Krugman, finally: We’re in a depression

June 29, 2010
By Tracy R Twyman

Economist and New York Times op-ed columnist Paul Krugman has filed a new piece called “The Third Depressionâ€?, in which he states, “We are now, I fear, in the early stages of a third depression.â€? Krugman wrote that we face a situation similar to that in the 1870s called “The Long Depression.” This occurred after a one-two punch in which the debt-free government-issued Greenbacks that had financed the Civil War were called in, and also silver was demonetized and called in. This lead to a dramatic reduction of the money supply by 760% over the next 20 years, from $50 per capita to just $6 per capita. The entire period of economic contraction lasted for 65 months. Krugman predicts that this time around, “tens of millionsâ€? of workers will “go jobless for years,” and that some “will never work again.â€?

No estimates yet on how much the population will be reduced by attrition, or what kind of sweeping political changes we can expect as a result of this. But we’ve already seen the beginnings of that.

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