Sunday, February 8, 2009

Tractors and Bankers Gone Wild

The way I see it, the Great Depression was caused by the introduction of the tractor in the 1910s and 20s. A tractor, fueled by stored solar power in the form of gasoline, gave the simple farmer the power of two hundred horses.

The unleashing of this kind of power, all across North America, caused productivity to jump. These productivity jumps, everybody assumed, would, of course continue for ever and ever. So the projections were made, and financial instruments were leveraged, and the productivity leveled off, and the system crashed.

Then Nixon took us off of the gold standard to fund overseas adventures, and intended not to abuse the fiat currency. And time went by and the power shifted. Then we were increasing the money supply by $300 billion every year to fund social experiments gone bad.

Then came the IOUs and government guarantees, because, you know, the government is good for it.

So, the way I see it, the ‘Great Depression’ was a correction based on a bad farming assumption. What we are facing now is a correction based on greed, gross conceptual errors concerning human nature, and the impending failure of worldwide currencies. So this round will likely be uncivil. These are dangerous games.

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