The Great Depression vs. the Great Recession

The Great Depression taught savings and thrift, while the Great Recession has taught borrowing and speculation.

The Great Depression Taught Savings and Thrift- The Great Recession Borrowing and Speculation

Podcast Summary:

0:00- 6:30 Introduction

The Real Estate Market Stagnates Despite Historically Low Interest Rates

6:40 -18:50 discusssion of the impact that all cash sales have on the real estate market. Housing sales are dropping as are mortgage applications, yet prices continue to rise. Mortgage providers are dealing with the decline in loan origination by providing higher commissions to sales people. Higher commissions and lower interest rates are not spurring new mortgages. The market is distorted by artificially low interest rates, that help only the wealthy.

18:50 -20:00 discussion of the lack of bank incentives to loan money at low interest rates especially when they can make more money trading derivatives.

The Difference Between the Great Depression and the Great Recession

The Great Depression taught savings- the Great Recession teaches speculation

20:00- 21:50 discussion how the stock market continues to rise on any news, good news, no news or bad news. The stock market is viewed as a barometer for the health of the economy. The current stock market is based on speculation. During the Great Depression, people learned thrift and savings. During the current Great Recession, people borrow and speculate.

People are speculating on all type of assets including Bitcoin and are unfazed at losses

Bitcoin slumps $120, but does anyone care?

Neither Mises nor Keynes ever contemplated Permanent Stimulus and artificially low interest rates

— Smaulgld (@Smaulgld) August 18, 2014

The Media Continues to Tout a “Recovery”

21:50 -22:40 discussion of the media’s incessant insistence that there is a jobs and economic recovery.

U.S. jobless claims up, but trend still points to firming jobs market http://t.co/ExlhpvsBDu

— Reuters Business (@ReutersBiz) August 14, 2014

When the stock market goes down, the “recovery” goes with it.

What will the Fed do in the event of a stock market crash?

Janet Yellen and the Labor Market

22:40-32:15 Discsussion of how the Fed might try to address the faltering labor market which is characterized by growth in part time jobs but a loss of full time jobs.

Discussion of the auto market which is booming on sub prime financing.

The Media insists there is a de-escalation of geo political tentions inspite of the news reports in Israel, Gaza, Ukraine.

as stocks rise on a lessening of geo-polical tensions @haaretzcom @ektrit

— Smaulgld (@Smaulgld) August 19, 2014

as stocks rise on a lessening of geo-polical and domestic tensions @NBCNews

— Smaulgld (@Smaulgld) August 19, 2014

The CPI is due out later today, no matter what the economic data is good or bad the media will explain why it’s good.

The Fed will always opt for inflation, thinking wrongly that it will boost the job market and the economy. It will only cause higher prices for people that have lower wages or part-time or no jobs. The Fed can not create jobs, just inflation. A drop in the value of the dollar due to de-dollarization will add to price inflation.

32:15-38:30 Discussion of inability of people to get mortgages, but no issues getting car loans and new credit cards. Discussion of the disincentives that lenders have to make loans.

How Wall Street Rewards Speculative Stocks

38:30 discussion of how speculation is rewarded in a low interest rate environment. Discussion of companies like Trulia and Zillow with multi billion dollar market capitalizations even though they have not made an annual profit in ten years.

Companies that lose money make the most in the stock market!

Discussion of how regulations hard small businesses and help lawyers, accountants and large businesses. We don’t need more regulation because they are political/crony driven. The Fed didn’t bail out Lehman Brothers when it could have.

Discussion of the raid on the Gibson Guitar factory and the power that administrative agencies have. You can’t fix, a debt problem with more debt or a government created problem with more government and you can’t fix stupid with more stupid.

People Seek Government Solutions for Government Created Problems

Federal Reserve Vice Chairman Talks About Bank Bail – ins

55:00-

The Fed Vice Chairman spoke about “issue bail-inable long-term debt” in a speech last week.

Why did he call raise the issue? Debt issued by any entity that goes sour already has the concept of pennies on the dollar built in or if they want they can make the bank securities convertible into equity.

Issuing specifically bailinable debt won’t fly- if they don’t sell enough of it they’ll say “conceptually depositors have “bailinable debt”, we’ll take that!”

The Difference Between the Great Depression and The Great Recession