SeeTheLight

Our Coming Depression

Heavy doom & gloom. Undoubtedly it is bad and it will get worse. America was definitely living beyond its means and will suffer the hangover of a long party. Instead of accepting the hangover after the dot com bust it kept drinking.

Yes there are parallels to the great depression, but there are some things that are different than in the past. The author notes some of them in that instead of reducing the money supply in response, it is adding more liquidity. This is unprecedented, is the author correct. I know not.

The other thing we have now that we didn't have in the past is the Internet, a grass roots method to inform the general public outside the main street media. In another Seeking Alpha article, another author talked about how financial markets and even the dollar are all based on trust. That trust has been shaken.

The fact is the only way we can truly get to a full depression is if collectively the world gets so panicked that everyone goes into a bunker and hides (the protectionism noted above).

I have no political affiliation to either American political party since I am Canadian. But the author makes the assumption that the democrats will get elected and their policies will exasperate the situation.

Personally, I see this article as irresponsible. It is well written, and has an easy to follow logic, and let's face it, it is a definite possibility. But even as it commends the American people for their reaction to the bailout bill, it condemns them to make the same mistakes of the past. Is the scenario outlined above possible? Yes, but only if everyone buys into it. Trust is key here.

I think everyone needs to accept that the party in America is over, and it will be hard. But if people irresponsibly incite panic it will be worse.

Will you lose money? Yes. But so will everyone else in the world, we will all be a little poorer (a period of deflation will occur), but if the underlying value returns it just means that everything will be cheaper and hey you might be able to buy something with a dollar then.

I commend the author for a well written article that has described accurately where we are today and the hard road ahead, but as someone who is clearly intelligent I find it hard to fathom why he would not consider the impact of his words and how they are just another irresponsible act on top of all the others.

I hope this helps those who are considering burying themselves in a storm shelter. By trying to help everyone else calm down maybe we can make sure the future is merely painful instead of catastrophic.