Comments on: What is the difference between a recession and a depression?

By: Quezi » What’s the difference between a recession and a depression?

Quezi » What’s the difference between a recession and a depression? — Sun, 04 Jan 2009 20:25:46 +0000

[...] some discussion about specific recessions and depressions in various countries, and how they were [...]

By: Surfing » Blog Archive » Waarom arent daar om het even welke nieuwe het surfen videospelletjes?

Mon, 24 Nov 2008 10:02:25 +0000

[...] Club Troppo

By: Michael Kalecki

Michael Kalecki — Mon, 24 Nov 2008 03:39:28 +0000

I would say tow things stand out in a depression in a monetary sense.

Deflation, which is worse than inflation, and the country usually experiences a liquidity trap.

By: John Greenfield

John Greenfield — Mon, 24 Nov 2008 03:22:19 +0000

Answer? 30 Newspoll points!

By: Saul Eslake

Saul Eslake — Sun, 23 Nov 2008 22:39:26 +0000

As I recall, Keynes’ point (and that of others) was that cutting wages simply accelerated the deflationary spiral, since unless wages fell faster than prices (which changes in labour market arrangements after World War I made difficult to accomplish) then real wages ended up rising anyway even if nominal wages were cut). Australia did institute a 10% cut in wages (and dividends) as part of the Premiers’ Plan of 1931, and that didn’t prevent unemployment from rising here as much as in the United States. The Hoover Administration remained on the gold standard (and the Fed actually raised interest rates in September 1931 in order to stem an outflow of gold); one of Roosevelt’s first actions after assuming office in March 1933 was to devalue the US dollar against gold, which effectively put an end to deflation.

I agree that we are not (yet) seeing deflation in the United States – the 1% fall in the CPI in October was, as JC says, largely due to lower energy prices – and, again as JC says, ‘base money’ has been increasing at very rapid rates as the Fed moves to implement the ‘quantitative easing’ strategy advocated by Ben Bernanke in the November 2002 speech which I quoted at some length.

By: JC

JC — Sun, 23 Nov 2008 13:05:06 +0000

Soul:

In the United States, where labour laws favoured employers vis-