We have begun to hear the drumbeat that we may be on the verge of another 2008. Truth is, if you really want to better understand where we may be heading, you might want to look back even earlier: It’s time to party likes it’s 1937.
The stock market has started 2016 with its worst performance ever. This has provoked a bandwagon of prognosticators to come out to foretell why this is the next recession. My question is, what took them so long? Looking at cycles, it was predicted, and I wrote about this downturn for 2016 more than three years ago. What you should be asking — and even more frightening — is what the cycles predict is coming next.
Donald Trump is correct that our country is disappearing — he just misses the mark on why and understanding that it cannot be fixed by his ego. Pundits and politicians add fuel to the problems, and benefit from the chaos and instability. People like George Soros and Andrew Roberts from the Royal Bank of Scotland feed the narrative to feed their wallets but don’t see past the next collapse.
Looking at economic indicators and current conditions confirms a recession is inevitable. It is not that the experts are entirely wrong about 2016; it is just that they fail to see a larger cycle that may exist and the bigger problem that may be looming. If you want to understand what may be coming and learn from history, we need to go further back than 2008 and first look at 1937.
We can begin with not a recession but the Great Depression, which engulfed our economy until the early 1930s. The recovery in the four years after Franklin Roosevelt took office in 1933 was incredibly rapid. Annual real gross domestic product (GDP) growth averaged more than 9 percent. Unemployment fell from 25 percent to 14 percent. By 1937, production and wages had regained their pre-1929 Great Depression levels.
The economy faltered in the spring of 1937 and tanked in the autumn. Unemployment jumped from 14.3 percent to 19.0 percent. Manufacturing output fell by 37 percent. Real GDP fell 11 percent, and industrial production fell 32 percent. Producers reduced their expenditures on durable goods and inventories declined, making it one of the worst U.S. recessions in the 20th century.
At the time of that recession, there were large imbalances of power and indifference was rampant. Liberties deteriorated not because of FDR but because a culture that accepted it. The period started with a major economic collapse; the disaster elicited a mix of apathy and anger kept at bay by paralysis. There began the general feeling that the culture was heading into peril and things built to an ultimate climax in 1941.
The actual lessons of Roosevelt’s recession are much different than many of the history books. The 1937 dip was not the product of tight fiscal and monetary policy but of excessive government regulation and loose monetary policy; but more importantly a reflection of the culture, people and attitudes of that time.
Perhaps the experts could have looked 80 years earlier to the Panic of 1857, a time that the nation was in uncertainty and government was driving policies that led to the apex of disaster in the 1861 Civil War — a war that was the bloodiest conflict in U.S. history, claiming more than 2 percent of the population.
Perhaps they would have seen similarities another 85 years prior with the credit crisis of 1772. The majority was not taking up arms against the crown but instead was uninterested, angry or paralyzed with fear and subordinate to power. Ultimately, the times saw a foreign government that overregulated, and drove social and economic conditions that exploded in 1775 with the shot heard around the world and the Revolutionary War.
The prognosticators could have even learned looking just 82 years before at the seven ill years and crisis of the 1690s that led to the War of the Spanish Succession. Eighty years before that was the downturn of economies of the 1610s that ultimately begot the English civil war, which claimed 3 percent of the population.
We can go back over 400 years and see this same pattern play out every 80-85 years. In 1937, the culture in the United States and the world was primed for social, economic and geopolitical problems. Not because it would be a repeat of eight years prior but because liberties continued shrinking and centralized power and apathy were growing. In those days of 1937, Americans saw unprecedented overreach of government, increased taxes and stagnant growth, unrest and instability abroad, and an underestimation of potential problems. The climax was not the recession of 1937 but the years that followed that enveloped us in World War II, which claimed more than 400,000 U.S. casualties.
Almost exactly 82 years later, we wake up now to a shift in culture and attitudes that are repeating history. It’s not because it is a repeat of 2008 but because we not only do not learn from the past, but through the generations we relive it. Many of the same phenomena and sentiments of 1937 are playing out today and we are heading full-steam toward similar consequences.
Unfortunately, we have already paved the “road to serfdom,” and as many fight to change policies and institutions to preserve liberty, one fears — and facts are beginning to support — that the cycle has progressed past the point of no return.
History is repeating itself, and I am less worried about the recession of 2016 than I am the reset of 2020.
• Eric Wilson, a tea party member and executive director of the Kentucky 9/12 Project, is co-author of “We Surround Them: Our Journey From Apathy to Action” (Georgetown Grassroots, 2011).
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