New WPA? War? How do we get out of the coming Depression?

[Porsche-O-Phile]

How do you think we'll try to get ourselves out of the coming Great Depression? Historians seem to think that the WPA played a role in helping to keep us afloat in the 1930s and that WW2 catapulted us into productivity and ultimately created prosperous times.

Obviously nobody wants war and I don't see the government able to fund any kind of WPA-like activity (they're broke too, especially in wake of recent bailouts) so let's put the brain trust to work here - how do you think we can get out of this mess and keep people working and doing SOMETHING in the coming months/years?

I hate to be so negative, but I'm seriously thinking that a major, prolonged Depression (not just the "R" word, but the "D" word for sure) is inevitable at this point. Any suggestions to fix it?

[scottmandue]

Nationalize the banks, oil, and insurance companies.

[daepp]

Just about every single thing Roosevelt and the government did during the Depression acted both to extend the overall national Depression AND to hurt the average Working Joe in America at that time.

Check out Amity Shlaes book for a couple of years ago: The Forgotten Man. It is a scholarly look back on the fiscal and monetary activities at play at that time.

[ckissick]

Create jobs. In the 1930's this was done with the New Deal and high taxes. Many say this prolonged the Depression, After all, it lasted 10 years and only ended with WW2.

You can also create jobs by drastically lowering taxes and shrinking government, and letting entrepreneurs do the work. This will never be tried, though. It's a foregone conclusion that Obama would go the New Deal route. McCain probably would, too. Therefore, longer depression.

[fintstone]

Cut taxes and government spending. Reduce interest rates.

[Aurel]

We`re already in a war, and it does not seem to be working for the economy. Maybe need a bigger one? Bush has two months left. I am sure he could nuke Iran, piss off the russians and the chinese in that timeframe .

Aurel

[tabs]

What made America rich was REBUILDING the world after WW2. The US no longer has the means of production. It is long gone to China, Japan, Korea, Taiwan, and now India.

I the US goes into a Depression (which it might not) it will be decades long. The world political situation will deteriorate into chaos. HOwever for a war to bail us out, it will be about a decade for things to get really bad.

It is lookin ever better that the world is gona end on 12/22/12.....That Mayan calender thing just sticks in the back of the mind? They were just so accurate over such a long period of time, that it gives ya pause.

We do seem to be on track for somethin?

[tabs]

They can reinflate their way out of this. Creat a huge money supply which will make any debt look cheap by comparison. With the coming inflation.

House will remain at these levels as they already have been inflated to what are now unsustainable prices.

Hard assets will be at a premium. The suckers will be Bond Holders and people in cash or cash equivalants.

Stock Prices should do well, as they will adjust to the new price structure.

Does this solve long term problems..NOPE. But do ya wana be eatin rice and beans for the next 20 years.

[fintstone]

Originally Posted by Aurel

We`re already in a war, and it does not seem to be working for the economy. Maybe need a bigger one? Bush has two months left. I am sure he could nuke Iran, piss off the russians and the chinese in that timeframe .

Aurel

or maybe France...that one would be quick and easy.

[1967 R50/2]

Originally Posted by ckissick

Create jobs. In the 1930's this was done with the New Deal and high taxes. Many say this prolonged the Depression, After all, it lasted 10 years and only ended with WW2.

You can also create jobs by drastically lowering taxes and shrinking government, and letting entrepreneurs do the work.

Creating jobs will do little because unemplyment is not the problem.

During the depression unemployment approached 20%. Now it is 6.1% which is not very high at all. So clearly unemployment is not the concern.

The cure:

Excess liquidity created this problem. In the short term, the government must allow liquidity to flow until trust in the banking system is regained.

This will keep the banks going short term, but the only thing that will keep them going long term is if they have a more favorable debt to equity ratio. In order to get equity (deposits), interest rates are going to have to be raised....a lot. Loans will cost more....that is the bottom line.

Housing prices will come down
Stock PEs will also come down

But overall the markets will be more secure. The key is to buy time to establish that security.

Countries that have large reserves...like China, have these deposits on hand for a reason. Rates for loans are quite high. The US needs to follow suit.

Ultimately the government will also need a net inflow of capital. Although with a national debt the size of the US, it will be a 50 year project and not the result of any one administrations actions.

BTW: The last I checked the US was at war TWICE...both fronts funded by debt. Literally, war is not the answer.

[varmint]

read

the forgotten man

by amity shlaes



the first thing to do when faced with economic troubles is DON'T VOTE FOR A SOCIALIST.

[ckissick]

Originally Posted by 1967 R50/2

Creating jobs will do little because unemplyment is not the problem.

During the depression unemployment approached 20%. Now it is 6.1% which is not very high at all. So clearly unemployment is not the concern.

[/B]

I was assuming that employment would become a problem. We're not in a depression yet. When and if we are, then 20% unemployment may be a reality.

[Noah930]

The Nurburgring was built out of the German equivalent of the WPA way back when. Do you think it might be possible to do something like that, here in the USA? Forget the murals and dams?