Is the recession upon us?

[Jason Harvestdancer]

Of course a recession isn't occurring. A recession is consecutive quarters of negative GDP growth. That isn't the same as a depression, in spite of the hopes of the Obama faithful.

 

[Metaphor]

Of course a recession isn't occurring. A recession is consecutive quarters of negative GDP growth. That isn't the same as a depression, in spite of the hopes of the Obama faithful.

So, is America in a depression, and how do you know?

 

[TV and credit cards]

Here are some numbers from Case-Shiller: Residential Real Estate Indicators. So then you just have to decide if you want to go with Case-Shiller or Wolf Richter of the Testosterone Pit. I'm not a big numbers guy but I can't seem to get these two to correlate. Personally, I'd go with the Case-Shiller Indices for objective information.
You can view the running averages on the Dow Jones Indices website.

I think what is important is the lack of new housing starts over the last few years as indicated in this article, Something's Missing by David Blitzer, Chairman of the Index Committee, S&P Dow Jones Indices. If you look at new housing starts since 2009 it tells you why we've been slogging along. New housing starts and it's consequent sales of durable goods by and large drive the economy. Resale of existing homes and rentals are okay but new homes not so good.
Why(s)?

 

[Jimmy Higgins]

Of course a recession isn't occurring. A recession is consecutive quarters of negative GDP growth. That isn't the same as a depression, in spite of the hopes of the Obama faithful.

Honestly, that should read "hopes of everyone". Seems that apparently not wanting to be in a Depression is a partisan thing these days.

 

[Earl IV]

Gold pitch in 5... 4... 3... 2....

 

[Jimmy Higgins]

Of course a recession isn't occurring. A recession is consecutive quarters of negative GDP growth. That isn't the same as a depression, in spite of the hopes of the Obama faithful.

Economy added 200,000+ jobs last month. Hardly booming, but not what appears to be a depression either. I know some people like talking about economic armageddon, but they seem to not have realized that it did happen in the fall of '08 and if not for a massive multinational government intervention, things were going to go straight to hell. We still don't know where everything stands, but capitalism was on ICU in the Fall of '08 and barely made it through the night.

 

[boneyard bill]

Of course a recession isn't occurring. A recession is consecutive quarters of negative GDP growth. That isn't the same as a depression, in spite of the hopes of the Obama faithful.

Economy added 200,000+ jobs last month. Hardly booming, but not what appears to be a depression either. I know some people like talking about economic armageddon, but they seem to not have realized that it did happen in the fall of '08 and if not for a massive multinational government intervention, things were going to go straight to hell. We still don't know where everything stands, but capitalism was on ICU in the Fall of '08 and barely made it through the night.

I ask if a recession is upon us. A recession is two successive quarters of negative real growth in the economy. Since we had negative real growth in the first quarter, it follows that negative real growth in the second quarter would amount to a recession according to the official definition. So are we experiencing negative growth at the present time? That is the question and we won't know the answer until the official figures come out and even those figures will then be adjusted a month or so later. So my question clearly is a matter of guesswork. My own guess is that we will see negative real growth in the second quarter when the final, adjusted figures come out. I base that assumption on the fact that retail sales are down and many retailers are shutting down many of their stores and laying off employees. Also, the only reason the first quarter wasn't a negative 2% was because of Obamacare enrollees and those enrollments should decline significantly now that the enrollment deadline has passed. Real estate sales remain good in upper-income areas but a poor in middle and low income areas so that is another negative.

On the employment front, we've been adding part-time jobs but losing full-time jobs so that doesn't bode well for the retail industry or home sales.

Capitalism died in 2008. The banks were not allowed to fail and capitalism depends on failure. Without failure you simply have the old Soviet system with private ownership. When the parts are not allowed to fail, the whole system will eventually break down. That is what we are faced with today. The next collapse will be worse than 2008 because we've allowed the inefficient, failed enterprises to continue to function, and we've even been subsidizing them.

I am not claiming, however, that the current situation is the beginning of that collapse (although it could be). I'm just asking if it looks like we're heading into a recession. The fundamentals of the US economy are horrible, and I think that signals a likely collapse. In fact, I would argue that a collapse is what we need to allow the economy to get straightened out. But a recession is not based on fundamentals. It is a more cyclical phenomenon.

I think that's what Jason Harvestdancer was trying to point out. Long-term we're in a depression that began in 2008, but that depression can be punctuated by periods of growth as well as recessions as occurred for example in the growth in the US from 1933-36 followed by a recession in 1937.

If we are to emerge from depression, we would need to see robust growth in capital investment, and that doesn't even seem to be on the horizon.

 

[Jason Harvestdancer]

Of course a recession isn't occurring. A recession is consecutive quarters of negative GDP growth. That isn't the same as a depression, in spite of the hopes of the Obama faithful.

Honestly, that should read "hopes of everyone". Seems that apparently not wanting to be in a Depression is a partisan thing these days.

I think we can worry about hope only after we are all willing to face the fact of a depression. Republicans are hoping for one, Democrats are hoping for lack of one, and most people are just hoping for a good job and aren't tying their hopes to a political party.

 

[laughing dog]

The straws that gloomsayers grasp in order to prop up their paroxysms of sadistic joy are truly weak. Drawing parallels between the situation today and the 1930s while ignoring the substantially significant differences and expecting anyone to take it seriously is an YEC-like suspension of reason.

Floating exchange rates, a lees commodity based (i.e volatile) structured economy, and a more interventionist willingness to deal with downturns are but a few reasons such comparisons are unconvincing.

 

[boneyard bill]

The straws that gloomsayers grasp in order to prop up their paroxysms of sadistic joy are truly weak. Drawing parallels between the situation today and the 1930s while ignoring the substantially significant differences and expecting anyone to take it seriously is an YEC-like suspension of reason.

Floating exchange rates, a lees commodity based (i.e volatile) structured economy, and a more interventionist willingness to deal with downturns are but a few reasons such comparisons are unconvincing.

All of the reasons given above are why we should be MORE concerned than in 1929. We have floating rates because we were FORCED off the gold standard not because we chose to discard it. So our money was much sounder then than now. We also have a very favorable balance of trade then whereas now, that balance is abysmally negative. We need MORE commodity-based currency now than we have. Especially we need more agriculture. Food prices are moving up and expected to higher while the number of farmers continues to decline. And it certainly isn't a good thing that we have to import most of our raw materials and a good deal of our energy today when we didn't have to in 1929. Meanwhile, our greater willingness to intervene is the scariest part of all. It's not that we didn't intervene in the 1930's. Hoover intervened a lot and FDR even more and there is no indication that any of those interventions did any good, and a good deal of evidence that they did quite a lot of harm. The fact that today we have a Fed that is even more willing to take "unconventional measures" that they grabbed out of a hat in hopes that it will somehow "stimulate" the economy is hardly re-assuring. The Japanese have been doing pretty much those same things for decades now and have remained in recession almost the entire time. But at least the Japanese people have a high savings rate which means that there is someone out there to buy Japanese debt. Unfortunately there doesn't seem to be anyone left who wants to buy US debt.

 

[fast]

A recession is officially defined and two successive quarters of negative GDP growth. We have one quarter now so if the 2nd quarter comes in negative as well, we will officially be in a recession.

If we ran the numbers like they ran the numbers but instead changed the beginning and ending months (or actual days, for that matter), then if we had any six straight months of -GDPg (or 1/2 years worth of days of -GDPg), then we may find that we're already in a recession by that definition, so what makes it official--adherence to the definition ... Or adherence to the definition benchmarked by the dates used by the government?

 

[laughing dog]

The straws that gloomsayers grasp in order to prop up their paroxysms of sadistic joy are truly weak. Drawing parallels between the situation today and the 1930s while ignoring the substantially significant differences and expecting anyone to take it seriously is an YEC-like suspension of reason.

Floating exchange rates, a lees commodity based (i.e volatile) structured economy, and a more interventionist willingness to deal with downturns are but a few reasons such comparisons are unconvincing.

All of the reasons given above are why we should be MORE concerned than in 1929. We have floating rates because we were FORCED off the gold standard not because we chose to discard it. So our money was much sounder then than now. We also have a very favorable balance of trade then whereas now, that balance is abysmally negative. We need MORE commodity-based currency now than we have. Especially we need more agriculture. Food prices are moving up and expected to higher while the number of farmers continues to decline. And it certainly isn't a good thing that we have to import most of our raw materials and a good deal of our energy today when we didn't have to in 1929. Meanwhile, our greater willingness to intervene is the scariest part of all. It's not that we didn't intervene in the 1930's. Hoover intervened a lot and FDR even more and there is no indication that any of those interventions did any good, and a good deal of evidence that they did quite a lot of harm. The fact that today we have a Fed that is even more willing to take "unconventional measures" that they grabbed out of a hat in hopes that it will somehow "stimulate" the economy is hardly re-assuring. The Japanese have been doing pretty much those same things for decades now and have remained in recession almost the entire time. But at least the Japanese people have a high savings rate which means that there is someone out there to buy Japanese debt. Unfortunately there doesn't seem to be anyone left who wants to buy US debt.

Your arguments would be stronger if they were based on reality. There are still active markets for US debt. The gold standard inhibited the US during the depression. The US voluntarily went off the gold standard. The US economy is not nearly as regulated as the Japanese economy. So your analysis is a pastiche of half-truths and hysteria much more consistent with your "sky is falling" hyperbole than actual events.

 

[funinspace]

Some interesting numbers, compared to the build up to the 2008 meltdown in this article. Yeah, he is a pessimistic guy. Wow, the last 2 quarters have seen an annualized $2.0 trillion plus growth in non-financial debt.
http://www.prudentbear.com/2014/06/credit-allocation.html#more

Total (financial and non-financial) Credit jumped $484bn during Q1 to a record $59.399 TN, or 347% of GDP. Although economic growth faltered during the period, Q1 2014 Total Non-Financial Debt (NFD) expanded at a 5.0% rate. Corporate borrowings grew at a robust 9.3% pace, up from Q4’s 7.7% and Q1 2013’s 7.2%. Federal government debt mounted at a 7.1% rate, down from Q4’s 11.6% and Q1 2013’s 10.1%. Consumer Credit accelerated from Q4’s 5.3% rate to 6.6% - the strongest increase in borrowings since Q2 2012. Consumer Credit expanded 4.1% in 2011, 6.2% in 2012 and 5.9% in 2013. If Q1 consumer borrowing is sustained, 2014 will post the strongest consumer (non-mortgage) debt growth since 2001 (8.6%).

The historic increase in federal debt runs unabated. Recall that federal government debt expanded 24.2% in 2008, 22.7% in 2009, 20.2% in 2010, 11.4% in 2011, 10.9% in 2012 and 6.5% in 2013. Federal debt has increased $9.718 TN, or 145%, in 23 quarters. The ongoing expansion of corporate debt is also noteworthy. Corporate debt expanded 8.3% in 2012 and another 8.9% in 2013 – significantly exceeding the growth in the real economy. We’re in the midst of the strongest corporate debt expansion since the 9.2% in 2006 followed by 13.5% in 2007.
<snip>

Analyzing the Fed's most-recent Z.1 “flow of funds” report recalls 2007 market exuberance. Looking back at the data, Non-financial Debt (NFD) growth increased to a blistering $2.344 TN in ‘07. Total Mortgage Debt growth, while slowing somewhat from the record 2004-2006 period, was still almost $1.1 TN (vs. 90’s average $268bn). Total Business borrowing rose to a record $1.045 TN. It was easy to ignore some subprime tumult with the economy seemingly firing on all cylinders.
<snip>
The Fed did succeed in rejuvenating strong Credit growth. Q1 2014 NFD was reported at a Seasonally-adjusted and Annualized Rate (SAAR) of $2.113 TN – with NFD growth now above my $2.0 TN bogey for two straight quarters. Considering the degree of Credit expansion, the performance of the economy has been most unimpressive (Q1 GDP up SAAR $11.7bn). I’m further troubled by the composition of the recent Credit expansion. Over the past six months, the $2.0 TN bogey has been achieved with federal debt growth of SAAR $1.1 TN and total Business borrowing at about SAAR $940bn. I would argue that large federal borrowings coupled with corporate debt funding M&A and stock buybacks (“financial engineering”) provide the real economy little bang for the Credit buck. Indeed, the massive inflation of Fed Credit has chiefly fueled dangerous speculation and runaway Bubbles in securities and asset prices. The divergence between inflated asset prices and deflating fundamental prospects now widens by the week

 

[Duke Leto]

It did so in 1937 with the recession inside a depression. Keynesians blame that the budget deficit shrank imperceptibly in 1936. Austrians blame a new tax imposed in 1936. Either way there was a recession inside a depression in 1937.

Hold on a minute. Fact check time.

http://www.usgovernmentspending.com/spending_chart_1930_1940USp_11s2li011mcn_G0f_US_Federal_Deficit_As_Percent_Of_GDP

According to this, the deficit as a percentage of GDP shrank ~4.5% to ~3% in the year from 1936 to 1937, and then down to 1.5% in 1938. This is in spite of Real GDP dropping from 1937-1938.

http://www.usgovernmentspending.com/spending_chart_1930_1940USk_13s1li011mcn__US_Real_Gross_Domestic_Product_History

Real GDP looks to have gone from $1.05 Trillion in 1936 to $1.11 Trillion in 1937 to $1.08 Trillion in 1938, expressed in 2009 Dollars. Note that this data is coming from an obviously anti-Keynesian website.

And Inflation was basically nil over this period. CPI-U reports a growth in the price level from 13.8 to 14.2 over Jan 1936 to Jan 1938, basically cumulative two year inflation of 2.9%, with the CPI only at 14.1 in Jan of 1937 and 211.1 in Jan of 2009.

http://inflationdata.com/Inflation/Consumer_Price_Index/HistoricalCPI.aspx?reloaded=true

So in the course of 1937 we can calculate that Nominal GDP went from $74.1 Billion to $72.6 Billion from Jan 1937 through Jan of 1938. And that it stood at $68.6 Billion in nominal terms in Jan of 1936.

We can then set the Nominal Deficits for each time point at $3.09 Billion for Jan of 1936, $2.22 Billion in Jan of 1937 and $1.09 Billion in Jan of 1938.

These are rough numbers. But only in comparison to contemporary Nominal Deficit numbers can a sane person claim that it was an "imperceptible" shrinkage. In relative contemporary terms, they cut the deficit in half in one goddamn year in 1937.

That is not "imperceptible", that is fucking enormous.

 

[funinspace]

China’s commodity backed financing issues sounds eerily like the US subprime CDO fiasco, with now the second Chinese company seeking for the metals they think they have warehoused. It is probably at least smaller than what blew up in the US, but their economy is also just over half as large. Nothing like borrowing multiple times against the same asset. Just how big and deep is this rabbit hole, seems to be the question. And of course Citigroup is involved.

This kind of crap concerns me more than the current economic issues within the US…
http://online.wsj.com/articles/bank...0001424052702304315504579613852120322562.html

One of China's most important financial companies moved to secure metals at a warehouse while concerns about fraud in commodities markets spread to a second Chinese port.

State-owned Citic Resources Holdings Ltd. said Tuesday it has applied to courts in the port city of Qingdao to secure metal assets it owns in warehouses, as concerns mount over the use of commodities for financing in China.
<snip>
The operator of Qingdao port, on China's eastern coast, confirmed on Monday that Chinese authorities were conducting a probe into allegations of fraud.

Separately, Western banks worry that the potential fraud has flared up at a second Chinese port, Penglai, also located in Shandong province, according to people familiar with the matter.

Banks and trading houses are looking into suspected fraud involving metals stored in China that were used as collateral for loans, according to people with knowledge of the matter. At least a half-dozen lenders, including Standard Chartered PLC, provided loans to trading firms that were backed by metals such as copper and aluminum stored at Qingdao, one of China's biggest ports, the people said.
<snip>

The Western lenders involved include Citigroup Inc., Standard Chartered PLC, Standard Bank PLC, ABN Amro Bank NV, BNP Paribas SA and Natixis.

Goldman estimates that commodities-backed financing has led to capital inflows of between $81 billion and $160 billion since 2010.

http://systemicriskandsystematicvalue.blogspot.com/2013/05/chinas-commodity-financing-deals.html

"Our best estimate suggests that roughly 10% of China’s short-term FX lending could have been associated with CCFDs since the beginning of 2012. In April 2013, we estimate that CCFDs accounted for USD35-40 bn of China’s total short-term FX lending. More broadly, Chinese bonded inventories and short-term FX lending has been positively correlated in recent years "

 

[Underseer]

Are we heading into another recession? GDP growth for the first quarter of 2014 came in at just .1% which is troubling enough but that figure has now been revised to -1.0%. A recession is officially defined and two successive quarters of negative GDP growth. We have one quarter now so if the 2nd quarter comes in negative as well, we will officially be in a recession. The outlook does not look rosy.

The key to the health of the middle class is having plenty of good jobs.

But the U.S. economy continues to lose more good paying jobs.

For example, Hewlett-Packard has just announced that it plans to eliminate 16,000 more jobs in addition to the 34,000 job cuts that have already been announced.

Today, there are 27 million more working age Americans that do not have a job than there were in 2000, and the quality of our jobs continues to decline.

This is absolutely destroying the middle class. Unless the employment situation in this country starts to turn around, there does not seem to be much hope that the middle class will recover any time soon.

Citigroup has joined the ranks of those with trading troubles, as a high-ranking official told the Deutsche Bank 2014 Global Financial Services Investor Conference Tuesday that adjusted trading revenue probably will decline 20 percent to 25 percent in the second quarter on an annualized basis.



"People are uncertain," Chief Financial Officer John Gerspach said of investor behavior, according to an account from the Wall Street Journal. "There just isn't a lot of movement."



In recent weeks, officials at JPMorgan Chase and Barclays also both reported likely drops in trading revenue. JPMorgan said it expected a decline of 20 percent of the quarter, while Barclays anticipates a 41 percent drop, prompting it to announce mass layoffs that will pare 19,000 jobs by the end of 2016.

http://www.zerohedge.com/news/2014-05-30/has-next-recession-already-begun-americas-middle-class

So we had negative growth in the 1st quarter and more lay-offs are taking place in the 2nd quarter while retail sales have tanked and the big banks, despite endless bail-outs, are still in deep trouble.

Real estate sales are still robust if you're rich. High end real estate is selling well but for normal people in the lower and middle brackets, there's not much going on.

In short, the indications are that 2nd quarter economic activity is declining even from the 1st quarter lows. It looks like the recession will soon be official. Not good news for all those Democrats seeking political office, but even worse news for the American people.

Do you mean to suggest that the previous recession ended?

Oh right, there's a Democrat in the White House now. We probably shouldn't acknowledge that there was a previous recession. Nevermind. Carry on.

 

[boneyard bill]

The straws that gloomsayers grasp in order to prop up their paroxysms of sadistic joy are truly weak. Drawing parallels between the situation today and the 1930s while ignoring the substantially significant differences and expecting anyone to take it seriously is an YEC-like suspension of reason.

Floating exchange rates, a lees commodity based (i.e volatile) structured economy, and a more interventionist willingness to deal with downturns are but a few reasons such comparisons are unconvincing.

All of the reasons given above are why we should be MORE concerned than in 1929. We have floating rates because we were FORCED off the gold standard not because we chose to discard it. So our money was much sounder then than now. We also have a very favorable balance of trade then whereas now, that balance is abysmally negative. We need MORE commodity-based currency now than we have. Especially we need more agriculture. Food prices are moving up and expected to higher while the number of farmers continues to decline. And it certainly isn't a good thing that we have to import most of our raw materials and a good deal of our energy today when we didn't have to in 1929. Meanwhile, our greater willingness to intervene is the scariest part of all. It's not that we didn't intervene in the 1930's. Hoover intervened a lot and FDR even more and there is no indication that any of those interventions did any good, and a good deal of evidence that they did quite a lot of harm. The fact that today we have a Fed that is even more willing to take "unconventional measures" that they grabbed out of a hat in hopes that it will somehow "stimulate" the economy is hardly re-assuring. The Japanese have been doing pretty much those same things for decades now and have remained in recession almost the entire time. But at least the Japanese people have a high savings rate which means that there is someone out there to buy Japanese debt. Unfortunately there doesn't seem to be anyone left who wants to buy US debt.

Your arguments would be stronger if they were based on reality. There are still active markets for US debt. The gold standard inhibited the US during the depression. The US voluntarily went off the gold standard. The US economy is not nearly as regulated as the Japanese economy. So your analysis is a pastiche of half-truths and hysteria much more consistent with your "sky is falling" hyperbole than actual events.

Who is buying US debt? Yes, the Chinese and Japanese are stilling rolling over old debt, but who is buy new debt besides the Federal Reserve and a mysterious Belgian buyer? The gold standard inhibited us from creating inflation, but inflation did nothing to get us out of the depression. We were never faced with a possible currency crisis during the depression. We are now. We voluntarily left the full gold standard during the depression but remained on the gold standard for international trade. We were FORCED to abandon gold and accept floating rates 1971. I made no mention of Japanese regulation so what I said still stands in its entirety.

 

[boneyard bill]

China’s commodity backed financing issues sounds eerily like the US subprime CDO fiasco, with now the second Chinese company seeking for the metals they think they have warehoused. It is probably at least smaller than what blew up in the US, but their economy is also just over half as large. Nothing like borrowing multiple times against the same asset. Just how big and deep is this rabbit hole, seems to be the question. And of course Citigroup is involved.

This kind of crap concerns me more than the current economic issues within the US…
http://online.wsj.com/articles/bank...0001424052702304315504579613852120322562.html


http://systemicriskandsystematicvalue.blogspot.com/2013/05/chinas-commodity-financing-deals.html

"Our best estimate suggests that roughly 10% of China’s short-term FX lending could have been associated with CCFDs since the beginning of 2012. In April 2013, we estimate that CCFDs accounted for USD35-40 bn of China’s total short-term FX lending. More broadly, Chinese bonded inventories and short-term FX lending has been positively correlated in recent years "

China also appears to be faced with a serious real estate bubble. The Euro is also in serious trouble, and the pound may be even worse. Then there's Japan which has now been in recession for decades. There seems to be little question that the global economy is really in serious trouble and the only question is when and where the crisis might arise. The commodity-based countries like Russia, Brazil, Australia and Canada may be a bit better if only by comparison.

 

[laughing dog]

Who is buying US debt? Yes, the Chinese and Japanese are stilling rolling over old debt, but who is buy new debt besides the Federal Reserve and a mysterious Belgian buyer?

Last year, the US gov't issued less new debt than it had in the previous six years. The primary buyer was the Fed, followed by Japan (http://www.nytimes.com/2014/02/22/business/economy/no-surprise-fed-was-biggest-buyer-of-treasuries-in-2013.html?_r=0)

The gold standard inhibited us from creating inflation, but inflation did nothing to get us out of the depression.

No one claimed inflation did get us out of the recession.

We were never faced with a possible currency crisis during the depression. We are now. We voluntarily left the full gold standard during the depression but remained on the gold standard for international trade.

We left the gold standard in order to avoid a currency crisis.

We were FORCED to abandon gold and accept floating rates 1971.

Please show who forced us to abandon the gold standard. Nixon chose to leave it (and made the right decision).

I made no mention of Japanese regulation so what I said still stands in its entirety.

I agree. What you said is wrong in its entirety because you made a false analogy: the US economy cannot be compared with the Japanese economy for a variety reasons, including the fact that the Japanese economy is more rigid due to regulation than the US economy.

 

[boneyard bill]

Last year, the US gov't issued less new debt than it had in the previous six years. The primary buyer was the Fed, followed by Japan (http://www.nytimes.com/2014/02/22/business/economy/no-surprise-fed-was-biggest-buyer-of-treasuries-in-2013.html?_r=0)

The gold standard inhibited us from creating inflation, but inflation did nothing to get us out of the depression.

No one claimed inflation did get us out of the recession.

We were never faced with a possible currency crisis during the depression. We are now. We voluntarily left the full gold standard during the depression but remained on the gold standard for international trade.

We left the gold standard in order to avoid a currency crisis.

We were FORCED to abandon gold and accept floating rates 1971.

Please show who forced us to abandon the gold standard. Nixon chose to leave it (and made the right decision).

I made no mention of Japanese regulation so what I said still stands in its entirety.

I agree. What you said is wrong in its entirety because you made a false analogy: the US economy cannot be compared with the Japanese economy for a variety reasons, including the fact that the Japanese economy is more rigid due to regulation than the US economy.

Regarding point one, you have simply confirmed my claim. Japanese and Chinese purchases of new debt were negligible. Just barely enough to roll over the old debt. There is a mysterious buyer of US debt this year out of Belgium, but it's way too much to be any Belgian investor. Some people suspect that the true source of those purchases is the Fed which wants to announce a taper without actually tapering.

Point two: What other inhibitions did abandoning the gold standard do for us in the GD if not to allow inflation? So what's the point of your point if it isn't that?

Point three: How did abandoning the gold standard avoid a currency crisis when we didn't abandon the gold standard with respect to other currencies? Even if you assume that the devaluation helped, it wasn't necessary to abandon the gold standard to devalue.

Point four: Nixon didn't abandon the gold standard immediately. He devalued. First he raised the price of gold to $38 and ounce and then to $42 an ounce. But that didn't stop the run on gold. So he let rates float with the intent to fix the price where gold leveled off, but it never leveled off. So he was forced to abandon the gold standard and, in 1973, he cut the deal with Saudi Arabia to create the petro-dollar.

Point five: Your claim is totally non-germane. I said that Japan is not an exact parallel because they are able to finance their debt domestically. Your point is gratuitous and irrelevant. They also drink tea in Japan. So what?