Are GOP Policies Leading Us Toward A New Depression ?

In the past, Republican policies (favoring the rich and corporations) created a situation where the gap in wealth and income between the rich and the rest of the country was enormous. A stock market crash in 1929 triggered the Great Depression (which was inevitable because of that wealth/income gap).

Today's Republicans have recreated that wealth and income gap, and it is growing even larger than it was prior to the Great Depression. The policies, deregulation of financial institutions and huge tax cuts for corporations and the rich, have also had another effect. It has created an enormous debt -- both government and private debt.

Some economists believe it is this ballooning debt that will trigger a new depression -- and it could happen before Trump's presidential term ends. Consider this part of a thought-provoking article by John Aldan Byrne in The New York Post:

Ten years ago, it was too-easy credit that brought financial markets to their knees. Today, it could be a global debt of $247 trillion that causes the next crash.

After a decade of escalating US household debt brought on by low wages and the national debt more than doubling over the same time frame, to $21 trillion, debt could soon put the brakes on this economic recovery, analysts warn.

“We think the major economies are on the cusp of this turning into the worst recession we have seen in 10 years,” said Murray Gunn, head of global research at Elliott Wave International.

And in a note, he added: “Should the [US] economy start to shrink, and our analysis suggests that it will, the high nominal levels of debt will instantly become a very big issue.”

The economic stats:

• US household debt of $13.3 trillion now exceeds the 2008 peak. That’s due in part to mortgage lending, which is hovering near its decade-ago level of $9 trillion-plus.
• Student loans outstanding have skyrocketed from $611 billion in 2008 to around $1.5 trillion today.
• Auto loans, at nearly $1.25 trillion, have exceeded the 2008 total, while credit card balances are just as high now as before the Great Recession.
• Meanwhile, global debt — a result of central bankers flooding economies with cheap money to lift them out of a funk — is now $247 trillion, up from $177 trillion in 2008. That is close to 2½ times the size of the global economy.

“We won’t be able to call it a recession, it’s going to be worse than the Great Depression,” said economic commentator Peter Schiff, forecasting a major economic downturn as early as the tail end of the Trump presidency’s first term. “The US economy is in so much worse shape than it was a decade ago.”

Economic theorists say insurmountable debt is the big kahuna. The huge sums today certainly fed the boom times. But since it must eventually be repaid, the tipping point will come when a wave of defaults by overwhelmed borrowers — potentially squeezed by rising interest rates — leads to a widespread reduction in spending and incomes, economists explain.