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"We are in a depression, but not because we don’t know how to remedy the problem. We are in a depression because it is our revealed preference, as a polity, not to remedy the problem. We are choosing continued depression because we prefer it to the alternatives."
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But the preferences of developed, aging polities — first Japan, now the United States and Europe — are obvious to a dispassionate observer. Their overwhelming priority is to protect the purchasing power of incumbent creditors. That’s it. That’s everything. All other considerations are secondary. These preferences are reflected in what the polities do, how they behave. They swoop in with incredible speed and force to bail out the financial sectors in which creditors are invested, trampling over prior norms and laws as necessary. The same preferences are reflected in what the polities omit to do. They do not pursue monetary policy with sufficient force to ensure expenditure growth even at risk of inflation. They do not purse fiscal policy with sufficient force to ensure employment even at risk of inflation. They remain forever vigilant that neither monetary ease nor fiscal profligacy engender inflation. The tepid policy experiments that are occasionally embarked upon they sabotage at the very first hint of inflation. The purchasing power of holders of nominal debt must not be put at risk. That is the overriding preference, in context of which observed behavior is rational.
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That’s true. But the revealed preference of the polity is not balanced. It is not some cartoonish capitalist-class conspiracy story, where the goal is to maximize the wealth of exploiters. The revealed preference of the polity is to resist losses for incumbent creditors much more than it is to seek gains. In a world of perfect certainty, given a choice between recession and boom, the polity would choose boom. But in the real world, the polity faces great uncertainty. The policies that might engender a boom are not guaranteed to succeed. They carry with them a short-to-medium-term risk of inflation, perhaps even a significant inflation if things don’t go as planned. The polity prefers inaction to bearing this risk.
This preference is not at all difficult to understand. The ailing developed economies are plutocratic democracies. “The people” do have power, but influence is weighted in a manner correlated with wealth. The median influencer in these economies is not a billionaire, but an older citizen of some affluence who has mostly endowed her own future consumption. She would like to be richer, of course. But she is content with her present wealth, and is terrified of becoming poorer. For such a person, the depression status quo is unfortunate but tolerable. The risks associated with expansionary policy, on the other hand, are absolutely terrifying.
"Fearful and flattened. That’s what our industrial growth culture wants and needs of its members, now that it is a global monoculture strained to its absolute limits. Unless exercised in a culturally-approved way (such as “competitive” sports, wars, or abuse of one’s work or social “subordinates”), or locked away behind closed doors where there is plausible deniability, anger is now met with quick and violent suppression. Peaceful but angry demonstrations are met with heavily-armed stormtroopers. Anyone who even discusses angry resistance to the ecological desolation of our planet, to the theft and pillaging of Earth’s resources for the benefit of a tiny rapacious 1%, or to wars over oil or ideology, is branded a “terrorist” and subject to “disappearance”, extraordinary rendition to torture prisons, and/or indefinite imprisonment.
Likewise, feelings of debilitating grief, which I think are perfectly normal in our terrible world, have been pathologized and are now treated with large doses of anti-depressants or, failing that, ostracism and/or incarceration or other institutionalization. Our industrial culture teaches us to self-victimize. We are to blame, we are told, for our own unemployment and poverty (due to personal laziness or lack of moral fibre). We are to blame, too, for our own chronic illnesses (due to our poor eating and exercising habits). Suicide is, of course, treated not only as a sign of irresponsibility, but as a crime."
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The most worrisome aspect about our current slump is that it combines obvious short-term problems — from the financial crisis — with less obvious long-term problems. Those long-term problems include a decade-long slowdown in new-business formation, the stagnation of educational gains and the rapid growth of industries with mixed blessings, including finance and health care.
Together, these problems raise the possibility that the United States is not merely suffering through a normal, if severe, downturn. Instead, it may have entered a phase in which high unemployment is the norm.
We are the 99 percent. We are getting kicked out of our homes. We are forced to choose between groceries and rent. We are denied quality medical care. We are suffering from environmental pollution. We are working long hours for little pay and no rights, if we're working at all. We are getting nothing while the other 1 percent is getting everything. We are the 99 percent.
"There's a glum desperation in the air that's hard to escape: volatility, futility, and a McFuture ghoulishly wagging its skeletal finger at a lost generation."
Cognitive inflexibility may play an important role in rumination, a risk factor for the onset and maintenance of depressive episodes. In the study reported here, we assessed participants’ ability to either reverse or maintain in working memory the order of three emotion or three neutral words. Differences (or sorting costs) between response latencies in backward trials, on which participants were asked to reverse the order of the words, and forward trials, on which participants were asked to remember the words in the order in which they were presented, were calculated. Compared with control participants, depressed participants had higher sorting costs, particularly when presented with negative words. It is important to note that rumination predicted sorting costs for negative words but not for positive or neutral words in the depressed group. These findings indicate that depression and rumination are associated with deficits in cognitive control.
Often cited comparisons – which look only at the US – find that today’s crisis is milder than the Great Depression. In this column, two leading economic historians show that the world economy is now plummeting in a Great-Depression-like manner. Indeed, world industrial production, trade, and stock markets are diving faster now than during 1929-30. Fortunately, the policy response to date is much better.
in list: Economic Crisis
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To summarise: the world is currently undergoing an economic shock every bit as big as the Great Depression shock of 1929-30. Looking just at the US leads one to overlook how alarming the current situation is even in comparison with 1929-30.
For the last month, I have been gripped by the gnawing sensation that all of the conventional wisdom about our current economic crisis is wrong. I think we are facing a crisis of capitalism, not just a periodic bout of market failure.
in list: Economic Crisis
Depressions are a natural feature of a much bigger cycle. A part of capitalism that people love to talk about when the going is good…but despise when it turns against them. We’re talking about what Schumpeter describes as “creative destruction.” Everyone loved “creative destruction” in the late ’90s – when they thought it added to their balance sheets. Now, they beg government to save them from it.
in list: Economic Crisis
Which brings me to the purpose of this week's rant. I am watching Saturday Night Live and the Abilify commercial comes on and I say Hmmm, that is interesting, Abilify isn't really a product for the masses...well, not yet. People experiencing episodes of psychosis are really a niche market in your humble narrators opinion. So I listen just a bit more closely. The ad tells me that if I am depressed, taking an antidepressant and am still feeling depressed, well then what I need is a heavy duty antipsychotic tranquilizer to shake me out of my doldrums. What the Fuck! These drugs are at their chemical base neurotoxins, like the fleaspray you put on your dog, only you are smart enough not to swallow that or allow your dog to swallow it. All of the antipsychotic medications are ultimately similar chemical derivatives of the granddaddy of them all thorazine. Thorazine has been used throughout history for many things. Why in this country in the 1930s the Department of Agriculture was distributing it to farmers to kill parasites on and in their pigs. The drug companies will tell you that the new "atypical" antipsychotics have fewer side effects and are less toxic. Two words-bull shit.
The report found that among small businesses "no "credit crunch" has appeared to date beyond the normal cyclical tightening of credit." The NFIB found that worries about interest rates and financing were a concern to only 3% of respondents...By and large, the story of the NFIB report was that if credit is going untapped, it's largely because company operators are not choosing to pursue the credit. It's not that companies can't get the extra money, it's that they don't want or need it because of the broader slowdown in economic activity.
in list: Economic Crisis
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