I could ignore the mention of zillions by Rich D., Esq., but your use of the words 'a couple of generations' which works out to be near the 23rd Century was quite hard to swallow.
My old crystal ball tells me that when a bushman becomes k>
By a "generation" I mean 30 years - the age difference between generations.
Search posts on uk.finance by "fofp" and "credit bubble" and you'll probably find a reasonable explanation for why I think the credit cycles repeat through the grandchildren. There will have been more than a few of them between 2000 and now.
Cheers
FoFP
Does it take approximately 30 years to forget tough lessons learned ?
Han de Bruijn
M Holmes wrote
couple of generations.
Thats just plain wrong. In the century before 1929, we saw much more frequent bubbles than that.
Have fun explaining the bubble of the late 20s which wasnt that long after the previous recession. That was less than 10 years.
And it isnt even clear if we will see anything similar to the great depression now, its MUCH more likely it will end up being just another recession with a rather spectacular start to it now the govts have enough of a clue to realise what is going on with a credit crunch and how to deal with that.
Doesnt explain the frequency of bubbles in the century before 1929.
Han de Bruijn wrote
Nothing like it. My father left school and started working during the great depression and didnt have any problem with using credit when that was appropriate.
And the effects of the great depression where more severe for his country than were seen in the US.
Nope. It takes sixty or more. Long story short, people get to "credit revulsion" in the debt-deflation and swear off debt for life. They raise their kds to do tye same. For the next set of kids though, they'll start borrowing just for mortgages or whatever. Later for them, or for their kids, the last bust will just be ancient history. They'll start taking debt for more things. Then eventually there'll be one particular asset which they think always rises in price, and we're off to the races again.
I have an article written for One magazine on this very subject. It's too long for the paper edition, so it may go on the website:
Which are you thinking of?
Not every recession is the result of a bubble. There are normal business cycle recessions between the debt-deflationary ones which end the bubbles at the end of the credit cycle.
It's already different to normal recessions inasmuch as it wasn't started as a result of hiking interest rates to control an inflationary boom. This one quite clearly features debt-deflation dynamics rather than the normal inflationary one.
Not a chance.
If you think the government knows what it's doing, you haven't been paying close enough attention.
FoFP
One can find all sorts of strange things on Wikipedia.
Not long ago that had a picture of Emperor Palpatine as the Pope.
That's why, although its OK to use to get a convenient lead on things, before making a definitive claim one should consult a definitive source. Like the Fed on the definition of M1 & M2.
M0: The total of all physical currency, plus accounts at the central bank that can be exchanged for physical currency.
M1: M0 + those portions of M0 held as reserves or vault cash + the amount in demand accounts ("checking" or "current" accounts).
M2: M1 + most savings accounts, money market accounts, and small denomination time deposits (certificates of deposit of under $100,000). ~~~
... one doesn't see the word "loans" in there, eh?
Does M2 or M3 include US dollars in off-shore banks, under some conditions, (owned by US companies, people etc.)?
David Bernier
you're talking about the kontratieff cycle? the average cycle is 54 years long but the lengths can vary.
M Holmes wrote
That doesnt happen that much. If it did, we wouldnt have seen the risk of credit cards in the 50s, much less than 60 years after the great depression.
whatever.
That doesnt happen either.
Thats only been true last century. In the century before 1929, there was a MUCH higher number of busts, what they mostly called panics in those days.
It actually happened a lot quicker than you claim.
Plenty thought that about real estate much sooner than 60 years after the great depression.
The author(s) cant explain those basics above.
M Holmes wrote
couple of generations.
frequent bubbles than that.
All of them.
That one was.
Yes, but that wasnt just a normal business cycle recession.
That isnt what happened with plenty in the last century.
inflationary one.
We'll see...
rather spectacular start to it
We'll see...
close enough attention.
They understand what they are doing MUCH better than they did in the early stages of the great depression.
In spades with how to avoid the worst downsides.
The modern definition as used by the Fed would exclude currency holdings held by banks, i.e., the same amount of $10 trillion as you have mentioned.
************************** It's only a trillion difference. that's small change these days.********************************
Could you also confirm that by 'bank balances' you are refering to bank deposits held by depositing customers and not the cash held by the bank within its premises, Sir?
**************************************Yes.
Well, OK, there are always rich folks and even in the most extreme bubbles, not all of the population takes part. In the 50's were credit cards normal for the masses?
Panic of 1837, Panic of 1873 were both significant bubbles. Which others were you thinking of that were more or less national?
I'm listening. What other nationalk bubbles have we seen between the end of the 1929 bust and when this one got going in the early 1980's? I can think of quite a few in other countries, but the UK or US?
The asset is chosen before the bubble gets started, largely because it is seen during the inflation as being able to protect wealth from inflation.
The bubble though gets speculative during disinflation.
FoFP
Yep, K-cycle, Schumpeter cycle, long credit cycle. A very good explanation is given by Leigh Skene.
FoFP
couple of generations.
frequent bubbles than that.
Just as our 1990's recession was part of the current bubble. It's the deflationary crash at the end that's the real worry though. The first one is just an interruption.
Beckman has argued that it was the primary recession in the same K-cycle that resulted in the 1929 crash. What's the counterargument for it being the same stocks bubble?
That I do agree with. I have questions as to what difference having fiat currency might make to these things.
Fair enough.
I think they're throwing money away they'll need when this bottoms. The thing that will make the most difference between now and the 1930's is the welfare systems.
To the extent they simply delay the necessary restructuring of production with demand, they'll prolonmg this and quite possibly make it worse overall, as I suspect they did in Japan.
FoFP
I keep seeing this Austrian School-type claim repeated everywhere nowadays.
Could someone kindly elaborate on this? Thanks.
===================================================On Dec 3, 8:50 am, M Holmes wrote: ......
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M Holmes wrote
Yep. In spades in the 60s.
or whatever.
You said busts, not bubbles.
You said busts, not bubbles.
great depression.
Thats not what most bubbles are about.
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