Sunday Summary

Let's face it--the economy sucks, right now.

Most of us are aware that it doesn't help matters to say this.  After all, the prime mover for consumer economy is confidence, and to admit that the economy sucks is only likely to make it worse by deflating the confidence that everyone has that it's going to get better.  It may still, and will, hopefully, get better, but right now, it ... well, it's really tanking.

All most of us need do is take a look around them, if it hasn't effected them directly, already.  Especially here, in California, rents are up, houses are being foreclosed upon, small businesses are going under, "For Lease" signs are going up, people are struggling to find work, and are ever more thankful that if they have a job.  In the broader perspective, we hear more bad news, every day--the stock market is falling, unemployment is rising, the government has been spending ever more money to spur economic growth, so the national debt is through the roof, and all while the price of just about everything goes up.

Economists and bankers are only now beginning to suggest that the "risk of recession" is now "very great".  In an interview several days ago, President Obama said that he "doesn't think that the U.S. economy is in danger of falling into another recession."  But, seriously, who are these people kidding?  Have we even yet to really recover from the 2008 recession? 

Peter Schiff, an American investment broker, author, financial commentator, and former contender in the 2010 Republican Connecticut Primary, believes we're in a depression.  What gives him the confidence to make such statements is the credit he received from those in the financial world for noticing and commenting on the sub-prime housing "bubble" back in 2006, long before anyone realized it was even a bubble. 

If Schiff is right, it's very, very likely that the economy is going to get much, much worse before it ever gets better.  To him, the Federal Reserve is running a Ponzi scheme, effectively sanctioned by everyone; that Ben Bernanke is going to continue to print money until it becomes so devalued that it will collapse.  As it was during Germany's Weimar Republic, it will take barrowfuls of money to buy a loaf of bread.  And only those who have gold or silver, (used as money for millenia), will have any real purchasing power.  This prognostication is echoed by growing number of others in the public sphere, including Republican Presidential candidate Ron Paul.

Those of us who study history are not in the business of making prognostications.  However, we still have to feed our families, and to that end, it behooves us to have an understanding of the current economic climate.  Moreover, one of the very reasons to study history, and indeed, one of the reasons we began this blog, is because, in the oft-quoted phrase, "those who cannot remember the past are condemned to repeat it," and most of us, we're sure, wish not to have to live through an economic depression, if history is any guide.