Monday, February 9, 2009

The Greater Depression

Monday, February 9, 2009

The Great Depression.


It was simply that abstract thing that was always mentioned in some of our classes in college. It was that thing so painfully yet beautifully depicted in John Steinbeck’s masterpiece, The Grapes of Wrath. But not anymore.

The Greater Depression.

When before it was merely a topic, a concept, an abstraction, some piece of history, now it is reality. It is here – ubiquitous and inexorable, even greater a depression than the one before. In different ways and in varying degrees, we all feel the staggering agony and devastation it has wreaked worldwide.

How could such thing have happened again? How is our generation—so different from that of the 1930s) handling it? Is there a difference between they way the US government handled it before and how they are handling it now? I needed answers. I wanted to understand. And the best way to comprehend the complexities of what’s happening right now is to go back to the basics, I thought. So I dug up my tattered Samuelson and Nordhaus undergraduate Economics textbook and started reading. I revisited the a-bit-forgotten-but-still familiar concepts, trying to makes sense of each in the context of the present: Government control of the economy: the thunder of world history is heard in fiscal policy because taxing and spending are such powerful instruments for social change. The G in Y=C+I+G+X-M. The limits of the Invisible Hand. The warring schools of macroeconomics: the classical tradition, the Keynesian revolution, supply side economics, monetarism and the neoclassical approach. The impacts of a tax cut, an increase in the money supply, exports, transfer payments on the course of prices, output, and employment. And on and on and on.

After a few hours of this I’m-not-sure-if-it-even-helped compulsive reading, I came to this one conclusion: If they survived the Great Depression of the 1930s, then we will definitely survive this one, too.

9 comments:

jacqueline said...

as what we're often told - This too shall pass. :)

diamondmum said...

I too am daunted with the current situation...trying to find answers but can't full understand where everything's coming...

a lot of things have been said and governments are now trying to recover from this...

I really believe "history repeats itself"...

take this phrase "if USA can surpass this one, and the rest will follow" - agree?

Angeli said...

Hi Jac and Amelia. I agree with you both. We are made of resilient stuff.

Anonymous said...

everyone - start coveting thy neighbors' possessions to spur economic growth. :)

Angeli said...

isn't that a part (or even the root) of the problem? the cause not the remedy? :)

Anonymous said...

C in your equation is consumption. Ergo conspicuous consumption will definitely increase Y(GDP). QED. :)

Angeli said...

true, true. but consumer confidence is down.

Anonymous said...

i urged all to start coveting didn't i? greed and envy are good for the current crisis. :)

Angeli said...

but to covet is to desire for what already belongs to somebody else. there must be some multiplier effect in there, huh? hahahah

 
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