Macroeconomic Conditions the Real State

Macroeconomic Conditions

The Real State of the Macroeconomy

Me of the author

The Garrison State

The New Deal

A New Deal

A legitimate question currently regarding the economy is regarding what the current macroeconomic situation actually is in the United States. We are being told that we currently are currently in danger of slipping back into a recession. However, given the current severity of the economic situation and unprecedented demonstrations to "occupy Wall Street," it is legitimate to ask if we are not just still in a recession, but are actually in a depression. These would argue that truly we never left economically bad times and have to look for root of the problem further back in U.S. history, comparing the current situation as it has developed in the Obama administration to the 1930s. Due to the brevity of the essay, we will let the current protest movement speak for what is going in the present and focus in the roots of the current problem. This author's assumption is that credit easing for Wall Street does nothing but impoverish Main Street (the real economy, not the speculative economy). It would also imply that all of the administration (and the Federal Reserve, the real government) propaganda data about and improving economy, including unemployment, inflation, GDP growth, expansionary fiscal policy tools and market forces that will export us out this economic canyon are less than truthful and will provide nothing but confusion in a quest for a solution.

Background

There is a very good reason that there is a lot of confusion over what marks a recession and what marks a depression. Very simply, there is no universally agreed upon definitions. Every economist will give you different answers. However, a very basic barometer that the U.S. government uses are the tax rolls. To further define this further, any analysis should consider present tax rolls as compared to their classical 1930's Great Depression era equivalents. What gives the issue an even more ominous pessimism is that we now have a garrison effect to our economy that Franklin Delano Roosevelt did not have to deal with, that is concurrent land wars in Asia and Africa.

Tax Rolls-It looks a lot like 1932.

Hardly a hostile source to President Obama, an NPR report title says it all when it says "Tax Receipts Fall Off Cliff; Worst Drop Since Depression." Now, we can more profitably harvest figures, basically that at the August 2009 date of the report, tax receipts dropped 18%. This was the biggest single-year drop since the Great Depression. In other words, across the board, the basis for the "stimulus" is not there in the style of FDR in terms of available tax rates to bail out the economy with a federal deficit that in 2009 had hit an annual record rate of $1.8 trillion dollars. A direct quote from the report speaks directly to the issue: "The last time the government's revenues were this bleak, the year was 1932 in the midst of the Depression (James)."