I believe that just as the political and financial authorities were incorrect about the imminent end of the depression in 1930, their successors are incorrect about the imminent end of the depression today. Last Friday, British economists were shocked when the GDP numbers from the Office of National Statistics indicated further economic contraction instead of the growth that had been uniformly forecast, and I expect this to be the first of many such surprises to the downside.

The Federal Reserve System must be challenged. Ultimately, it needs to be eliminated. The government cannot and should not be trusted with a monopoly on money. No single institution in society should have power this immense. In fact, I believe that freedom itself is at stake in this struggle.

– Ron Paul, “End the Fed,” p. 11

It should also be emphasized, though, that not just the existence of financial difficulties during the 1920s but also the policy response to those difficulties was important. Austria is probably the most extreme case of nagging banking problems being repeatedly “papered over.” That country had banking problems throughout the 1920s, which were handled principally by merging failing banks into still-solvent banks. An enforced merger of the Austrian Bodencreditanstalt with two failing banks in 1927 weakened that institution, which was part of the reason that the Bodencreditanstalt in turn had to be forcibly merged with the Creditanstalt in 1929. The insolvency of the Creditanstalt, finally revealed when a director refused to sign an “optimistic” financial statement in May 1931, sparked the most intense phase of the European crisis.

Composite Leading Indicators point to broad economic recovery. OECD composite leading indicators (CLIs) for July 2009 show stronger signs of recovery in most of the OECD economies. Clear signals of recovery are now visible in all major seven economies, in particular in France and Italy, as well as in China, India and Russia.

– Organization for Economic Co-operation and Development, Sept. 11, 2009

The two hallmarks of the Great Depression were unemployment and bank failures. While the same economists who denied there was a recession for the first nine months of the economic contraction are now insisting that it is over and the recovery has begun, I am extremely dubious. Since the crisis became apparent, I believed that 2009 would be the equivalent of 1930, that being the year that everyone expected recovery to be waiting around the corner. But while there are some statistical green shoots, there are also numerous signs that the perceived recovery is illusory, and in fact, the economic situation is more dire now than it was 79 years ago.

It is a common assumption among the Republican faithful to assume that Democratic criticism is universally disingenuous and unfair, on those rare circumstances that it is not entirely fact free. This opinion is not without a basis in fact, as one has only to read the editorial page of nearly any newspaper in America to discover a glaring example of Democratic dishonesty. The Democratic Party is, for the most part, the party of the evil and the party of the stupid; not for nothing is it primarily made up of an alliance of useless, overeducated academics with uneducated dimwits lacking …more

The remarkable thing about the “wildly popular” scheme to encourage American consumers to purchase more automobiles is not, as a few conservative commentators have wryly remarked, that the mainstream media finds it surprising that people enjoy federal largesse. It is, rather, that so many commentators have recognized that the program is merely designed to encourage tomorrow’s consumption today.

I had the good fortune to attend a lecture given by Robert Prechter this weekend. Prechter is the originator of the fascinating neo-science of socionomics, about which I have previously written, and the purpose of his lecture was to update the Elliott Wave interpretations provided in his 2002 book entitled “Conquer the Crash.” His fundamental thesis is that the U.S. economy is now several years into a depression that will be an order of magnitude larger than the Great Depression of 1929.

There is the possibility, for the reasons discussed above, that, after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute in the sense that almost everyone prefers cash to holding a debt which yields so low a rate of interest. In this event the monetary authority would have lost effective control over the rate of interest. But whilst this limiting case might become practically important in future, I know of no example of it hitherto.

How does one resolve the question of the presumably cataclysmic meeting between the hitherto immovable rock and the historically unstoppable force? Perhaps by reversing the logic of the famous question: “Who are you going to believe, me or your lying eyes?” Is the rock truly immovable? Or, alternatively, is the force actually unstoppable?