisis in the United States is likely to be judged as the most wrenching since the end of World War II.”

cwilbur's avatar

Hardly, robmandu. And I think equality of opportunity would be a nice ideal to return to.

I’m talking about things like CEOs who run their companies into the ground while making hundreds of times what the lowest-paid workers get, and then getting seven-figure severance packages when they’re finally fired, and the people who play numbers games on Wall Street having multi-million dollar nest eggs—how much was the executive team at Bear Stearns paid for their role in the recent collapse and acquisition?—while the people actually doing the work of creating wealth can’t earn enough in 40 hours to support themselves, not to mention buy a house or get health insurance.

If you think the only alternative to that is communism, you’ve got serious blinders on; and if you don’t think that, why did you make such a moronic suggesion?

robmandu's avatar

@fury, you know you’re right… but that doesn’t change the current, accepted definition in textbooks. Maybe it could and should change. And even though I cite it overmuch, I hope everyone knows to double-check any Wikipedia reference for themselves.

@cwilbur, no one likes to see people succeed financially for being abysmal failures in their jobs. There’s definitely something not to like there with your CEO example. But what would you do? The boards of those companies have, generally-speaking, made a good-faith attempt to bring in a competent CEO. Oftentimes, they try to lure in the very best candidates with admittedly over-extravagant comp plans. But what’s the alternative? Have the government intercede and spell out what a CEO can be paid? Why stop there then? I think lawyers make too much, too… and how many have ever substantively improved anyone’s life? So, lawyer pay should go down, too, right? Who decides that?

And I understand there’s a whole spectrum of economic-political ideologies running the gamut from anarchy to democracy to communism… I was just waxing hyperbolic is all (hence my immediate apologetic “Sorry, not trying to harsh you out here”).

cwilbur's avatar

@robmandu: allow everyone equal opportunity to bargain collectively and meddle with the market. The reason the people actually doing the work get paid so little is because they can’t bargain collectively and are all competing against each other, while the management layers can present a unified front. That would be a good start.

Further, it’s nice to trumpet equality of opportunity, but I’ll believe it when an inner-city kid from Baltimore has the same opportunity as a trust fund kid from Beacon Hill, Boston.

robmandu's avatar

@cwilbur, it doesn’t happen for everybody, but it does happen.

Opportunity != Guarantee

cwilbur's avatar

Oh, no, I’m not even talking about guaranteed success.

I’m talking about the relative levels of effort necessary for the inner-city kid from Baltimore to have, say, a $60K/year income, compared to the trust fund kid from Boston. When those levels of effort are within two orders of magnitude of each other, you might have a case that equality of opportunity exists, but not before then.

And, to return to your pedantic economic definition: the people who aren’t the trust fund kid from Boston have seen the share of the GDP that benefits them shrink every quarter for the past few years, while the trust fund kids and crony capitalists have seen theirs grow more than that 0.6%. That’s why people think there’s a recession on.

crackerjack's avatar

If you do not count the nation in a period of recession or depression, I think that there is no counter to the fact that we are in a period of stagflation (increase in inflation with rising unemployment and slow economic growth).
The government has found that unemployment has raised to i believe 5%, not including the people who cannot file for unemployment or the people who live on the streets and the government does not count in unemployment percentages.

I do not believe that anyone will argue that inflation has been on the rise, all you need to do is look at how much the cost of things has increased in the past two years and how much money the Federal Reserve has put into the nation causing the U.S. dollar to decrease compared to other nation’s money.

The economy, while slowly growing, does not compensate for the increase in the amount of people in the U.S. either by immigration or birth rate.

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