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I found a website which I think is very interesting. http://www.measuringworth.com/index.php

It has a lot of data tools on it but what caught my eye was the comparison of real/nominal GDP histories. On his website, Cynicus used to make the point that GDP is not worth discussing unless you net for inflation. So this website makes looking at this data quite easy.

What I found interesting is when you look back across previous recessions (I went back to 1971 because that's when I was born) there hasn't been a "real" drop in GDP anything like as fast or as much. For example:

Real GDP

2008 2009 % less

1330088 1264646 95.1%

1990 1992 % less

863019 852250 98.8%

1979 1981 % less

674110 651345 96.6%

1973 1975 % less

617164 605277 98.1%

(edited for table formatting)

So in 1 year we've dropped considerably further and faster than before, draw your own conclusions......

I've attached some screenshots of the graphs on the website.

My question is, how is that such a steep drop can seem so relatively painless? My recollection of other recessions was that unemployment, inflation etc were worse (I will be looking these up later) and the general mood was awful - the general public (by that I mean that those that don't read the finincial papers) don't seem that worried.



Edited by ezekiel
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My question is, how is that such a steep drop can seem so relatively painless?

Because, to quote Jeremy Warner in the The Telegraph,

We live in a policy-induced stupor, shielded from the consequences of past follies by fiscal and monetary stimulus.

He also adds (and it's something a few people on here have been saying for a long time)

Nobody should be under any illusions about how these levers work: they could only ever succeed in smoothing and slowing the pace of adjustment.

We know that $600bn of stimulus has failed miserably to hold down Treasury rates. Let's see how much time the BoE bought with £200bn. I think we'll have a good idea by the end of 2011.

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