Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
In the same category

Job Creation via Jobless Benefits and Fed Money Printing : Signs of a a Modern Day Depression

IMG Auteur
Published : November 29th, 2012
679 words - Reading time : 1 - 2 minutes
( 2 votes, 5/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...
Category : Editorials

 

 

 

 

When reading Wall Street Journal stories such as CBO: Unemployment Extension Would Add 300,000 Jobs, it’s easy to come away with the impression that the economic world we live in is radically different than it was just a few years ago. And, now almost three-and-a-half years after the Great Recession officially ended in 2009, when perusing Wall Street Journal reports such as Fed Stimulus Likely in 2013, it’s not hard to conclude that we are living in a modern day depression.

The times are surely different than 80 years ago, one of the biggest differences being how the federal government has responded to this economic crisis, and therein lies a frightening possibility for our collective future for anyone who thinks the malinvestment that developed during another historic asset bubble must be purged before sound economic growth can continue – if the Great Depression lasted a decade with far less government support, how long might the current slowdown persist, given that large swaths of the economy are being propped up by massive deficit spending and money printing in Washington?



Perhaps more importantly, have the borrowing and spending efforts by elected officials and the money printing actions of central bankers in recent years set us on a cataclysmic course, one that wasn’t even possible 80 years ago?

Without reading the first sentence in the first story noted above about extending unemployment benefits, you get the clear impression that the financial media and policymakers may have reached a new level of desperation in their quest for more jobs and stronger economic growth.

To be sure, it is the job of the CBO (Congressional Budget Office) to do all sorts of calculations to help policymakers make decisions, but when borrowing another $30 billion to continue extended jobless benefits directly translates into “adding” 300,000 jobs to the U.S. economy (and boosting growth to boot), something is seriously wrong with what the CBO is being asked to do these days.

If the U.S. government was sitting on piles and piles of money, one might argue that they should just write checks to all U.S. citizens – not just the unemployed – and this would give the economy a real boost, but nearly half of what the government spends is borrowed money, though this seems to bother fewer and fewer people with each passing day, particularly since the election earlier this month.

Some 15 million families (or almost 50 million Americans) now rely on food stamps that account for a whopping 80 percent of the $1 trillion “Farm Bill” passed by the Senate last summer. While no one likes to see people go hungry, it’s worth pondering the long-term impact of making food stamps as easy to use as swiping a credit card, that is, rather than the stigma and inconvenience associated with Depression era breadlines.




The fact that the nation has a major obesity problem and that consumers still find a way to fund holiday purchases during the madness otherwise known as “Black Friday” make this an even more intriguing comparison to the 1930s, one that historians will no doubt delight in analyzing many years from now.

But, probably the most disturbing comparison between the 1930s and today is the lengths to which the Federal Reserve has gone to aid the ailing economy, already printing about $2 trillion in new money to buy housing and government debt and, as detailed in the second Wall Street Journal story above, now likely to up their money printing efforts to about a trillion dollars a year, until such time that the economy improves.

Never before has the central bank printed so much money with so little impact and this is another important distinction between 80 years ago and today – nobody knows where the Fed’s past and future actions will lead.

Most historians credit the onset of World War II and the resulting surge in U.S. war-related exports to Europe for pulling the economy out of its decade-long funk, however, there is nothing of that scale on the horizon to turn things around during our modern day depression.

 

 

<< Previous article
Rate : Average note :5 (2 votes)
>> Next article
Tim Iacono is the founder of Iacono Research, a subscription service providing market commentary and investment advisory services specializing in commodity based investing.
WebsiteSubscribe to his services
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
The U.S. Continues To Import Rec...
14 FebGypsy-1
Steve, you seem to have a grasp on Silver Reality here. I'm impressed. With over 100 claims on each ounce of GOLD being sold in the Paper Market,...
Gold Surges Another 7% This Week...
13 FebS W.
Buy the dip in gold?? Better to buy the selloff in Oil.
Gold Surges Another 7% This Week...
12 Febovertheedge
"Buyers should be getting into position to buy on the next dip." Gold is up something like 16% so far this year. Should'a bought when it wa...
Here We Go Again: Banks Are Impl...
12 Febsonora69
What is going to happen NEXT Monday? The Shanghai markets are closed all this week for the Lunar New Year. Monday morning ( or Sunday night U.S. t...
First Report since April, 2014
05 FebAndy_K1
Jason, One of your articles written way back is one of the reasons I started paying attention to silver and shortly thereafter started to ...
Something has Changed in Gold St...
06 Febneville
No nothing strange has happened in GOLD stocks....absolutely nothing.....The fact of the matter is that you byrne have been playing the man and...
The Revisionist Theory and Histo...
05 Febovertheedge
"The key is in the hand of the U.S. government. It is the same key that was used to lockthe U.S. Mint to silver in 1873, and to gold sixty years la...
First Report since April, 2014
05 FebS W.1
Here I was just 2 days ago thinking whatever happened to that evangelical silver guy. Low and behold up he springs, like some spirit from the g...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Mining Company News
Lara Expl.(Cu-Zn-Au)LRA.V
Revised Resource Estimate Report Filed for Maravaia Copper Gold Deposit
CA$ 0.34+1.49%Trend Power :
Corporate news
Black HillsBKH
Black Hills reports 4Q loss
US$ 51.64-2.75%Trend Power :
Corporate news
Kinder Morgan(Oil)KMP
Midstream Companies Were above the 20-Day Moving Averages
US$ 102.03+1.98%Trend Power :
Corporate news
Kinder Morgan(Oil)KMP
Midstream Companies Were above the 20-Day Moving Averages
US$ 102.03+1.98%Trend Power :
Corporate news
Devon Energy(Ngas-Oil)DVN
Gasoline Inventories Rose Last Week despite Fall in Production
US$ 21.69+2.07%Trend Power :
Corporate news
United States Steel(Fe-Sn)X
U.S. Steel (X) States Ratification of Labor Agreements
US$ 7.40+8.35%Trend Power :
Corporate news
Black HillsBKH
4:34 pm Black Hills Corp beats by $0.04, misses on revs; guides FY16 EPS below consensus
US$ 51.64-2.75%Trend Power :
Corporate news
Black HillsBKH
Black Hills Corp. Reports 2015 Fourth Quarter and Full Year Results
US$ 51.64-2.75%Trend Power :
Corporate news
Transcanada PipelinesTRP.TO
TransCanada to Sign Substantial Agreement to Benefit Québec Economy
CA$ 48.65+0.16%Trend Power :
Corporate news
Devon Energy(Ngas-Oil)DVN
4Q15 Crude Oil Prices: Fallout for the Energy Sector and SPY
US$ 21.69+2.07%Trend Power :
Corporate news
Comments closed