I remember, when after publishing The Return of the Great Depression in 2009, various critics used to cite various “green shoots” reports in an attempt to taunt me for being incorrect. “What depression?” they would ask mockingly.
“Just wait,” I would tell them. “We are in the early stages of a depression that is bigger than the Great Depression.” Seven years later, even rosy-goggled mainstream economists like Brad DeLong are admitting that the situation is historically dire.
Economist Joe Stiglitz warned back in 2010 that the world risked sliding into a “Great Malaise.” This week, he followed up on that grim prediction, saying, “We didn’t do what was needed, and we have ended up precisely where I feared we would.”
Joe Stiglitz is right.
In the aftermath of 2008, Stiglitz was indeed one of those warning that I and economists like me were wrong. Without extraordinary, sustained and aggressive policies to rebalance the economy, he said, we would never get back to what before 2008 we had thought was normal.
I was wrong. He was right. Future economic historians may not call the period that began in 2007 the “Greatest Depression.” But as of now, it is highly and increasingly probable that they will call it the “Longest Depression.”
You don’t say…. Remember, while I am certainly capable of being wrong, I am well-read, well-educated, and significantly more intelligent than the norm. So, even if I am wrong, I usually have a fairly solid set of facts and logic behind the position I am expressing.
Perhaps more importantly, and unlike most of those who opine on such matters, I have no dog in the hunt. While I would very much like the economy to be booming, I am not financially dependent upon saying so. While the measures that Stiglitz and Krugman were pushing were absolutely and utterly wrong – the “extraordinary, sustained and aggressive policies to rebalance the economy” would have only made things worse, as what was needed was a huge round of bankruptcies to clear the zombie debt – they were right to observe that the Neo-Keynesian measures utilized were doomed to be ineffective.
I wish I had been wrong about the Great Depression 2.0. But I wasn’t. And, as even Nate will likely admit now, I was also right about the global economy falling into worldwide deflation.
Unfortunately, this tends to indicate that I am likely correct about the world rapidly heading towards large-scale 4GW, including multiple civil wars, across more than one continent.