Re: There are a lot of studies about the US Great Depression - but how many about the German one?
Indeed, the Germans have an extremely vivid experience of what happens with QE. I thought the UK in the 1970's would be a timely reminder about Keynesian economics, but apparently people have forgotten that too.
The problem is that there are many who think that money and productivity are the same. There is also a problem in that Western economies are based on this fiction: value = the amount of money someone is willing to pay.
The problem with that idea is that willingness to pay is inherently unstable because we create markets based on speculation and the idea of ever-increasing productivity/wealth. I think it was Money magazine (I could be wrong there) which talked about an impending UK economic collapse because everyone has the idea that past growth rates must continue. The problem is that the past growth includes industrialisation and urbanisation, the introduction of power distribution, motorised transport, piped water/sewage systems. We've most recently seen globalisation made possible by the introduction of computer networks.
Now, who thinks that there is anything like these on the horizon to drive equivalent future growth? Is twitter or facebook going to deliver these real benefits? Is SDN going to equal the productivity leap forward of putting global networks in place to start with?
I'd suggest that we've done the great leap forward. There is little productivity to add when compared to the introduction of industrialisation, computerisation and networks. Everything from now on will be slow. What we considered normal growth in the past will be a bubble if it happens again. It could be a speculation bubble or it could be a fashion bubble, but we are already rather efficient at what we do. That is why IT is in such a bad way - it has little more to offer. Our large companies are so large that they can quickly saturate global demand, but then they struggle with over-capacity and expectations of growth which can't continue. We've seen it recently, with the IT companies hiding the drop in earnings by jacking up prices, "look demand is increasing, we've earnt more!" No, demand is falling and you'll earn less and less as we move from short-term ("we can't change anything so we'll have to pay") through long term ("some things can be changed") to very long term ("everything is changeable").
We've confused owning knowledge and rights with being productive. What happens when a city goes bankrupt and can no longer spend police time protecting IP rights? What happens when someone decides they'll just write a note on a bit of paper and post it, rather than spending $1000 on a computer, $400 on the OS, another $400 on some software to write a letter? In fact, the a flick of a pen any country can nullify all our "ownership." While intent on promoting profits from "innovation", we have grown fat on artificial scarcity of things people really don't need.to live. It was bad enough in the 1930's when the West produced things, now almost no-one has assets or skills to produce anything. It's all very well for MS to have an Office cash cow, but if things turn out like the 1930's no-one is going to be buying. All that "value" will go up in a puff of smoke, because it isn't really "value," its merely a price. Value is a far more ephemeral concept which varies from person to person and instance to instance, especially when it refers to intangibles.
I can't see how the future is going to be anything but messy and very unpleasant. All those poor third-world farmers shipping food to the West - they have very little to lose from keeping and eating their own crops. I suspect the escapades in Iraq will seem like a time of relative peace. In case you think it couldn't happen - it has happened before.