Interest in economics appears to be inversely proportional to the strength of the economy. When wealth seems to be expanding—when houses can be bought, flipped, and resold quickly and at great profit, or when IPOs of Internet startups make everyone involved filthy rich—only contrarians and pessimists question the soundness of what is universally regarded as a good thing. But when the boom turns to bust, it becomes imperative to understand where things went wrong. Doe-eyed economists, who were as blind-sided by the downturn as those who foolishly followed them, scramble to retain credibility. Meanwhile, more skeptical commentators are provided with an opportunity to make their case against a system built on debt—at least until credit expansion brings about the next boom.
Vox Day is a self-described contrarian, whose prognostications of doubt about the health of the global financial system go back to at least 2002. In The Return of the Great Depression (RGD), Day cautions against “the consensus view that the economic contraction of the last eighteen months is essentially over.” This optimism fails to take into account the actual state of the economy, and is instead built on “definite hope.” He presents six economic scenarios for the coming decade which merit contemplation, ranked in order of decreasing likelihood to occur as follows: Great Depression 2.0, The Great Recession, Whiskey Zulu India or Hyperinflation, The Jobless Recovery, Fallout 4 Live or Doomsday, Saint Bernanke and the Greenshoots or Immaculate Recovery. His case for a second Great Depression is regrettably convincing, as are the ten reasons he gives as to why the current depression will be worse than the first.
RGD begins with a look at the Japanese recession of 1989, which is about to enter its second decade. The reason this recession is relevant for those trying to come to terms with our present economic crisis is that the actions taken by the Japanese Government in an attempt to stave off recession are disturbingly similar to those taken by the Bush and Obama administrations. “In nineteen years, neither monetary nor fiscal policy has managed to pull the Japanese economy out of the crater created by the Heisei boom.” The implementation of demonstrably inadequate policies portends a prolonged and painful recession for the U.S., and, indeed, much of the world.
For the most part, RGD is easy for the layman to follow. Some knowledge of economics would be useful, and is in fact provided by a helpful glossary of terms, but Day intends for his book to be read by “economic actors, not the economists who study them.” The sheer number of statistics and charts may prove overwhelming, but they also help illustrate one of the author's points. In attempting to accurately grasp the state of the economy: No One Know Anything. This doesn't make econometrics worthless, but it does mean that we need to be skeptical about facts and figures bandied about by talking heads—especially when these come courtesy of government bureaucrats.
To give just three examples from the book: Consumer Price Index (CPI), GDP, and unemployment figures are very unreliable. The formula used to compute CPI, which is used to determine inflation, was changed in the early 1990's. The new figure may understate inflation by as much as seven percent. GDP, too, possesses dubious utility as a statistical metric, since a decrease in imports causes the GDP to rise. Similarly, unemployment figures fail to take into account those who have ceased seeking employment. Paradoxically, a rise in unemployment may be seen as good news, since those who had given up looking for a job have resumed their searches, increasing unemployment numbers.
If Saint Bernanke and his fellow central bankers have actually ended the current recession, government intervention will see a boost of popular support, while the doomsayers, Day among them, will be justly ignored. On the other hand, if Day is correct, the coming depression presents an opportunity to diminish the role central bankers, bureaucrats, and politicians play in the economy. A freer, more prosperous world depends on radical adjustments to the structure of our economic system. Although the picture it paints is rather dark, RGD ultimately provides a useful blueprint for a better economic future.
Vox Day is a self-described contrarian, whose prognostications of doubt about the health of the global financial system go back to at least 2002. In The Return of the Great Depression (RGD), Day cautions against “the consensus view that the economic contraction of the last eighteen months is essentially over.” This optimism fails to take into account the actual state of the economy, and is instead built on “definite hope.” He presents six economic scenarios for the coming decade which merit contemplation, ranked in order of decreasing likelihood to occur as follows: Great Depression 2.0, The Great Recession, Whiskey Zulu India or Hyperinflation, The Jobless Recovery, Fallout 4 Live or Doomsday, Saint Bernanke and the Greenshoots or Immaculate Recovery. His case for a second Great Depression is regrettably convincing, as are the ten reasons he gives as to why the current depression will be worse than the first.
RGD begins with a look at the Japanese recession of 1989, which is about to enter its second decade. The reason this recession is relevant for those trying to come to terms with our present economic crisis is that the actions taken by the Japanese Government in an attempt to stave off recession are disturbingly similar to those taken by the Bush and Obama administrations. “In nineteen years, neither monetary nor fiscal policy has managed to pull the Japanese economy out of the crater created by the Heisei boom.” The implementation of demonstrably inadequate policies portends a prolonged and painful recession for the U.S., and, indeed, much of the world.
For the most part, RGD is easy for the layman to follow. Some knowledge of economics would be useful, and is in fact provided by a helpful glossary of terms, but Day intends for his book to be read by “economic actors, not the economists who study them.” The sheer number of statistics and charts may prove overwhelming, but they also help illustrate one of the author's points. In attempting to accurately grasp the state of the economy: No One Know Anything. This doesn't make econometrics worthless, but it does mean that we need to be skeptical about facts and figures bandied about by talking heads—especially when these come courtesy of government bureaucrats.
To give just three examples from the book: Consumer Price Index (CPI), GDP, and unemployment figures are very unreliable. The formula used to compute CPI, which is used to determine inflation, was changed in the early 1990's. The new figure may understate inflation by as much as seven percent. GDP, too, possesses dubious utility as a statistical metric, since a decrease in imports causes the GDP to rise. Similarly, unemployment figures fail to take into account those who have ceased seeking employment. Paradoxically, a rise in unemployment may be seen as good news, since those who had given up looking for a job have resumed their searches, increasing unemployment numbers.
If Saint Bernanke and his fellow central bankers have actually ended the current recession, government intervention will see a boost of popular support, while the doomsayers, Day among them, will be justly ignored. On the other hand, if Day is correct, the coming depression presents an opportunity to diminish the role central bankers, bureaucrats, and politicians play in the economy. A freer, more prosperous world depends on radical adjustments to the structure of our economic system. Although the picture it paints is rather dark, RGD ultimately provides a useful blueprint for a better economic future.
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