Will the Great Depression re-enters or “Trump’s economic recovery” is just a “blush” illusion
Standing today and looking back at the world before May, we may feel like a world away. Although people on the street generally still wear masks, seats in movie theaters must be separated from each other, and temperature measurement at subway stations is an inevitable measure, after all, our lives are back.
This will give us an illusion has life really returned to the world we are familiar with?
The 33rd issue of “Looking” in 2020 published an article by Weiwen, former Economic and Commercial Counselor of the Consulate General in San Francisco and New York on August 15, entitled “Will the U.S. Economy Fall into a “Ten Year Downturn”.” He quoted the forecast of the U.S. Congressional Budget Office and agreed that in the next ten years, the U.S. economy will be in trouble, repeating the economic trend of Europe in the decade after 2008 and entering a downturn.
In the second quarter, US GDP fell 32.9% from the previous quarter, the lowest since 1947. But the situation in the third quarter is that the epidemic has eased, and under Trump’s strong policies, many states and cities have reopened, and the US economic index and unemployment rate have eased. So, maybe the numbers will not be as extreme as in the second quarter.
The forecast of the International Monetary Fund is more optimistic. It believes that the United States will be able to return to 2019 levels by 2022. You know, the unemployment rate in the United States in 2019 reached the lowest since World War II, and GDP growth was also the best in 10 years. If this is the case, the epidemic is just a short detour after prosperity, and good days are ahead.
But I’m afraid, this is still an illusion. Maybe it’s worse than we thought.
“Trump’s economic recovery” is just a “blush” phenomenon
In fact, the economic recession in the United States did not start after the outbreak, or even in 2019. The so-called Trump economic recovery is actually nothing more than a “blush” phenomenon under Trump’s continuous fiscal stimulus.
The United States has long been trapped in the mud of economic recession or even depression. But this is not a problem unique to the United States. During the entire ten years from 2008 to 2018, which is the so-called “decade of depressed Europe,” the whole world has actually entered a U-turn path. The inertia of globalization at that time was still driving trains including China, ASEAN and the United States, creating a decade of “false growth”.
The academic and economic circles in the United States have actually been reviewing the impact of the 2008 U.S. subprime mortgage crisis. In fact, no serious economist has admitted that the U.S. economy has been viewed from any angle in the past ten years. It looks like a full recovery or growth-that is actually just a political trick of Trump.
The economic difficulties caused by the subprime mortgage crisis have been tossing Americans. People choose Obama and abandon the Democrats for the same reason they did not save the economy and rescue people from the hardship, especially the middle class and low-income people. This is actually a core reason for choosing Trump Since nothing has changed, try another person or a party.
The reason for the nearly 20-year period of rapid development in the United States from 1990 to 2008 (that is, the golden period of development for the entire world) is simply economic globalization, information revolution, and technological innovation. This cycle has almost the same trajectory as the economic explosion of the Industrial Revolution.
However, this wave of economic cycles also created the element conditions that swept the US, Europe and Hong Kong economic crisis.
American historian Tony Jut and economist Joseph Stiglitz almost came to the same judgment the period of rapid economic development benefited from the unbinding of many economic policies and the indulgence of social welfare systems. Including the privatization of the original state-owned industry. In other words, the United States is more liberal and capitalist.
Due to the unbundling of economic policies, especially the unbundling of the information industry, the rapid development of Internet technology has brought about technological innovation in the entire social field, which has led to a blowout in the entire technology industry and the indulgence of social welfare policies has made enterprises at the same time as the country, it has thrown off the welfare guarantee for the general public, and can move forward with light.
But this wave of economic cycles has brought about profound changes in the social structure the gap between rich and poor has widened rapidly. Today, the United States includes Europe, where the social welfare system is the most rigorous. With the rapid expansion of the information industry, the gap between the rich and the poor has become the worst polarization between the rich and the poor since the Second World War. Moreover, the middle class is shrinking.The society transitioned from an olive type to a dumbbell type.
Where did the 2008 crisis come from? Due to policy unbinding, financial derivatives are constantly being created, and the indulgent social welfare system has forced middle-class and lower-class workers on the verge of bankruptcy to rely more and more on financial tools. There are just a few social resources. Money does not fall from the sky. Financial tools are actually just spending future money. The bubble burst when the drum passer lacked a receiver.Have these problems that caused the financial crisis in 2008 been resolved afterwards? not at all.
What Obama is trying to do is to lay the foundation for the long-term stability of the United States through new energy, a new economy, and a new labor policy. But the problem is that the old problem is still there, and the near thirst cannot be quenched by far.
After 2008, the United States has not recovered at all. However, the benefits of the new economy and the allocation of resources brought about by the global supply chain make the United States still look prosperous.
Epidemic exposes America’s false prosperity
This kind of flower clusters and splendor could have continued hypocritically, even all over the world. After all, globalized resource allocation and uneven regional development, including the rapid development of China, India and Southeast Asia, and the continued tilt of global resources to the United States and Europe, can maintain such “false prosperity” for at least a period of time. .
Unfortunately, the Sino-US trade war started and the new crown epidemic came.A bed of broken cotton wool was opened. China’s rapid development has challenged the authority of the United States. Global geo-competition has never gone far. Zero-sum games have always existed. The Americans have also discovered that if China is given another ten years, the world situation will be upended. Trump is here to implement the policy of containing China, he is not the inventor.
However, the adjustment of the global pattern, inevitability and accidental factors are not transferred by human will. The arrival of the epidemic broke the normal arrangement of the United States to adjust the pattern of globalization to curb the development rate of China and developing countries through the reconstruction of trade and supply chains.
The adjustment after the epidemic has lost the possibility of the original method, which has put the brakes on globalization, and all the possibilities of recovery have been wiped out innovation is stagnant, globalization is stalled, and financial tools are ineffective.
After 40 years of high-speed technological innovation, the innovation power of technology and model has been insufficient. The so-called innovation is nothing but a reaction to the original economic structure and redistribution of interests.
This is history, a revolution in which New Money replaces Old Money. In other words, the heroes of the information age should replace the nobles of the industrial revolution era.
World history has always happened like this. The mechanized enterprises of the industrial age tried to keep the old money, so their descendants became nobles, without the motivation to create, just want to stick to the old pattern. But the generation that has grown up in information technology education since the 1960s, from Bill Gates to Sergey Brin to Mark Zugberg, wants to overthrow the old money rule. So there was the Internet revolution.
But new money has slowly become old money, in 40 years. These new money must fix the world they have struck down. As a result, monopolies have occurred in all fields, no matter which country in the world, giant companies are buying, buying, buying, because they want to incorporate all innovations into their systems.
Another stagnation demonstrated by the epidemic is globalization. This is in line with the monopoly in the field of technology. Why did everyone seem to have a deep-seated hatred of globalization overnight? Because the old forces, including the United States and Europe, found themselves not the biggest beneficiaries of globalization, at least a large part of them were not beneficiaries, and even had to bear the costs of globalization, including unemployment, immigration, and welfare costs, so they demanded reconstruction.
But the new forces, including China, India, and Southeast Asia, want to maintain the current globalization pattern.
Contradictions arise, but there is no solution. The American method is to shoot two things apart, and the European attitude is to cringe.
As soon as globalization stopped, the room for coordination of financial instruments on a global scale was suddenly lost. The United States could originally rely on offshore finance, overseas investment, and other methods for alternative development, but relying on the return of foreign growth to promote its own development has no way. Next, financial instruments can only be used domestically.
However, the new economy is inevitable and can only be global. Up to now, any new economy that is closed to the country is a joke.
Can the unemployment registration of more than 35 million be absorbed by the domestic investment of the United States? It’s just a dream.
This is the current economic recovery dilemma in the United States insufficient motivation for innovation, unsolvable employment, failure of financial tools, widening of the gap between rich and poor, stagnation of global trade, and collapse of the supply chain structure.
Trump’s three axes have been used a long time ago, and the Democratic Party has no new cure for the world.
The Great Depression may come to America again
What was the solution to the Great Depression in the United States? Roosevelt’s new economic policy, large-scale investment in national infrastructure and job creation.
But the America of today is no longer the America of 1929. In the world after globalization, what is more needed is not infrastructure investment, but global trade, technology export and the creation of new types of work. It is impossible to return to a low-tech economy. Obama’s direction is right, but he has not coordinated the relationship between the present and the future.
However, there is no possibility of restarting globalization in the short term. In this case, the possibility of recovery in the short term does not exist.
As for the return of prosperity in the three years envisaged by the International Monetary Fund, the possibility exists, but that will only create another blush.
Relying on strong economic stimulus policies and massive government subsidies to forcibly solve the employment problem can recreate some stock market recovery, employment growth and consumption recovery in the short term. However, the three old problems are there, globalization is hopeless, and a long-term recession is in sight.
A more pessimistic forecast is the return of the Great Depression.After decades of prosperity and prosperity, people may be more sensitive to depression. The only expectation is that depression will come slowly, and people’s psychological endurance will be more calm.
But this is unpredictable.
The United States has fallen into a long-term downturn, or even a cliff-like depression, which is certainly not a good thing. It is impossible for a world structure of one superpower to endure such a collapse at all. The November U.S. election may be a turning point, which will make the current despair or pessimism more clear.
This is the luck and misfortune of individuals in an era of great change you have the opportunity to witness history, but you have to endure its pain.