Organizing for America | Tyler Folsom's Blog: Depression

Depression

By Tyler Folsom - Oct 7th, 2008 at 12:18 pm EDT

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We are entering a depression. The next few years will be rough. We are seeing the results of the dismantling of the New Deal that started in 1980 and has continued under Reagan, Bush, Clinton and Bush.

Our economy is now based on credit. Once the house of cards starts collapsing, it will take a long time to start over. The surge in housing prices led to equity borrowing which masked the fundamental weaknesses of the economy. As housing prices rose, they took the economy with them. Now as they fall, the economy goes along for the ride. The major problem for the coming years will be deflation. Now as people discover that they have nothing to spend, they cut back and businesses go down. When our foreign creditors discover that they made a bad bet, they will take their money elsewhere.

Roosevelt said "we have nothing to fear but fear itself". Fear has been the Republican mantra since September 2001. It is time to get past it and reassert our greatness. Obama is a centrist Democrat. To adequately confront the depression, he must become a radical. Start by nationalizing the banks and health care.

This is a major collapse, but I am confident that a better America will rise from the ashes. The Detroit truck companies will have to become car companies. People will have to start driving efficient vehicles and live close to where they work. The rest of the world will no longer subsidize our profligate energy habits and we will have to become sustainable. The ethic of borrowing money to lead an unaffordable life-style will give way to prioritizing purchases to what is really important.

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