08 October 2008

Prolonged Depression?

Yes, I'll admit it: the economy is on my mind a lot lately. As do many, I wonder what's going to happen next, what it will mean for people's retirement, what it will mean for all of us in general, from day to day. Are we heading for another recession? A depression? A prolonged depression? Will any of us have any money left, either in retirement funds or in daily operating checkbooks? (No, I'm not trying to sound "doom and gloom"; just trying to echo the thoughts that seem to be so prevalent.)

Mostly I wonder how all of this "economic downturn" may effect the Church, particularly in terms of folks coming to the Divine Service to discover or relearn where their true meaning and purpose in life is, namely, in Jesus Christ and His life and salvation. Difficult economic times could very well bode well for the Church, because, after all, the golden calves of our humming, ever-growing economy and our super-soaring social status based on material wealth sure seem to be biting the dust. Only time will tell, of course, how things will turn out. Only our Triune God and Savior can truly provide for what we really need, regardless of how much money we may or may not have.

In the meantime, perhaps we can learn a little something from history. We might wonder if we could ever get ourselves into another "Great Depression." Some say, "Yes, we could"; others say, "No, we have too many correctives in place these days." But you might be interested in this article from "MoneyNews.com".

According to two UCLA economists (yes, "left coast"!), it would appear that FDR's policies, usually credited with rescuing the nation from the Depression's destruction, may very well have prolonged the early 20th century economic downturn. I had to take a little time to wade through the statistical details in the article, but I also find it helpful to look at this historical event from a different perspective. I hope you will too. Here's the article's concluding paragraph to spur you on to read the whole thing:
"The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes," Cole said. "Ironically, our work shows that the recovery would have been very rapid had the government not intervened."
Certainly gives another healthy serving of food for thought regarding our most recent governmental interventions in economic bailouts/rescue packages, doesn't it?

5 comments:

Father Hollywood said...

You might want to peruse The Recession Reader. The Mises Institute has been saying just that for many years (that FDR prolonged, rather than ended) the Great Depression.

Ron Paul has been saying that all along only to be hooted down by mainstream Republicans and by Democrats as well.

But you can only whitewash the truth for so long.

The "bailout" is only deepening the crises. You might also want to look for a book by Peter Schiff called "Crash Proof" (Schiff is an economist and broker who was laughed at until recently. Nobody's laughing now).

Pastor D said...

I think we will be in a world of hurt for some time. I serve a rural parish in northeast Indiana. Many of the people I serve are involved in agribusiness and the markets are fluctuating day to day. When farmers can no longer purchase necessities for spring planting such as fuel, seed, fertilizer and herbicides all of us will be affected.

When commercial banks can no longer or will no longer lend to each other, when a small business owner finds out that his line of credit has been shut off even though he has paid his bills month in and month out “Main Street” will be hit hard. Like the prodigal son we have squandered our inheritance.

There is plenty of blame to dish out and no one wants to fess up. Such is life.

On the positive side – we will have ample room by way of example from which to preach! Christ and Him crucified is our only hope. Let us press on while there is still day.

Dan @ Necessary Roughness said...

When commercial banks can no longer or will no longer lend to each other, when a small business owner finds out that his line of credit has been shut off even though he has paid his bills month in and month out “Main Street” will be hit hard.

If a small business is able to pay the loan/line of credit he made, his loan is an asset to be sold to a solvent bank if his bank goes under. He doesn't lose it. If he needs another line of credit, there will be a rate of interest a bank deems will be worthy of the risk.

Business startups that planned to pay employees from loans could very well be affected, but even if the banks themselves aren't lending, there may be venture capitalists that will help out. They'll want to make a better return on their money than what's provided by Treasury bills.

It's going to be a tighter situation, for sure, but it won't be impossible.

Adversity may move people into churches, but it makes them particularly ripe for prosperity Gospel.

Thanks, guys, for all you do.

Anonymous said...

The most insightful commentary I've heard on the bailout: "Gee, I wish I had bought a bigger house."

That just about says it all.

Tom Fast

Randy Asburry said...

Fr. Hollywood, thanks for the tip on further reading on this subject. I look forward to checking it out.

Thanks everyone else for good, thoughtful comments! Yes, it would appear that we are only at the beginning of some difficult times, economically, socially, and quite likely even politically. It will be quite interesting to see how and when (or if) people begin realizing that their trust in prosperity is misplaced. Only time will tell, and only our Triune God will provide and save regardless of our circumstances.