Re: German real wages in the Depression\Classical Views

[michael perelman <michael@xxxxxxxxxxxxxxxxx>]

Bankruptcies can theoretically create a long run recovery, but the
bankruptcy process generally sets off a long wave of bankruptcies --
comparable to the way pressure from the cost savings of one bankrupt
airline puts pressure on the next.



The last two major recoveries came neither from volunteerism more from
an automatic stabilizer.  The depression of the late 19th century ended
by corporate consolidations, which reduced downward price pressure.  The
gold discoveries, which the monetarists credited with the recovery, may
have contributed a bit of a speculative bounce to the recovery.



The New Deal by itself did not seem to conquer the Great Depression --
although I realize that he did not have a real fiscal effect.  Military
spending seems more important.



I believe that because economists are inclined to think about automatic
processes little thought has been given to the consideration of
recoveries from major depressions.  The small sample that we have makes
progress even more difficult.


--

Michael Perelman
Economics Department
California State University
michael at ecst.csuchico.edu
Chico, CA 95929
530-898-5321
fax 530-898-5901