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Ahh, the great depression. The Lincoln Brigade. The Bonus March. It’s always nice to have a reason to revisit our nation’s young history. We don’t have so much of it that it overwhelms; one can march through the centuries in a few hours’ contemplation. Dorothea Lange documented the Depression years in beautiful, riveting light; her work is worth a look.
We aren’t heading down that road yet, but it’s worth revisiting the conditions and social norms that prevailed in the late 1920′s, to remind ourselves of what to avoid in addition to the obvious issues from our immediate past.
Here’s a tidy visual of our proposed bailout spending, and comparisons of what else we could do with those funds. There are arguments to be made that the bailout monies would be returned eventually — but there is no guarantee of this; it is more likely that some significant percentage would be lost. One could likewise claim that we received major returns on investment from Apollo, the latest stimulus package, and the like. The worst of all scenarios is one in which a bailout provides temporary but not medium-term relief, and simply shifts costs for a necessary correction to a different audience — individual citizens and our national debt.
I personally don’t much care about where costs are shifted, but think that if we don’t find a way to effectively assess the magnitude of overvaluation that has occurred, and find ways to avoid similar trust-backed delusions in the future, we risk much larger disasters. Financial systems only hold together when one trusts the notion of currencies. Nations only holds together when one trusts the idea of a social compact.
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