Not only did the capital goods industries boom, investment activity in the finance sector exploded and speculation became rampant. Employment in this sector grew from 100,000 in 1914 to about 380,000 in 1923. By 1923 productive capacity had increased significantly compared with 1913. However, productivity fell, the production of consumer goods plunged and there was a massive drop in living standards. What Australia is going through now is only a mini-version of the Weimar tragedy.
Recession is now on the lips of every commentator.
For most of them it is only a question of how long it will be and how deep. And yet just 18 months ago I warned of an impending depression starting in late 1989 or early 1990. Twelve months ago, in a newsletter, I repeated my warning, and shortly before the general election I wrote in the Western Independent why we would have a depression. The Government has already savagely applied the monetary brakes, the country s cash base is falling in real terms, credit expansion has now collapsed from nearly 30 per cent annually to 10 per cent. This is a sudden and severe monetary squeeze that can have only one result.