Quick Summary of US economics in the last 90 years

[Grummgug]

If you want a quick summary of US economics in the past ~90 years:

1. Roaring 20s features a boom period where companies were hiring like crazy and selling goods to the world.
2. 1929 came and the excesses of the Roaring 20s led to overcapacity. Too many goods were chasing too little demand. Thus economic activity fell off a cliff and the Great Depression hit.
3. The economy burns down like a forest fire from 1929-1933. Factories get shuttered. Shops close. Unemployment is sky-high.
4. Then, disaster. FDR actually gets elected. He comes in and mercilessly crushes the private sector with brutal new taxes and regulations. This prevents a rebound. Instead of a POWERFUL rebound from the crash as you would normally expect, horrific economic conditions stretch across the entire 1930s as businesses are too afraid of FDR to hire new workers and open new factories. The Great Depression is born.
5. WWII breaks out. What factories remain get diverted from domestic to military production.
6. US enters the war. Unemployed enter the military.
7. Demand for domestic goods builds through WWII as a shortage of domestic goods persists for years.
8. WWII ends. Soldiers with money in their pocket and a need to buy domestic goods come home. They spend a ton kick-starting a new economic cycle.
9. Rebuilding Europe and Japan after WWII from the late 40s to early 60s generates great demand for US goods overseas, creating a strong US economic boom.
10. By the mid 1960s, more and more of the rebuilt economies in Europe and Japan start to build manufacturing centers of their own. Instead of buyers of US goods, and become competitors in the free market to sell goods.
11. In the late 1960s, the US is facing increasing competition to sell goods to the world. An economic slowdown is imminent as the US begins to lose global market share. LBJ attempts to counteract this with STIMULUS. Stimulus in the 1960s came in the form of "guns and butter". The Vietnam war, and medicare/medicaid (the great Society). Massive government debt spending was supposed to be the cure-all.
12. By the early 1970s, the massive great Society spending had succeed in prevent a major slowdown in the US economy. However, it kickstarted a period of a very high inflation. Prices began to skyrocket in the 1970s.
13. By the end of the 1970s, the economy is in shambles. Unemployment has slowly risen to high levels. Inflation is out of control.
14. The decision is made to jack up interest rates near 20% to destroy inflation at any cost. The policy is successful in crushing inflation, but brings us the nasty recession of 1982.
15. The USSR is near collapse by the early 1980s. In an attempt to stave off the inevitable, Gorbachev initiates the policies of Glasnost and Perestroika. The goal of these new policies is to open up free trade with America. America is able to sell goods and services to the Soviet Union for the first time in about 70 years.
16. Like magic, a whole new world opens up that ravenously devours US goods and services as the USSR opens its doors. This powers a TREMENDOUS new economic boom that lasts for about 20 years until 2000.
17. Vast amounts of money made from sales to the USSR (and former Soviet Union after its collapse) is used to fuel the tech boom and eventually the dotcom boom in the 1990s.
18. By the end of the 1990s, US companies have largely saturated the former Soviet Union market. Profits begin to greatly slow down. The theme of the global economy shifts back again to how the US is losing market share to competitors such as China and India.
19. People in the stock market fail to recognize the new fundamentals and bid up stocks to insane prices in the dotcom bubble.
20. The bubble pops in early 2000. The stock market crashes. Unemployment surges. George W. Bush opts for the LBJ route and tries to stimulate the economy with massive debt spending and near zero interest rates.
21. Inflation from the massive stimulus is averted thanks to massive amounts of cheap Chinese imports flooding the marketplace. Inflation shows up in commodities however, and oil prices surge, gold surges, and housing becomes a bubble.
22. Bush gets boxed into a corner by 2008, as his stimulus is keeping the economy afloat but driving oil prices to insane levels. Oil prices are so terribly high and surging higher that they push the economy into a new recession as consumers are forced to curb spending to pay for gas.
23. Housing went berserk thanks to the stimulus and the housing market completely collapses in 2008 as the credit crisis is born.
24. In another mega-disaster, Obama is actually elected and becomes BUSH ON STEROIDS and QUADRUPLES Bush's stimulus. The democrats obtain complete power with a supermajority in congress. We had deficits running $500 billion under Bush which was really bad. Obama and the dems roll out $2 trillion deficits. Rates are still near zero and now we go even further by having the Fed buy treasuries (QE) to keep interest rates artifically low.
25. In 4 years of Obama, we have almost completely retraced the runup in oil prices that took 8 years under Bush. Obama's super stimulus is warping the entire US economy and ramming gas prices higher. Gas prices are set to be a MAJOR problem for the economy in 2012.
26. High gas prices should once again cause the consumer to buckle in 2012, as they will have to curb spending to pay for gas. This will likely push us into another recession.
27. Meanwhile, the US is still losing global market share to other nations that are more business-friendly, and no-one in either party is doing anything about it.

[Tradewind]

Yeah, not quite.

Cite your sources.

[Maharishi]

Yeah, not quite.

Cite your sources.

Why does he have to? Correlation obviously implies causation. There's no such thing as 3rd party factors in something as large as the world economy.

But seriously, that's one of the more biased lists I've seen in a while.

[Xeones]

I like how you ignore the Reganomics fiasco.

Clearly taxes are bad and any attempts to stabalize the economy are bad. Rampant deregulation that leads to these situations in the first place is clearly good.

Yep, US isn't buisness friendly. Execs can just afford to make more money each year even if it means laying off thousands of people. Any other place and these people would get strung up.

[Tradewind]

Christ, I went for a second look over all of that. What a mess of flat out wrong information. Stick to making bad stock purchases. I'd suggest locking this before some of the more educated members of these forums tear him apart.

[yurano]

Correlation obviously implies causation.

No it doesn't. Correlation does not necessitate causation.

http://en.wikipedia.org/wiki/Correla...mply_causation

Example:
As ice cream sales increase, the rate of drowning deaths increases sharply.
Therefore, ice cream consumption causes drowning.

The correct statement: Ice cream is sold during the hot summer months at a much greater rate than during colder times, and it is during these hot summer months that people are more likely to engage in activities involving water, such as swimming. The increased drowning deaths are simply caused by more exposure to water-based activities, not ice cream.

[Maharishi]

No it doesn't. Correlation does not necessitate causation.

Sorry, was intending that as sarcasm.

[semaphore]

No it doesn't. Correlation does not necessitate causation.

http://en.wikipedia.org/wiki/Correla...mply_causation

It was obvious sarcasm. The "but seriously" should have been a dead give away.

[Grummgug]

I think the summary started going off the tracks at point #2.


I did enjoy the assumption that Carter and Obama had anything to do with gas prices, and that Reagan was responsible for bringing it back down.

Tell the bastards to stop speculating so much on oil, and actually open up their reserves to Americans rather than trying to make a few more bucks selling it overseas, and gas prices won't be a problem.

There was plenty of speculation in oil in the 1990s, yet oil prices kept falling. A weak dollar policy drives commodity prices upwards. Obama has an extremely weak dollar policy. Gas prices have been rising for his entire term. It won't stop until the US adopts a strong dollar policy.

Reagan viewed Perestroika as an opportunity to fix the economy. And it worked.

Economies are actually very simple. Think of the America as a company. Think of it like Apple. If Apple comes up with a great new product like the iPod and sells it to the world, and the world buys them like crazy, the economy of Apple booms. A nation is no different. If you want to fix the US, the only path is to determine what it is we can sell to the world, and sell it. The world buys, and the US enters an economic boom. Bush nor Obama have taken that approach. They've both decided that the solution is to stimulate. That just warps the economy, devalues the dollar, and causes commodities like oil and gold to rise.

That was the genius behind the Reagan-era decision to sell tons of goods to the USSR. They were starving for US goods and services for 70 years. It was like a vast new market got dropped down in the global marketplace. I remember as a kid pouring over Standard & Poors reports at the local library in the 1980s. I would turn to Coca-Cola report, and it would talk about how they were expanding into the USSR for the very first time and making SOOOO much money. Their profits were literally rising 25% PER YEAR. And that went on for over a decade, just from expansion into the USSR. And I would see company after company doing this. I mean sure, some people fall for political spin about who to credit for that boom. But I lived it, I watched it unfold with my own eyes. I invested in it and made lots of money in it. I know who's telling the truth and who's lying.

[Deleted]

You completely ignore the effects of central banks for example. While it's true that FDR enacted economic policies of which some were absolutely disastrous, and some where necessary to keep people alive - the Federal Reserve was a massive player in causing and deepening the depression.

The way the Fed deepened the depression, and which of FDR's policies were good or bad is up for debate - that fact that all of this happened, is not.

All in all, pretty weak explaination, but on the otherhand you couldn't make an accurate summary of the last 90 years of US economic history with just 30 sentances.

[Grummgug]

You completely ignore the effects of central banks for example. While it's true that FDR enacted economic policies of which some were absolutely disastrous, and some where necessary to keep people alive - the Federal Reserve was a massive player in causing and deepening the depression.

The way the Fed deepened the depression, and which of FDR's policies were good or bad is up for debate - that fact that all of this happened, is not.

All in all, pretty weak explaination, but on the otherhand you couldn't make an accurate summary of the last 90 years of US economic history with just 30 sentances.

There's a whole lot of misinformation out there. US history has been warped for political gain. I would give credit to FDR and Truman for using WWII and the rebuild afterwards to get the economy healthy again. I would give credit to Reagan for using Perestroika to get the economy healthy again. I would criticize FDR for ruining the economy in the first place. I would criticize LBJ, Nixon, George W. Bush, and especially Obama for relying on stimulus to try to fix the economy, which never works - it just warps the economy by causing prices to go out of whack.

The problem is, you get people who become cheerleaders for one party or the other and therefore cannot make an honest assessment of the situation. When their guy messes up, they have a litany of excuses. When the guy on the other side does something right, they try to say he had little to do with it.

Right now, Obama is in office, and democrats will say none of his problems are his fault. Its either Bush's fault, the fault of evil corporations, or oil is rising because of Iran (despite the fact that oil has been rising since 2009). That's what makes investing so difficult for a lot of people.

[Deleted]

There's a whole lot of misinformation out there. US history has been warped for political gain. I would give credit to FDR and Truman for using WWII and the rebuild afterwards to get the economy healthy again. I would give credit to Reagan for using Perestroika to get the economy healthy again. I would criticize FDR for ruining the economy in the first place. I would criticize LBJ, Nixon, George W. Bush, and especially Obama for relying on stimulus to try to fix the economy, which never works - it just warps the economy by causing prices to go out of whack.

And as someone who espouses free markets himself, I feel like your "summary" seem like alot of fanboyism.

Not a lot of actual economic history content, mostly political.

P.S. FDR didn't "ruin it in the first place". The economy was already in a mess when he stepped in. Many of his policies were total disasters, as if thought up by some 5th graders. Others were necessary to keep people alive during his mad policy experiments. But the central banks played the largest role in preventing recovery.

[eriseis]

Why does he have to? Correlation obviously implies causation.

Um, what? You're posting the exact opposite of the first rule of Statistics.

---------- Post added 2012-02-20 at 10:29 PM ----------

There's a whole lot of misinformation out there.

Including the OP's post. I love the cleverly planted words in caps.

[GennGreymane]

problem with thinking that the new deal halted economic rebounds

it was an international crash. not just the u.s

also cite sources before you spew your opinion.

[GennGreymane]

The "POWERFUL rebound from a crash" was funny to me. The world loses most of its capital in a single weekend and they're just supposed to rise from the ashes like a phoenix.

another interesting fact

those who managed to save were very well off in the 30s, bought the cheap as hell stocks and the cheap as hell everything

those who were powerful in the 20s who did not have much saved..... not so much powerful no more

[Badpaladin]

Not to be blunt, but a more accurate title for the thread would be:

"Abridged Economic Opinions About a Private Sector Repeatedly Crushed By an Evil Government for 90 Years"

Because this really isn't very accurate, for a multitude of reasons.