"1937 parallels for today's global economy"

"The depression that followed the stock-market crash of 1929 took a turn for the worse eight years later, and recovery came only with the enormous economic stimulus provided by the second world war, a conflict that cost more than 60 million lives. By the time recovery finally arrived, much of Europe and Asia lay in ruins.

...The despair felt after 1937 led to the emergence of similar new terms then, too. "Secular stagnation", referring to long-term economic malaise, is one example.

...In the late 1930s, people were also worrying about discontent in Europe, which had already powered the rise of Adolf Hitler and Benito Mussolini.

Now Putin and ISIS etc...

The other term that suddenly became prominent around 1937 was "underconsumptionism" – the theory that fearful people may want to save too much for difficult times ahead.

...Secular stagnation and underconsumptionism are terms that betray an underlying pessimism, which, by discouraging spending, not only reinforces a weak economy, but also generates anger, intolerance, and a potential for violence.

Ferguson, Scotland, Hamas, Spain, Ukraine etc...

...The downside of the sanctions imposed against Russia for its behaviour in eastern Ukraine is that they may produce a recession throughout Europe and beyond.

That will leave the world with unhappy Russians, unhappy Ukrainians, and unhappy Europeans whose sense of confidence and support for peaceful democratic institutions will weaken...

Along with unhappy Americans, South Americans, Africans and Asians.

In his magnum opus The Moral Consequences of Economic Growth, Benjamin M Friedman showed many examples of declining economic growth giving rise – with variable and sometimes long lags – to intolerance, aggressive nationalism, and war."

Robert J Shiller is the 2013 Nobel laureate in economics and professor of economics at Yale University...


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