US & Europe's Scary Deficits
"US deficits are 6% now, and deficits in Europe are over 3.5%. Those are numbers higher than the Great Depression." - Tuur Demeester
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Discussion
So what’s the difference between now and the great depression what is stopping us from going there?
They remained pegged to Gold. What got them out of it was a te valuation of the dollar with respect to gold.
Oh, because we’re printing money we can stay ahead of it for longer as we couldn’t have done with the gold peg
Exactly. The governments and banks were tied to not being able to spend more then they had, as the dollar was redeemable for gold, that meant, there was an inability to provide liquidity in a range of different areas. In the 20’s they had solidified the monopoly of the Federal Reserve and allowed for a lot of individuals to take out credit, but stocks on leverage e.g. 10x.
That created a highly leveraged market until it got to a stage that was unsustainable, The fed increased interest rates to rein in the crazy valuations and chaos ensued. The 30s was the unwinding of that leverage, which was gruesome.
Yes, thank you You explained that very well appreciate that it makes it make so much more sense.
While not a good sign, obviously, debt to GDP is not a great metric.
GDP is fake and pumped via government spending.
A better indication might be deficit to federal tax revenue.
Current about 37%. Insane.
Good rip