Why China Could Lead Us Into Another Depression

June 30 2010, 12:38am

Graham and Dodd Investor submits:Most people breathed a sigh of relief as the economic crisis of early 2009 came and went. Another Great Depression had been avoided, or so people thought. After they got over their initial, late 2008 shock, the U.S. Treasury Department and Federal Reserve Bank got the job done, albeit in the worst way, creating enough liquidity to prevent a financial “seizure,” at the cost of worsening the deficit. That deficit is actually symbolic of America’s problems. Current income levels can only support a 1980s level of spending. We’ve been borrowing the difference, meaning that once the lending window is closed (as it was recently), there has to be a quarter century regression in the American standard of living (the original 1930s took America back to the 1910s). That was the true meaning of the 1930s Depression. Soup lines and 25% unemployment were merely the symptoms.Complete Story »