Between 1936 and 1937, stock prices doubled. Between 2010 and 2011, stock prices doubled. In 1937, the government decided to slash the deficit. The depression returned and stocks collapsed. In 2011, the government is going to slash the deficit. The depression will return and stocks will collapse. The economy of the 30s was saved only by massive government spending for World War II. This time, the economic crisis will coincide with the most serious environmental crisis in history, the equivalent of a world war, but one nobody will win. History has long since proven that the best way to eliminate deficits is to encourage economic growth, not cut spending. All deficit reduction is going to do is prolong the depression.

4 Comments

  1. It is counterintuitive to
    It is counterintuitive to think that cutting spending will not produce positive results for the economy. But it’s not the same as managing one’s home or business budget. Even though the waste and fraud over the years is beyond huge, heavy slashing of government spending will put so many local, state and federal employees and private contractors out of work that the burdens will only be shifted to personal economic distress on a large scale, ie. a depression. And unbridled economic growth is ultimately an environmental wrecking ball. As Elvis sang “we’re caught in a trap”.

  2. An antiquated public
    An antiquated public transportation system, a crumbling infrastructure, total reliance on fossil fuels without investing in/encouraging the development of alternative energy sources… If we don’t invest heavily into these sectors soon, the rest of the developed world will overtake us very soon, I’m afraid.

  3. The Gov’t is not slashing any
    The Gov’t is not slashing any significant spending. The whole debate of cutting is a joke. The numbers are so huge that even if everything were to be cut in half and taxes doubled it would do little. We are on one path, and that is to inflate away the debt. The last place anyone should be is sitting on cash for one day the dollar will likely collapse. In fact, I would not be supprise to the Dow break 30,000 as the dollar sinks lower and lower. The worst place to be will be in the bond bubble. Money is already leaving bonds and as money flees bonds it will move to other assets, (stocks/commodities). We can have an economic collapse and a record high stock market. It is already confusing the majority of Wall Street, but it will happen. There will be a collapse, but not until massive inflation.

  4. Whitley, once again your
    Whitley, once again your brilliant understanding of the financial workings of the world has predicted the terrible events of this past week. It was the worst week for the S&P 500 and Nasdaq on a percentage basis since November 2008 and the worst week for the Dow since March 2009. I lost 40% of my pension in 2008/9, and 10% this week. Please, give us some guidance for the future. Should those of us who have our pensions connected to the stock market seek another way of protecting/investing our money for our retirement? In my case, there can be no possibility of a retirement anymore because of what happened in 2008/9 and this past week. But I want to protect what is left. Some say to buy land. Some say to buy silver/gold. Some say to invest in inventions. Should we hang in there with the stock market for some kind of rebound? I know you are not a professional financial advisor, but what would you theoretically recommend to a friend? Thanks.

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