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Epic Recession explains the origins and future direction of the current economic crisis, and the relationships between the banking system's breakdown and the economy in general. Jack Rasmus describes how Epic Recession is highly resistant to traditional fiscal and monetary policy solutions and requires major structural changes in the economy in order to check and contain. The book analyzes in depth the origins and causes of Epic Recession—revealing its roots in corporate and government policies and fundamental structural changes in U.S. capitalist economy since the early 1980s. Epic Recession explains how the current economic crisis is similar to, and simultaneously different from, both the Great Depression of 1929-1934 and post-1945 recessions in the U.S. It categorizes Epic Recessions in two dominant forms: ‘Type I’ and ‘Type II’: The former similar to events of 1907-1914; the latter to events of 1929-1931. Rasmus argues today’s current crisis is evolving into a ‘Type I’, but has the potential for transforming into a ‘Type II’ and that 2011-2013 will be a critical period for determining which type will prevail.
Epic Recession further provides a detailed critique of both George W. Bush and Obama administration recovery programs, in both their monetary and fiscal dimensions, and assesses why they have fared poorly thus far in resolving the crisis. The book concludes by presenting a full, thorough alternative program necessary for recovery.
Introduction: Epic Recession-Past, Present, and Prologue 1
Part 1 Theory
1 Quantitative Characteristics of Epic Recession 23
2 Qualitative Characteristics of Epic Recession 49
3 The Dynamics of Epic Recesion 86
Part 2 History
4 U.S. Depressions in the Nineteenth Century 125
5 'Type I' Epic Recession: 1907-14 145
6 'Type II' Epic Recession: 1929-31 164
Part 3 Epic Recession, 2007-10
7 The Epic Recession of 2007-10 201
8 The Bush-Obama Recovery Programs 245
9 An Alternative Program for Economic Recovery 284
Glossary of Key Terms 315
Jack Rasmus has produced a most remarkable study of the USA’s recessions. He points out, “the data show clearly that the largest contributor to the excess debt accumulation in the U.S. economy has been neither the consumer nor the government; it has been the business sector, in particular the financial business segment of the economy.” Total US debt was $50.6 trillion in 2008. Business debt (financial and non-financial) was $30.6 trillion, government (federal, state and local) $8.6 trillion, mortgage debt $8 trillion, and consumer debt $2.5 trillion. As he observes, “the business-finance sector borrowing and debt accumulation is attributable largely to speculative investing.” Speculative investment has grown at the expense of real, physical-asset, investment that creates jobs. The US Fed, US military and aid spending, and tax policies favouring the rich, have created $20-40 trillion excess money, which means more credit, which means more debt. Its financial instruments create money, credit, loans, debt, liquidity and therefore more speculative investment. Rasmus explains, “In terms of federal government, debt accumulation has been the consequence of chronic government budget deficits. Those deficits in turn are the result of three developments: first, a three-decades-long restructuring of the tax system in which repeated tax cuts reduced wealthy investors’ and corporations’ tax contributions; second, by chronic war spending; and, third, increasingly in recent decades by the growing cost of the bailout of banks, financial institutions, and other businesses that has followed the financial crises that have occurred since the 1980s.” So government debt is not due to its spending on health care, education or welfare. There is too much debt and too little income (because too little production). The US working class’s real earnings were lower in 2007 than they were in 1982. Increased debts are not due to a cultural shift (an idealist explanation), but because people had to borrow to maintain their living standards. Rasmus asserts that recovery needs “ a massive dose of government spending in the short run and major structural changes in the economy in the longer run that restore a more equitable distribution of income.” He proposes, “an immediate, additional injection of fiscal spending equal to approximately 16 per cent of GDP, or $2.5 trillion, with a primary focus on job creation ... a subsequent permanent increase of the government’s share of annual GDP, with the government assuming new roles in initiating necessary infrastructure and technology investment. That government share of annual GDP should rise from its post-1945 historical average of 20 percent of GDP to the 30-35 percent range … a nationalization of the residential mortgage and small business property markets, followed by consumer credit markets in general … implementing policies that establish a more equitable long-run distribution of income … and restore the predominance of investment in real assets that create jobs …” He also advocates a public health care service, a reformed pensions scheme, and de-privatizing the student loan market. Tax reforms should include repatriating tax haven assets, rolling back tax cuts on capital gains, and creating a separate utility banking sector.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.