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this post was submitted on 21 Feb 2025
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That depends on a bunch of factors.
Here's my take on what "caused" the Great Depression (over simplification, obviously):
This time around, spending is pretty healthy, we're not in a deflationary environment (just coming off an inflationary environment), etc. Tariffs will likely cause a demand shock due to higher prices though, so I think recession is likely as spending falls off (assuming the tariffs stick). I doubt we'll see a depression unless Trump increases tariffs again in response like Hoover did.
Everything depends on how the US gov handles the reaction to tariffs and how other countries react as well.
So basically a competent and thoughtful government is sort of required to avoid one?
gulp
No, we shouldn't be trying to avoid recessions, that's how we got the Great Depression of the 1930s and the stagflation of the 1970s (different causes and responses, similar govt meddling). Recessions are normal and usually short lived, so the best response IMO is to let bad businesses fail and maybe reduce lending rates to encourage good businesses to fill the expand.
What we need is for government to stay out of it. Don't touch tariffs, and definitely don't try to fix things. The economy is fine, though I think we'll likely see a correction or recession regardless sometime in the next few years (AI bubble, high borrowing rates, climate change, etc). I also believe tariffs will accelerate that.
So we don't necessarily need competent government, we just need to avoid incompetent, reactionary government when the pullback happens.
Thats my point. Far right governments are taking power all over the world. They don’t usually lead to stability. Add in some well-timed crisis (or at least the perception of a crisis, and the media loves to make us perceive things as crises), and things could go south very fuckin fast. Look at Milei, Trump, the far right in Britain, the AfD. These aren’t the most competent people. They’re reactionaries at best. But what they are good at is scapegoating groups and whipping up peoples fears and biases. A few more elections going the wrong way and we are looking at a nearing uniform far right takeover of power.
One of these is not like the other.
I think Milei is doing a fantastic job at what he set out to do: tackle inflation. He's an economist, and when he took office, inflation was 250% and rising, peaked at 300%, and now it's <100% and falling rapidly. He had to take drastic measures to fix it, similar to (and more extreme than) what we did in the late 70s and early 80s to fix stagflation, and it took years to take effect. The larger the problem, the more painful the fix, and he's taking the right approach IMO of trying to get it done ASAP so things can return back to normal more quickly.
I agree with the overall sentiment though. I'm very concerned about Trump and many of the elections over the last couple of years, as well as upcoming elections. We'll see where it all ends up though.
Also the wave of unemployment that is about to cone might push us into a recession
It's not going to be from cutting federal workers, at least not in the short term, those impacts are more long-term. I'm much more worried about tariffs destroying consumer spending, and that might end up with a wave of unemployment.