A History of the American Economy - Part 1

Today's Quote:

"Never interrupt someone doing what you said couldn't be done." - Amelia Earhart, disappeared on this day, 1937.

I read with fascination the continued flow of B.S. coming from Wall Street, the MainStream Media ("MSMS"), and Washington in their debate over how to describe the current economic circumstances. I have been noodling this for a while and reading through the economic history of the U.S. (and hence the world) for the post civil war period.

One of the hardest things to do when considering this is to "compare apples to apples". For instance, is a house a house? Or should it be described as a square foot of residence per capita? Are we wealthier because we are better nourished? Or poorer because we are so very overweight? Is life more fair or less? Are we "freer"? And who, exactly, is "we"?

The comparisons in the media of this period to the 1930's accomplishes little - except in what it is meant to accomplish: To sway elections with an economically under informed and under educated electorate that seems incapable of comparing "apples to apples". An electorate that simply does not know its history, because all it knows is "what it reads in the newspapers" - material written by folks that have taken some serious poetic license with history.

I am going to jump around a bit on the time line in order to make comparisons of apples to apples but mostly I am going to compare today to various periods and walk through the series of events that got us from there to HERE.

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The First Installment

So here we are in July, 2010 America, a time by which a constant comparison to the 1930's is made in the media (primarily to gain advantage in the next election and not to accomplish a damn thing). There is in fact a great deal in common. Today, 25% of men between the ages of 25 and 75 DO NOT have a full time job (the headline unemployment number we see every month is merely propaganda) and through much of the 1930's 25-30% of men in this age group did not have a full time job. From an employment perspective, the circumstances are more similar than not (with the exception of "unemployment insurance"). However, there is vast difference in CAPITAL. No, not just corporate capital - capital investments and stock. We have more houses than we need, more cars than we can use, closets filled with enough clothes to last the life time of a denizen of the '30s, and the ability of the government to spend far more than it takes in WITHOUT having the currency collapse in a bout of hyper-inflation (a very bizarre set of circumstances). This has enabled the continued expansion of "unemployment insurance" payments (though some in the Senate are threatening reality as I write this). When and how this ends is up for debate.

The singular image burned into the minds of those that came after were photos of soup lines in New York City in the winter of 1933. In fact, documented cases of people starving are few and far between (other than Alcoholic residents of the Bowery). Politics ALWAYS rears its ugly head. While starvation in the modern "third world" is almost always as a result of politics, throughout history the simple fact of the matter is that hunger and starvation were ALWAYS ASSOCIATED with weather and natural disaster (and to a much lesser extent due to war. Many argue that this will change drastically in any serious fuel shortage and I tend to agree). In much of the 30's between 10% and 20% of the population experienced food shortages on a regular basis. In 2010, nearly 12% of the population receives "food assistance" from the Federal government.

A major difference is that the markings of middle class - cell phones, cars, certain apparel - is attainable by the "poor". In fact, many of the "poor" don't know they are "poor". They merely consider themselves "broke", and I think that that is a much better state of mind.

(I am being summoned by She Who Must Be Obeyed for some emergency furniture repair.)

To Be Continued...