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dippin · 02-12-2009, 01:37 PM

Now, at first this one might look on par with 74 and 81. But look at it closely: in other post-ww2 recessions, at this point in the recession employment either had started to rebound (like the 1974 recession) or at least job loss was declining (that is, job loss increasing at a decreasing rate). In our current recession, job loss only started to pick up over the last 4 months. If February is anything like January (and given seasonal adjustments, it is likely to be worse), it will officially become the worst recession in 70 years.

Now, this is only looking at the employment data. If we couple that to the monetary policy data, we see how we are in such a deep mess. 1981 came about when Volcker really stepped on the breaks, significantly raising interest rates in order to reign in inflation. Once inflation was under control, it was a matter of lowering interest rates and things improved.

Currently, we are already at the dreaded liquidity trap. There is no interest rate to cut to create the rebound...

02-12-2009, 01:37 PM	#123 (permalink)
dippin Crazy, indeed Location: the ether	Now, at first this one might look on par with 74 and 81. But look at it closely: in other post-ww2 recessions, at this point in the recession employment either had started to rebound (like the 1974 recession) or at least job loss was declining (that is, job loss increasing at a decreasing rate). In our current recession, job loss only started to pick up over the last 4 months. If February is anything like January (and given seasonal adjustments, it is likely to be worse), it will officially become the worst recession in 70 years. Now, this is only looking at the employment data. If we couple that to the monetary policy data, we see how we are in such a deep mess. 1981 came about when Volcker really stepped on the breaks, significantly raising interest rates in order to reign in inflation. Once inflation was under control, it was a matter of lowering interest rates and things improved. Currently, we are already at the dreaded liquidity trap. There is no interest rate to cut to create the rebound...