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Confounded

Have The Central Banks Actions Avoided A Depression?

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Coming up a lot in peoples writings (even bearish commentators) that things are going to be bad going forward but we have avoided a depression.

A lot of what I have been reading suggest we are already in a depression especially when you look at the retrenchment in consumer net borrowing in the US and here. The 60 year debt bubble is imploding and by my judgement we are only a little bit past kick off having had all the fan-fair of the start of the game.

I am not suggesting that it will be soup kitchens everywhere with total unemployment, I just see a very protracted period of low or negative growth.

I am interested in gauging the opinion of the board so please vote.

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I think they probably have.

Now, instead of a large but quick route to the bottom, it could take years.

Might not seem so bad, but a generation broken!

This is effectively what a depression is. I read that technically it is 10% decline in GDP from start to finish (still possible for the UK over the next 5 years).

I class Japan's lost decade as a modern depression and I think it is far from over for them either. Their's occurred at a time when the rest of the World was booming. Yes the central banks and politicians can create pockets of GDP statistical growth but until the debt has worked it's way out of the system the next period of growth can not resume.

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Slow and prolonged strangulation of real economies around the world by the blood-sucking vampire squids until truly representative democracies replace the corporatocracies we have now. But before that happens we will have protectionism, war and depression.

Edited by RajD

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This is effectively what a depression is. I read that technically it is 10% decline in GDP from start to finish (still possible for the UK over the next 5 years).

I class Japan's lost decade as a modern depression and I think it is far from over for them either. Their's occurred at a time when the rest of the World was booming. Yes the central banks and politicians can create pockets of GDP statistical growth but until the debt has worked it's way out of the system the next period of growth can not resume.

Too true.

They have adjusted the pace at which the final outcome occurs but not the ultimate destination.

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Not sure I can answer either, I think possible we could be in for a very slow and long decline rather than a quick slump. Although unemployment is clearly rocketing towards depression levels.

Agreed. Double dip looks less likely than some sort of V followed by a verrry long L.

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Agreed. Double dip looks less likely than some sort of V followed by a verrry long L.

Was it Soros who came up with the "upside down square root sign" description? You and he are probably going to be right ......

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Not sure I can answer either, I think possible we could be in for a very slow and long decline rather than a quick slump. Although unemployment is clearly rocketing towards depression levels.

I think this is what we have got to hope for, a quick collapse would be devastating. What you are desribing is what I would class a drawn out depression.

http://www.boston.com/bostonglobe/ideas/ar...like/?page=full

"There is, in fact, no agreed-upon definition of what a depression is. Economists are unanimous that the Great Depression was the worst economic downturn the industrial world has ever seen, and that we haven't had a depression since, but beyond that there is not a consensus. Recessions have an official definition from the National Bureau of Economic Research, but the bureau pointedly declines to define a depression.

What sets a depression apart, most economists would agree, are duration and the scale of joblessness. To be worthy of the name, a depression needs to be more than a few years long - far longer than the eight-month average of our recent recessions - and it needs to put a lot of people out of work. The Great Depression lasted a decade by some measures, and at its worst, one in four American workers was out of a job."

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I think this is what we have got to hope for, a quick collapse would be devastating. What you are describing is what I would class a drawn out depression.

http://www.boston.com/bostonglobe/ideas/ar...like/?page=full

"There is, in fact, no agreed-upon definition of what a depression is. Economists are unanimous that the Great Depression was the worst economic downturn the industrial world has ever seen, and that we haven't had a depression since, but beyond that there is not a consensus. Recessions have an official definition from the National Bureau of Economic Research, but the bureau pointedly declines to define a depression.

What sets a depression apart, most economists would agree, are duration and the scale of joblessness. To be worthy of the name, a depression needs to be more than a few years long - far longer than the eight-month average of our recent recessions - and it needs to put a lot of people out of work. The Great Depression lasted a decade by some measures, and at its worst, one in four American workers was out of a job."

Nearly 75% say no, much higher than I expected even on this site.

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Guest Steve Cook

I voted no.

However, this was on the basis that the depression to come may be either an inflationary one or a deflationary one. Either way, the average citizen will be significantly poorer in real terms.

In real terms, a depression of the average living conditions of the average citizen is absoloutely unavoidable.

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I voted no.

However, this was on the basis that the depression to come may be either an inflationary one or a deflationary one. Either way, the average citizen will be significantly poorer in real terms.

In real terms, a depression of the average living conditions of the average citizen is absolutely unavoidable.

+1en where n is a very large number

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Guest Steve Cook
This is effectively what a depression is. I read that technically it is 10% decline in GDP from start to finish (still possible for the UK over the next 5 years).

I class Japan's lost decade as a modern depression and I think it is far from over for them either. Their's occurred at a time when the rest of the World was booming. Yes the central banks and politicians can create pockets of GDP statistical growth but until the debt has worked it's way out of the system the next period of growth can not resume.

In nominal monetary terms, I agree, this is what a depression is. However, since the money supply can be manipulated at the whim of government, such a technical description becomes somewhat meaningless.

For me, a depression is defined by a real terms reduction in the living conditions of the average citizen. Defined in this way (stripped of the nominal camouflage of QE), a depression is already well underway and has a long way to go yet before it hits bottom.

Edited by Steve Cook

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