Tuesday, January 18, 2011

We Are In "The Great Depression II"

Today, just as then, almost one in four working-age Americans (or non-citizens, who also must be counted since they are part of the available work force) are unemployed.  This 25% estimate includes those who previously were not in the workforce but who are looking now, presumably out of hardship.  Tending to confirm this, a recent household survey found 22% unemployed.  Conversely, the latest United States Bureau of Labor Statics (BLS) report puts the number at 9.9%.  The disparity arises because the BLS number counts individuals receiving unemployment checks.  No check?  Not counted.

From what I can tell, the total number of unemployed in America today is at least 37.5 million, rising to over 65 million if the underemployed are included.  These numbers sound too big to be true but can be pieced together from a variety of sources, including the BLS.

37.5 million unemployed out of 150 million potential workers -- one in four.  If this is correct, then where are the bread lines?  First, Americans entered the current downturn far wealthier than ever before.  Many survive today on fast-depleting retirement accounts and strained credit.  Second, massive security nets -- welfare, extensive unemployment benefits, disability payments, and school loans -- have disguised or deferred the physical presence of otherwise visible hardship and deprivation.  Government-backed programs, many themselves insolvent, are the "bread lines" of today.

Persistent high unemployment will not soon resolve: job creation currently lags population growth.  About 145,000 jobs must be created every month to reach parity -- not growth.  400,000 jobs would need to be created to replace by 2013 the jobs lost since 2007.  Even with a sustained recovery starting immediately, it would take at least eight years to recover jobs lost during the last two.

One reason the job picture is so grim is that investors are confounded by Federal monetary policy.  Under Roosevelt, just as it is now and was during Carter, Fed policy was an explicitly Keynesian effort to correct unemployment -- not a stable-dollar course like Reagan pursued, or Thatcher for the British Pound.  As Margaret Thatcher pointed out in her autobiography, The Downing Street Years, monetary policies must either "hitch their star" to a stable currency or pursue specific social outcomes, such as reducing unemployment.  Never both, it must be one or the other.
With trillions outlaid in "stimulus," America is committed to the latter course today.


  1. Its funny you go to other sites like HERE. and they give disinformation to CANADIANS to keep the sheep going, stay forever in debt, broke and stupid. A former cabinet minister telling people to sell GOLD and use their house as an ATM machine. The spin and lies just keep going.

  2. The best disinformation from that site (as he believes "things" will never end):
    (5) Stop reading doomer web sites. Seriously. The world is not going to end. The United States will not default on its bonds. There will be no hyperinflation. The US dollar won’t end up as bathroom tissue. There are no FEMA concentration camps. There’ll be no food riots in North America. Gold ain’t going to $5,000 an ounce. You do not need a weapon, and stop hoarding Spam.

  3. Really the truth is that the world is ending. It doesn't mean humanity will end or meteors will strike but the American dream is gone, the world will enter global anarchy leading to a global dark age.

    Things are going to get a little, smoggy...

    I hope there is a spiritual force in this world that can wave a magic finger and make things good. But for those oblivious to anything... good luck goners.

  4. dying birds, dying fish, our world is polluted beyond all hope. It all ends in 2012!

  5. Obviously none of you idiots on this blog knows what depression is really like to think that we are in a depression. Its time for all you LAZY BASTARDS go look for a job, plenty out there...

  6. to 8:56, perhaps you could tell us lazy bastards exactly where those jobs are? The only jobs where I live (northeastern PA) are driving trucks for the gas drillers (who are also poisoning our wells at the same time). And a lot of those jobs went to people the gas company brought in from out of state.

    Ain't nothing else except working at the local Dandy Mart for minimum wage, and only when the latest employees get tired of the lousy working conditions and quit. We ARE in a depression, but nobody will admit it and so far all the gov't handouts are keeping a lid on the revolution.

  7. Someone smarter than I called this new depression a cancer and it is...It slowly eats everything till it's all dead.

    Problem with me is I rather just get it over with and hit the worse of it now but it's taking forever...Or so it seems.

    In the grand scheme of history we're actually moving towards the collapse quicker than anything seen before BUT since our society is used to INSTANT rise or fall it seems we're NOT collapsing.

    The US has collapsed economically SEVERAL times and we're slated to collapse again...I just want it to hit so we can rebuild before I get to old and weak to make a difference.

  8. The fact of the matter is there are 1 in 6 people on food stamps. For the first time in history there is more food being consumed than produced. There already is food riots in third world countries and if the dollar ceases to be the standard then there will be food riots in the United States as well. I'm not a doomsday prophet...The US will still be here I believe, but our standard of living will be much lower.


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