The authors themselves state that there is a direct link between the Great Depression and deflation. They then go on to say that besides that unfortunate link, there is only a small connection between the two.

Anyways, like I said, not necessarily titans of the field. They have a few grants, most university PhD's get those now and then.

Also, I wouldn't go around saying that the linked article is a report from the Fed. As best I can tell it was a research paper with one of the authors being employed by the Fed at the time, not an officially accepted Fed position.

Thinking outside the box is fine, just as long as it's not just for the sake of thinking outside the box.

>> ^nock:

Yes, evidently I said deflation by definition = deflationary spiral... NOT. Also, you found a single article that says that the link between deflation and depression is "not closely related", written by 2 guys no one would consider economics titans by any means. They couldn't even support an argument saying it was not related. The preponderance of evidence supports deflation as a bad thing - I don't deny that there are people who suggest it's not related to bad things, but then again there are people who believe in Dianetics and Jeebus...
If you'd like to ignore the evidence, that's your choice. Doesn't make it right.


Unrelated personal attacks. If reports from the Fed itself aren't evidence, then it is a mirror on yourself I point your comment at me at. Here is a corresponding phot
o of inflation cycles that have non-corresponding "Great Depressions" in American history.


As to a fallacy of an appeal to authority has been invoked, I site their qualifications.

Patrick J. Kehoe - Patrick received his B.A. in Mathematics and Russian from Providence College in 1978 and his Ph.D. in Economics from Harvard University in 1986. A prolific researcher, Patrick has published in numerous prestigious publications, including Journal of International Economics, Econometrica, International Economic Review, and Journal of Economic Theory. He currently serves on several editorial boards and is a Fellow of the Econometric Society.

Throughout his career, Patrick has advised numerous Ph.D. students. He has been awarded several grants, including six from the National Science Foundation. His research focuses on monetary policy, time consistency and financial crises.

Andrew Atkeson - Ph.D. Economics, 1988 Graduate School of Business, Stanford University. Grants and Awards:
National Science Foundation Grants
1991-1993 with Robert E. Lucas, Jr.
1992-1994 with Masao Ogaki
1995-1997 with Patrick Kehoe
1997-2000
2000-2004 with Fernando Alvarez
2005-2008 with Ariel Burstein
2006-2009 with Harold Cole

More scholarly than you or I in the field I would wager. Accepting only main stream editorials (this source was actually a wiki article source) tends to fuel a group think which I never like to completely engage in, which is why I frequently view posts from Netrunner and the like. A healthy dose of life from a different perspective keeps ya honest. Anyway, please take this as it was meant, a nice conversation about a subject we both find interesting and controversial. Take the teeth off your comments as I wasn't meaning to make anyone's blood boil.

First of all I do respect you for defending yourself quantumushroom, Sorry about the cheap jab earlier.

However you are going to have a hard time if you are trying to convince me that FDR's government spending didn't help our country through the great depression. The New Deal and the Emergency Banking Act are highly regarded as key pieces of legislation that helped our country recover. The banking act is an instance where the Government stepped in to fix some broken systems. Hell he closed down banks if they didn't meet the criteria he demanded. That's not very free market, but the free market is flawed in some regards. It requires legislation to fix the problems. I am studying Economics in school right now, and I will not budge on this issue. Government needs to be involved in our economy, it would be a disaster if nothing is regulated. This means that at times policies that you see as socialist need to be passed, and 99% of the time these policies will cost tax-payer money.

We don't need to polarize the issue either. Passing some "socialist policies" such as buying banks that have gone bankrupt to help our Economy does not make our state similar to Soviet Russia.

By the way. If you still think the Tea Party is still for the people sick of both parties and who want change and more reasonable spending/taxation, look who is funding the Tea Party now. It has been bought out by the rich, and is now probably less genuine than either the republican or democratic party. A shame, but that's that state of our Nation.

quantumushroom do you really believe Obama would have made a move at trying to buy the banks if they were not about to go bankrupt and potentially put the nation into a great depression. He is not a socialist, he is a realist, and Republicans love to victimize him for it, and convince people like you he is 'Socialist' 'Muslim'. It's silly and I feel bad for Obama he probably thought our country was better than that.

Forget for a moment that Obama grew up around and among angry leftist radicals and his past is well-hidden by compliant MSM.

Why would anyone think nationalization is going to save anything? The soviet union--with natural resources far greater than the US--was 100% nationalized and failed. Yes we were told that only by thugverment spending money would we all be saved from another Great Depression (which was actually prolonged by thugverment spending).

"Franklin Delano Roosevelt. FDR's treasury secretary, Henry Morgenthau, wrote in his diary: 'We have tried spending money. We are spending more than we have ever spent before and it does not work. ... We have never made good on our promises. ... I say after eight years of this administration we have just as much unemployment as when we started ... and an enormous debt to boot!'"


Yes, Bush the half-servative was responsible for the first round of failouts. Obama just greatly expanded on his predecessors' failure.

None of that shit would have had to been nationalized or bought if republicans hadn't deregulated banking and trade. Obama didn't want to nationalize anything, He did it because all of his economic advisor's told him the apocalypse would fall on America if he didn't pass the economic stimulus bill. Why is it that people refuse to use their common sense when they think about politics. The republicans are the majority of the problem, but they love to cry about how they are so damn responsible with money.

quantumushroom do you really believe Obama would have made a move at trying to buy the banks if they were not about to go bankrupt and potentially put the nation into a great depression. He is not a socialist, he is a realist, and Republicans love to victimize him for it, and convince people like you he is 'Socialist' 'Muslim'. It's silly and I feel bad for Obama he probably thought our country was better than that.

>> ^jwray:

epic fail. Isn't US history a required subject in high school and/or college? How do you study US history without studying the new deal, and mentioning Keynesian economics?


Easy, they don't call it "Keynesian economics" they call it "the New Deal", and "jobs programs", and "infrastructure investments", and then most classes say that it was the mobilization for WWII that really ended the Great Depression.

My high school history class on the depression went way into the weeds about the Tennessee Valley Authority and the WPA, but never once did they say "the New Deal was a Keynesian economic policy that used fiscal stimulus to increase aggregate demand to close the output gap that had opened up in the Depression".

Tags for this video have been changed from 'trampled by turtles' to 'trampled by turtles, great depression, footage' - edited by calvados

>> ^NetRunner:
@<A rel="nofollow" class=profilelink title="member since January 19th, 2008" href="http://videosift.com/member/radx">radx, Paul Krugman also wrote an op-ed about it.
I'm not sure what to think about this worldwide austerity thing. I've never really believed there's some worldwide conspiracy to enslave mankind, but worldwide austerity during what amounts to the sequel of the Great Depression sure seems like a great way to go about it...


Sigh, it is sad we are spending so much on wars and useless drivel... However, we got to the point of where we are by deliberate steps (Mostly banks lending money people could not pay back and borrowing money as a nation, from social security dipping, low taxes, wars, borrowing, ect...) and the first step (Which has/has not been done,) is to rectify the problems we have...

Where does spending stop? Besides the wars of course... Should it stop? Ever. And if not in a time that all America is losing huge portions of taxable income, then when?

@radx, Paul Krugman also wrote an op-ed about it.

I'm not sure what to think about this worldwide austerity thing. I've never really believed there's some worldwide conspiracy to enslave mankind, but worldwide austerity during what amounts to the sequel of the Great Depression sure seems like a great way to go about it...

@blankfist, I'm kinda surprised at you. Perhaps you fell for the title, but here are some of the things Bill Black says:

1. Yes, [the bill's provision for running derivatives through a government-run exchange] is a good idea. You shouldn't be doing non-exchange traded derivatives, and this bill encourages exchange-traded derivatives. But it has loopholes that allow people to evade it, so it's probably not going to be terribly effective.
   
   Which is to say, the new regulations on derivatives are good, but they are too easy to circumvent.
   
   
2. What else do we know created perverse incentives? Professional compensation.
   
   
3. We know that the Goldmans of the world deliberately put the rating agencies in competition with each other in what in economics we call a "competition in laxity". In other words, whoever is willing to give the most absurdly inflated rating is who will get my business.
   
   Note: rating agencies are privately owned, for-profit companies.
   
   
4. So when we say the rating agencies screwed up, we don't mean that they took something that, you know, should've been a single-A and they call it a triple-A. No, we're talking about something that should have been 25 levels lower, and they called it AAA. If they're willing to do that, then they're going to be willing to bless the next insane thing, as long as the competition and laxity is allowed to exist.
   
   
5. Americans don't know that over 10 percent of all appraisers in America have signed a petition calling for the government to step in and regulate and enforce because of this Gresham's dynamic. A Gresham's dynamic is where cheaters and the least moral people prosper, and they drive the honest, moral people out of the marketplace. And that's what the appraisal industry was telling us. And the regulators refused to any do anything. And now, after a crisis measured in trillions of dollars of losses—and a trillion dollars is a thousand billion—we have, supposedly, the greatest reform bill since the Great Depression, and it completely ignores this causality.
   
   
6. The consumer bill was the other thing you asked me about. That is a good thing. But you can tell somebody has a really malicious sense of humor, because they put the new consumer agency into the Federal Reserve—the leading opponent of protecting consumers. This is the agency that under the HOEPA law [Home Ownership and Equity Protection Act], which goes way back to the '90s, had unique authority to protect us from otherwise unregulated mortgage bankers and anyone else who made mortgage loans. And even board members at the Federal Reserve went to Alan Greenspan and asked him to take action against these enormous abuses in the liar's loans and subprime, and Greenspan refused to act.
   
   This probably got your juices flowing, since it places some blame on the Fed. Unfortunately, it places blame on the Fed for refusing to regulate. Oh, and it was Republicans who insisted that the consumer protection agency be housed at the Fed.
   
   
7. So [in the subprime lending market] we had the exact opposite of what economics predicts: both parties to the transaction were made worse off. Well, why? Because the agents were made better off. Who were the winners? The rating agencies, the senior officers who walked away rich, the least moral appraisers, the least moral of the outside auditors at the big accounting firms. They were all the winners. They got rich by betraying their responsibilities. And so if you had had an Elizabeth Warren and if she had banned this nonprime product to protect consumers, now, that would enormously reduce this financial crisis.
   

In all, he's making all the usual liberal criticisms of the bill, which is that the bill's new regulations aren't nearly tough enough; which itself is based on the premise that unchecked greed and dishonesty was the root cause of the crisis.

Oh, and @marinara it doesn't "ensure Wall Street Scams keep running", a fair representation of his comments would be "doesn't crack down on Wall Street Scams."

>> ^Throbbin:

I hear Krugman warning against a relapse into recession and maybe even depression, and that is the last thing America needs right now (imagine what the Republicans would do with that?)

I think the real problem with the austerity decision is that the EU really needs to either put up or shut up about its existence. Either it needs to let member nations ditch the euro, or it needs to have the low-debt nations bail out the high-debt nations.

Keeping people on the euro, tightening monetary policy on the euro, and demanding austerity everywhere is going to give them a Great Depression that will make our economic troubles look like a walk in the park.

As for us, we seem to be good (but not great) shape on monetary policy, and have the right idea on fiscal policy, but we're being stymied on fiscal policy by domestic extremists. <godwin>You know, the Nazis used the Great Depression to come to power, apparently the Republicans want to create one so they can come to power!</godwin>

Crazy people against the Federal Reserve / WTO / IMF system??

Are you fucking insane??

Imagine if we had a gold standard and actual secured and backed monetary policy?
We wouldn't all be poor in a few years. Everyone is going to get fucked over hard by IMF and central banks, learn history and how the Great Depression was made 10x worse by this magical bank of yours.

Our govt doesn't even have any oversight over the federal reserve or their decisions and you might want to google and find out what country the Fed actual resides in.

^blankfist:
I heard somewhere the other day that during the Great Depression something like 40% of employment was in the farming industry. Now that makes up something like 4%.


I'm not sure about the actual numbers, but that trend seems reasonable.

Far fewer people are needed for the same amount of agricultural output now compared to the early 1900s. That happens with any industry that transitions from human labor to automation.

I don't quite follow your logic. Professional, technical or scientific services industries are far less likely to abruptly shift to another country. On the other hand many commodities generated from farming are highly fungible in the source of their production because they are generally homogeneous between countries. Tourism, especially inter-country, you would similarly expect to be replaceable with other countries and far more variable in terms of the revenue it brings in dependent on economic conditions, given that its a want not a need.
>> ^blankfist:

The problem, in my opinion (since you asked), is Greece's economy is 3/4 a service economy. They rely on tourism and export very few goods because production makes up a small part of their economy.
There is a realistic fear that the US has shifted from a prominent industrialized production economy to an economy relying heavily on providing services. I heard somewhere the other day that during the Great Depression something like 40% of employment was in the farming industry. Now that makes up something like 4%. Also I believe our production of goods is close to the ratio of Greece's (1/4th of the GDP).
I'm too lazy to google it and provide proof.

You might be right, but I know there are a complex set of issues involved in the national debts of most industrialized nations. That's why I was asking, because even though I think he offers some good reasoning, it just sounds a little simplistic to me. I don't like Republican fearmongering about our debt, but I can't help but wonder when we're ever going to get it under control. I don't want my son to live in Greece 2.0 when he's around my age.
>> ^blankfist:

The problem, in my opinion (since you asked), is Greece's economy is 3/4 a service economy. They rely on tourism and export very few goods because production makes up a small part of their economy.
There is a realistic fear that the US has shifted from a prominent industrialized production economy to an economy relying heavily on providing services. I heard somewhere the other day that during the Great Depression something like 40% of employment was in the farming industry. Now that makes up something like 4%. Also I believe our production of goods is close to the ratio of Greece's (1/4th of the GDP).
I'm too lazy to google it and provide proof.