During the 1929-1932 Great Depression, U.S. citizens knew that banks had closed, jobs were scarce, and that the overall economy had been shaken to the core. But it's unlikely that many people knew that the crushing deflation accompanying the economic nightmare had begun in Europe.
With that in mind, consider what is happening in Europe now: a series of bailouts, smoke-and-mirror debt buying agreements -- Eurozone debt is already contracting.
The deflationary trend in Europe has far more to go. A columnist for the Dow Jones & Company's Marketwatch put it this way:
Austerity has failed to bring public finances and debt under control. Increases in taxes and cuts in government spending have led to sharp contractions in economic activity, reducing government revenues and increasing welfare and support payments as unemployment rates increase. Budget deficits, while smaller, persist and debt levels continue to rise. .... For Europe, it is now a case of NWO (no way out), as without strong growth (which is unlikely) its debt problems may prove intractable.
- WSJ's Marketwatch, September 24
Should Americans pay heed to the lesson of Europe's advance deflation warning in the 1930s? Or will the Fed's seemingly endless willingness to print money create hyperinflation? News travels much faster than it did in the early 1930s. Still, it's likely that most Americans will be caught off guard by the magnitude of the next financial crisis.
Read the entire MarketWatch article here.