Are we headed for a great depression?

Question

Everyone seems to be complaining about a financial crisis. Gas prices on the rise, foreclosure on the rise....Whats going on.

Answer 1

Are we headed for a Great Depression? Yes.

The reason why is because we are very irresponsible, we focus only on ourselves, and could care less about the truth and the facts.

For example, everything created during the Great Depression to prevent another one is unfunded. That is, Social Security, Medicare, FDIC insurance, US pension insurance, and unemployment insurance are all UNFUNDED programs. Yes, along as there are a few banks that every now and then go out of business, no problem. However, FDIC insurance was not for a few banks going out of business, it was to help depositors if there was a run on the banks like in the Thirties.

If there was a run on the banks again, with an insurance company, that being the US government, who has put no money away, incase of the event, we would not be any better off then we were in the Thirties. We may actually be worse off if it happened again because no one would trust the government again for a very long time.

Look at Social Security; everyone has known that we had a generation called the Baby Boomers. And every one knew there was a whole lot of them, hence the name boomers. So in 1983 they raised the SS taxes by almost double. Why? To start a trust fund so when the boomers did retire, there would be a “trust fund” there with money to help out the young with paying for their parents (the boomers) retirement. What did the boomers let the politicians do for the last 25 years? Spend the trust fund each and every year.

You see, the boomers liked that, by spending the trust fund each year vs. saving it, stimulated the economy, it helped the boomers during their adult lives. And basically, the boomers just said to heck with our children, we’ll let them worry about paying for our Social Security. One parent may remark, “I don’t need my SS.” Fine, but over half of the boomers are 100% depending on SS to take care of them in their old age. And even if your parents don’t need help, you will still have a huge bill on your hands for all of the boomers who have saved nothing for their retirement.

And unlike your parents who have allowed the government to borrow and borrow more, that will not be an option for the X and Y generations, your parents are using up all of the US’s leverage. Right now we owe $9 trillion in total and over 2 trillion to the Chinese, Japanese, and OPEC countries alone.

When the current credit crisis completes its full cycle from boom to bust, and we hit a bottom, that will cause the consumer to run out of steam, then a recession, then the government will be hit with a huge reduction in tax revenues, and unlike in the past, they will not be able to sucker more investors into loaning them even more money. The US government will not be able to pay its bills and the rest will be history: “The Next Great Depression.”

Right now the dollar index is 75, its lowest point since it was begun in 1967. Normally, the dollar index is at a high at the end of a business cycle, for example, the last time the business cycle was at an end, in 2001, the dollar index was at 120. The dollar index is telling everyone something rather they want to see it or not. Furthermore, every expansion before the S&P 500 would triple, for example, from the recession of 1991 to the recession of 2001, the S&P 500 went from 400 to 1550, almost a 400% increase. However, this so-call expansion, the S&P 500 cannot even get back to where it was in 2000. Again, the stock market is telling everyone something rather they want to see it or not.

Yes, you can be a stock trader and maybe make money, but you had better forget about being a long-term investor in the US, unless of course you want to lose a bunch of money.

Don't believe me, just look at the Stock Market and the Dollar as compared to passed expansions, for example, the one between 1991-2001.

1)US government programs like SS, Medicare, and all the different insurance programs they offer are all unfunded.

2)There is no SS trust fund, only IOUs. The US National Debt is $9 trillion.

3)The US government cannot pay its bills now, which means they are insolvent, that is, unable to pay their bills without borrowing money. Insolvency is the precursor to bankruptcy.

4)Virtually, no one is talking much about the debt problems the US government has in the generally media and public.

5)Both Greenspan and Bernanke have gone on record as stating that if changes are not made immediately, severe consequences will be forth coming. And they made these comments years ago, and nothing has been done. The Comptroller of the US, meaning, the Head US accountant has gone on record saying the same thing.

6) Both the dolar and the stockmarket are performing poorly compared to other expansions, and there is a reason for it. The dollar and the stock market sees the problems with debt.

I have included a report from the St. Louis Federal Reserve bank titled “Is the United States Bankrupt?” Remember this is a report from a Federal Reserve bank.

Note, this is not something that is going to happen overnight, for the credit crisis to hit bottom could take at least a year, for a recession a year or two. For the government to feel it in their tax revenues, 3-4 years. Depression in 4-8 years, best estimate.

If you are really interested, read the report from the Federal Reserve bank in St. Louis.

Answer 2

The simple and immediate answer is "no." A depression is a recession combined with deflation. Deflation is where money becomes increasingly valuable over time. Inflation is where it loses value over time. The reason deflation is a problem is that prices are forced to fall, making it difficult or impossible for businesses to make a profit. As prices fall, they stop producing and lay off their staff, as staff is laid off, they stop purchasing and so forth in a nasty downward spiral.

We are more likely facing a situation like the stagflation of the 1970's where you get nasty inflation and no material growth in productivity. It is a bad combination and the medicine is exceedingly painful.

We are in the midst of a moderate liquidity crisis, but it is managable, though there will be a lot of bankruptcies, job losses and personal tragedies.

Far more serious is the fact that the nation is so deeply in debt that it will likely have to default on its obligations either through inflation, cancelling or reducing programs like Social Security or Medicare, or not pay its official debt (which won't happen). The current US debt completely swamps any possibility of Americans paying it, unless we end the prescription drug benefit, curtail military spending dramatically, and downsize the Federal government in a huge way.

This president has created more indebtedness, if you include things like the prescription drug program, than all our other Presidents combined. We are headed for a disaster, but it is probably about 10 years away when boomers really start retiring.

Answer 3

I would say no. Gas prices are on the rise, but housing prices are going down and that offsets at least somewhat the rise in the price of gas. Employment is still good, but final numbers come out tomorrow. Inventories remain low.

The market is spooked right now. There is an election year coming and there is no idea how it will turn out. If Hillary wins, she and the Congress (presumably still Democrat) will raise taxes on employers, thereby tightening the money supply. The dollar will rise, yes, but in an effort to save cash to pay for increased taxes and other contingencies, businesses will take measures to curb growth and reduce investment by cutting jobs. That sparks the recession right there.

A recession is a period of DECLINING GDP which lasts at least six months (two quarters). A depression is the same thing but lasts SIX QUARTERS, or 18 months.

To date, the GDP is rising, though the bears say this can't last, but employment remains high and inventories remain low which means businesses are continuing to invest and sell.

No immediate recession, but things are always tenuous at best. We have had a longer than usual period of expansion and a recession was predicted to happen earlier this year, but never did.

Eat, drink, and be happy. Invest! Invest! Invest!

Answer 4

Over the last five years I had begun to have increasingly withdraw into a downward spiral of depression..

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Helping you eliminate depression?

Answer 5

The situation isn't the same as when Great Depressions have occured. In a way, the fact that things are tight with oil prices and there is a mortgage crisis makes a Depression less likely. Depressions happen when things are good and everyone is upbeat about the economy. Because thats when they gamble with their money and take bad risks. Its when those bad risks start blowing up in people's faces that we have a dramatic crash and a Depression.

Answer 6

You can never count that out but the economy is showing signs of life. The stimulus helped a bit. ex. re-opened steel mills and a GM plant in Ohio and I hear solar/wind generators are selling. We need to be smarter about everything, trim the fat, invest in the future. Explain why you would thumb this down? Habit?

Answer 7

Only time will tell. During the present time just don't worry and live life to its fullest.

Answer 8

yep and thank the bush garden for it