Understanding America’s New Depression
Jim Rickards believes the United States is in a depression and has been for years. Rickards explains that economists ignore this reality, because there is no precise mathematical definition of a depression. This allows them to point to statistics like the growing GDP and improving jobs numbers as proof of an economic recovery.
However, Rickards points out that no American investor today has actually lived through a depression, so their conception of it is completely off-base. In his latest commentary, he sets out to explain exactly what a depression is and why the US has been in one since 2007.
The starting place for understanding depression is to get the definition right. You may think of depression as a continuous decline in GDP. The standard definition of a recession is two or more consecutive quarters of declining GDP and rising unemployment. Since a depression is understood to be something worse then a recession, investors think it must mean an extra-long period of decline. But that is not the definition of depression.
The best definition ever offered came from John Maynard Keynes in his 1936 classic, The General Theory of Employment, Interest and Money. Keynes said a depression is, ‘a chronic condition of subnormal activity for a considerable period without any marked tendency towards recovery or towards complete collapse.’
Keynes did not refer to declining GDP; he talked about “subnormal” activity. In other words, it’s entirely possible to have growth in a depression. The problem is that the growth is below trend. It is weak growth that does not do the job of providing enough jobs or staying ahead of the national debt. That is exactly what the U.S. is experiencing today.
…
The point is that GDP growth; rising stock prices and falling unemployment can all occur during depressions, as they do today. What makes it a depression is ongoing below trend growth that never gets back to its potential. That is exactly what the U.S. economy is experiencing. The New Depression is here.”
Get Peter Schiff’s latest gold market analysis – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning more about physical gold and silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!
Related Posts
Why and How US Debt Will End in Catastrophe
As fiscal imbalances persist, driven by coercive measures and artificial currency creation, the middle class faces erosion and purchasing power dwindles. But as the world hurtles towards a potential reckoning, the lingering question remains: can this precarious balance last, or are we teetering on the brink of a cataclysmic economic shift?The Economy Is Reaching a Tipping Point
Beneath the veneer of headline job gains, the American economy teeters on the brink: native employment dwindles as part-time and immigrant jobs surge. Government hiring camouflages looming recession warnings. Inflation and political blunders worsen the crisis, fueling public outrage at the establishment’s mishandling of the economy.Prices Up 2500% Since FDR Abandoned Gold
On April 5 1933, Franklin D. Roosevelt abandoned the gold standard, wielding questionable legal power amidst America’s dire economic depression. His whimsical approach to monetary policy, including coin flips and lucky numbers, unleashed unprecedented inflation and price increases that have since amounted to nearly 2500%. Our guest commentator explores this tragic history and the legacy […]How Inflation Buzzwords Manipulate
Welcome to the world of modern economics where the term “inflation” no longer signifies the increase in the quantity of money, but has evolved into a plethora of buzzwords. From “shrinkflation” to “greedflation,” these new terms and semantic shifts are by no means harmless but a manipulation of popular sentiment. Von Mises said they play […]Dollar Down 20% Since 2020, Biden Blames Greed
Assuming CPI measurements are not understatements, the dollar’s value has plummeted by a staggering one-fifth since 2020, yet, rather than acknowledging its role in fueling this economic turmoil, the Biden administration deflects, casting capitalism and corporate greed as the villains. The latest February CPI data show more signs of the upcoming inflation bloodbath.
Leave a Reply