Monday, October 19, 2009

The Future is Always Unpredictable

This article is an important reminder that the future is always unpredictable – even the “experts” don’t know how things will go.

“The only way to break the economic deadlock brought on by the Depression was to shock it back to life,” said Mr. Brinkley, who then added that for all of Roosevelt’s willingness to experiment and spend, the reason the Depression lasted so long was that the president didn’t spend enough.

That, of course, is what most people believe today — and that dogma is the reason the government last year threw literally trillions of dollars at the banking system to keep it from collapsing.

Mr. Roth’s diaries have no narrative. But they are compelling reading nonetheless, because they force readers to reflect on both the similarities and the differences between then and now. What particularly struck me was watching Mr. Roth, in his diaries, grope from day to day, and year to year, searching for an answer that wouldn’t be clear until long afterward. He’s like the proverbial blind man who feels an elephant’s trunk and thinks elephants look like a rope. Not unlike the way we are today, as we grope our way through our own financial crisis.

Mr. Roth’s inflation fears are one good example. A rock-ribbed Republican, he can’t understand why Roosevelt’s New Deal programs — and the spending they require — don’t bring with them the kind of scary inflation that had occurred in Germany after World War I. He keeps waiting for it, predicting it, ever fearful that it will make an awful economic situation even worse. He is baffled that inflation remained subdued. He can’t get outside of his mental framework and see — as we can today — that Roosevelt’s programs are the only things keeping the economy alive.

But an even more wrenching example of his groping in the dark is his desperate wish for the Depression to end. His diaries are filled with tentative predictions, usually based on experts’ opinions, that the worst is over. Yet every time he thinks that, he turns out to be wrong. He begins studying the charts of previous Depressions to see how long they lasted. “I have done considerable reading about the depressions of 1837 and 1873 and I am struck by the similarity to the present crisis,” he writes in early 1933. “If history repeats itself then we still have 2 or 3 years of bad times ahead.”