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Economists Herald New Great Depression
Figures comparable to 1930s, "central bankers
have stood in the way of recovery"
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 The
world is currently experiencing the modern day equivalent of
the Great Depression, according to a prominent economist who
has added his voice to scores of others now forecasting ongoing
economic doom on a scale not seen since the 1930s.
Robin Griffiths, a technical strategist at Cazenove Capital,
told CNBC Monday that he sees the stock market bottoming out
in October as the world has entered significant financial depression.
"Equities are for losers and bond markets for winners.
Equities are simply for people who like losing money,"
Griffiths said.
"A double-dip is inevitable and imminent, as Keynesian
stimulus measures have never worked anywhere. We are in the
equivalent of a Great Depression following 3 years of credit
crisis," he added.
Griffiths also says he has charted a
20-year secular downturn in the West, which we
are currently halfway through.
Griffiths' comments echo those of other
notable economists and experts who have concluded
that zero growth, mass unemployment, and devastating monetary
tightening spells depression
on a 1932 level.
With real measures of unemployment having been at around 20%
and rising for some time, other analysts have pointed
out that the numbers are in the same ballpark as the Great Depression.
The number of Americans relying on food stamps is at
a record level of over 40.8 million, that is one
out of every eight, with the figure projected to rise to 43.3
million next year. At the height of the Great Depression, the
rate was just one out of thirty-five Americans.
Furthermore, the M3 money supply in the United States is contracting
at an accelerating rate that now matches
the average decline seen from 1929 to 1933, despite
near zero interest rates and the all the stimulus activity.
July’s dismal jobs report and forecasts of
even weaker job growth ahead, along with
signs
of food inflation, also signals an era
of stagflation is upon us, a phenomenon not seen
during even the Great Depression.
Other economists are beginning to pin the blame for the continuing
spiral into depression at the feet of the central bankers:
"The major problem is that quantitative easing has been
counter-productive." Brendan Brown, head of research at
Mitsubishi UFJ Securities tells
CNBC.
"The central banks have stopped prices from falling. When
prices fall, people buy but by shoring up asset prices the central
bankers have stood in the way of recovery," he added.
"The big risk is that the Fed reacts to its own depression.
The Fed could over-react and would be better off going on holiday
rather than announcing yet more QE," Brown said on the
eve of a Fed meeting to discuss more QE.
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