Statistically, how does America's current state compare to right before the Great Depression?

statistical comparison of now and great depression

The differences between 1929 and today are so far apart in social circumstance, that a true comparison is nearly impossible. Banking was vastly different, requiring that all loans be backed by equal, or nearly equal deposits. Today, the ratio is closer to 1 to 5, although the Federal Reserve may change the requirement, when too much cash signals impending inflation.

Back then, banks could not leverage substantially. The gold standard held that every dollar printed by the treasury be backed by an equal amount of gold deposits.There were very different attitudes about interest and lending practices. Banks held the key to most, .if not all lending. Personal debt was frowned upon in a frugal society. Savings accounts were common in almost every family. Remarkably, by today's standards, banks, or their board of directors, held usurious interest rates in very low regard. Then, a loan might cost 4-7 percent. Compare that with the proliferation of debt at levels exceeding 40% and more. When coupled with so-called late charges and the amount of collective debt, It is not unusual for the debtor to be unable to pay down debt, but continue on a treadmill of lifelong payments, where furniture is worn out, cars towed to the junkyard, and home loans are never paid. In this climate, in what must be the height of irony, the lenders pushed through recent legislation to make it more difficult for debtors to file for bankruptcy!.

In rural 1929, where crops fed large families and the farm carried a mortgage, the family home was usually built and paid for and the well dug before the family moved in. Debt accumulated for purchase of seeds, fertilizer, farm implements, and farm animals. Families ate out of the garden. Often clothes were homemade and the winter provided game for the table. What little cash that was needed came from selling milk or produce from the garden. Canning was common and people came from the city to buy fruit pies, freshly baked bread, and canned peaches, pears, and jam. For a time some farmers resorted to making moonshine whiskey, despite hounding by "revenooers" from federal, state, and local government seeking the lost taxes from the illegal drink.

There was no welfare or social security. Pensions were not common. There was little travel or time for vacations. Families stayed on the farm, married, lived and died there.

The government had not yet in place regulations that curbed monopolies, regulated banking and furnished insurance for depositors. The stock market was hailed as the model for American liaises fa-ire capitalism. Unions were mostly seen as a curse by management and worker alike, so that wages remained incredibly low, assuring that workers would be further bound to slaveholder type working conditions by the company store and company owned housing. Consider that workers then worked 12 hour days with Sunday off. Coal miners, for example, were forced to work underground where cave-ins were common, unexpected flooding and rail cars silently smashed a miner to pieces. Whole families were lost in cave ins. Miners acquired black lung disease from omnipresente coal dust, unexpected falling coal chunks might fracture and maim indiscriminately, and did. Arthritis, from standing for hours in pools of icy cold water, while digging with pick and shovel was not unusual. There was little, if any compensation. Coal operators faced with dwindling coal abandoned the mine(as well as the workers)left the hole, the tailing's, and even underground fires and moved out.

The losses of 1929 were catastrophic because there were no safety nets. Little could bed done about unregulated banking, where money simply vanished overnight from the vaults, leaving millions penniless. There was no unemployment insurance. Unemployment hit 30% in some areas of the country. The stock market was like a huge slot machine, punishing speculators and the innocent equally, as a billions of dollars vanished overnight.

Today, the market has been in a bear market, heading steadily down, taking a trillion dollars out of the economy. No one is jumping out of windows. Unemployment has inched up to around 7 percent. The rich, thanks to generous tax cuts, have barely registered a blink. The poorer worker received a "stimulus" payment, with new talk of further stimulus checks to keep the economy from dipping to low. The Federal Reserve stands by to quickly raise interest rates if the economy heats too rapidly, thereby feeding inflation. (inflation was getting a bit high there. The government simply stopped keeping track of housing and fuel inflationary numbers).

Selective deregulation has seen a marked increase in scandals such as Enron and Worldcom, the Savings and Loan scandal, the banking and mortgage scandal, and the billions funneled illegally to overthrow governments of other countries. The ethanol scandal has yet to play out, where it takes more energy to produce a fuel extracted from food and is causing prices for commodities to give speculators billions. Oil companies are given billions so they will drill for more oil, but they don't. They rake in more billions in profits without taking the risk. of drilling. Even as the minutes tick off the allotted time to repair the planet, a churlish government sits on a bill to continue tax credits for wind energy.

The change in the way government, business, including the way financial institutions view its clients has changed enormously. How many customers give up trying to get through to a recording that doesn't understand all of the consumer needs anyway? Even as the little guy is expected to bail out the banks, the mortgage company, and the government, when they screw up, they seem to be moving to a more remote position, where the customer is viewed as a sort of barrier to their "doing business." A customer has a complaint but cannot get through. She waits for 45 minutes. Often the call is not paid by the company but by the consumer. This, of course, is one very important way to keep reportable complaints down, such as the telephone company to the FCC.

From this you can draw your own conclusions. My grandfather spent 40 years undergound digging coal. naturally this report is biased. But I have seen the best and worst in government, military, business and finance. I shouldn't leave out academia, with its own culture, rules, and bickering.

Our system of government remains the best of anything ever devised by man. It is always a work in progress, perhaps two steps forward and one back. The last hundred years have brought truly miraculous change in working conditions, inventions, travel, and prosperity. Now, as always , angels walk with truly evil men

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ParadigmShift... profile image

ParadigmShift... 8 years ago from San Jose, CA

nice. thanks for the response. So, would you say we are better off or worse off, statistically, than in 1929?? I ask this because I know, as anyone else who's done any kind of research and reading, that we are heading into recession, at least. But there is also speculation that we could go into a depression, because of the downward spiral we're in, as well as how much money exists in the world electronically or "on paper" vs. actual cash dollars. How high is the price of gold stock these days? And is there actual gold to back that stock up? I wonder...


Jordan Riley profile image

Jordan Riley 5 years ago

Fruitful hub that you have made.

Can’t wait to see your new hubs

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