The Depression Playbook
The comments below are an edited and abridged synopsis of an article by Jeff Thomas
The $20-trillion debt that the US government has created is far beyond anything the world has ever seen and, in fact, it exceeds the total of all other countries combined.
To add insult to injury, the unfunded liabilities of Medicare, Medicaid, Social Security, etc., bring the total real debt to over one hundred trillion—an amount so large that not even the interest can be repaid.
Although Republicans have traditionally railed against debt, they’ve recently voted in a dramatic tax cut, with no corresponding cut in federal spending. This is akin to an addict taking a shot of heroin. A brief period of investment in business will occur but, within a year, will be followed by a deeper tightening.
In addition, dramatically increased spending has been approved. Budget caps on defense and domestic spending have been eliminated. Entitlement spending is higher than ever, yet that, too, will be expanded.
Even the poor understand that expenditure cannot be increased if income has been curtailed, yet this basic arithmetic has been overlooked by legislators. The US is on board for dead-ended economic policies that will lead to a depression.
The Fed has raised rates repeatedly in the last year and has announced that it will raise them 5 times more over the next 2 years. Which rise will prove to be the trigger?
A crash appears inevitable, but that does not ensure a depression. Thomas looks at the events that took place after Black Friday in 1929 that sent much of the world into a prolonged economic collapse: decreased international trade; demand for goods; bank failures; and unemployment.