Not making a difference since 2006. Blog motto: Always be sincere whether you mean it or not.

Friday, April 25, 2008

It Wasn't All That Depressing

The end of the world is coming. Real Estate prices are in the tank and Walmart won't sell you more than a few grains of rice. Should we panic now, or when the depression actually hits and how will we know when it does?

Mr. Howard Katz in a blog post titled Reality has a different take.

The things in reality which are generally called recessions are credit contractions; they are periods when wealth flows from the paper aristocracy back to the ordinary American. During a credit contraction about 95% of the American people get richer. (During the Great Depression real wages rose, per capita meat consumption also rose, the nation ate less margarine and more butter and gave more [per capita] to charity.) The periods designated as depressions and recessions were such for the paper aristocracy but not for the average American. And the idea was to convince the average American that he was getting poorer when in fact he was getting richer (and vice versa). This is why after two decades of “economic growth” under the leadership of someone the media described as a “miracle man,” the people of the world are rioting and killing each other for food. This does not quite fit my definition of economic growth.

I am no economist, but am the son of people who lived through the depression. I can only inflict family narratives on my few readers.

My father, at the beginning of the depression had a bit of a hard time. When he got a job with a large enterprise, through some nepotism I suspect, things changed. He had a paycheck and some relative wealth. He would speak wistfully of how low prices were during the depression.

My mom's family did not have such a good time. With her dad out of work, it was tough. Oh, her dad's loss of work was injury related not economy related.

The 95% figure sounds high as I've heard unemployment figure that were persistently high. Still, the increase in meat consumed make it hard to argue the point. After all, how many steaks can a Rockefeller eat?

I feel much better.


Independent Accountant said...

Katz is a voice of sanity in an otherwise insane world. I read his "Warmongers" in 1980. I highly recommend it.

tvoh said...


I got and still have "The Paper Aristocracy." It is still a book I refer back to. Rather primitive for someone at your level.

Mr. Katz at that time was campaigning for a return to the gold standard. A forlorn hope at the time and still is. Only a complete collapse with people spontaneously adopting it as they did the Spanish Dollar over the Continental could bring that about.