What are the similarities and differences between the events leading to the great depression and the recession we are...
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This Hub Is a Response to a Request from Sir Dent
Sir Dent asked, " What are the similarities and differences between the events leading up to the Great Depression and the recession we are currently experiencing?"
That's a great question. I have opinions and thoughts about it, but I think it's important to note that some of the most brilliant economists in the world aren't sure right now what is going to happen next. That's how messed up things are today, March 4, 2009. So the odds of me getting it exactly right are probably not too good. Still, I'm flattered to be asked so I'll try my best to answer.
The second thing I want to mention before answering the request is that the Great Depression was such a big part of the lives of our grandparents (and for some of us, our great-grandparents) that I feel kind of inadequate to address it. I didn't live through the Great Depression. Most of us didn't. My grandparents did, and my grandmother had lots of stories that she told me, over and over, about what it was like and how she and her family survived it.
One story I remember her telling was of walking five miles once a week with a child's red wagon to a site where 20# bags of potatoes were being given away to hungry people, and how there were many weeks when that what was all that her family ate all week long: potatoes. She also talked often of her favorite Depression era supper, which consisted of crumbled soda crackers with milk. (She lived on a farm in Michigan, so they did have milk and the vegetables they grew on their own.) Even in her 80s she enjoyed soda crackers with milk--something I would probably never think of eating unless I was very hungry.
My grandmother also talked about buying margarine when it was available (not all foods were available every day or even every week), and coloring it with a separate tube of yellow food coloring that always came attached to what was essentially a chunk of white grease. Lard was used more often than margarine because it was more available, and for their entire lives my grandmother and my mother had an ongoing battle over whether lard or Crisco made better piecrust. (We kept the battle going to keep the pie coming.)
There's nothing bad about lots of pie, no matter what the crust is made out of.
Anyway, since most of us can't relate (yet) to eating soda crackers for dinner or to eating potatoes all week and not much else, I do think that so far, the current recession has not hit the depths of poverty and hardship that were ushered in by the Great Depression. But I think we could get there.
Scholars and Others Are Still Arguing
Scholars and other people with strong opinions, ideologies, or sometimes just axes they never stop grinding are still arguing about what caused the Great Depression. The most likely explanation from what I have read about it is that it was caused by a variety of unfortunate factors that occured simultaneously, sending the world (and the U.S. with it) into what is known in economics as a deflationary spiral.
A deflationary spiral is a situtation in which everything a society produces suddenly begins to lose more and more value, causing a massive loss of wealth, decreased spending, and huge unemployment numbers. Here is what Wikipedia has to say about the cause of the Depression and deflation:
The Great Depression was triggered by a sudden, total collapse in the stock market. The stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30 percent below the peak of September 1929. Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year. But consumers, many of whom had suffered severe losses in the stock market the previous year, cut back their expenditures by ten percent, and a severe drought ravaged the agricultural heartland of the USA beginning in the summer of 1930.
In early 1930, credit was ample and available at low rates, but people were reluctant to add new debt by borrowing.By May 1930, auto sales had declined to below the levels of 1928. Prices in general began to decline, but wages held steady in 1930, then began to drop in 1931. Conditions were worse in farming areas, where commodity prices plunged, and in mining and logging areas, where unemployment was high and there were few other jobs. The decline in the US economy was the factor that pulled down most other countries at first, then internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot-Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade. By late in 1930, a steady decline set in which reached bottom by March 1933.
Reading those two paragraphs, it is easy to see parallels to our current economic crisis: the downward pressure on home values (deflation), plummeting auto sales, rising unemployment, consumers pulling in and not spending, and a move towards protectionism in trade policies that is already alarming much of Europe. So it is possible to draw some strong parallels.
One Depression era parallel missing in the U.S. today is a second natural disaster which makes the economic one even worse. Many scholars believe that the Great Depression would not have been as bad without the Dust Bowl disaster of the 1930s. The Dust Bowl was causing by poor farming practices which caused such bad wind erosion that huge tracts of farm land were rendered uninhabitable for years. It displaced thousands of people. However, the current mortgage and foreclosure crisis looks like it could match the Dustbowl for population displacement before this mess is all over, and also, because this mess isn't all over yet, the possibility of a Dust Bowl-like event (another Katrina? a terrorist attack?) could still push us over the edge.
During the Great Depression unemployment reached 25% and it was common for men to travel the country looking for work. Right now, while there is a lot of controversy about what the unemployment rate actually is, almost no one thinks it has reached Depression era levels. Depending on who you want to listen to and where you live, right now unemployment in the U.S. is somewhere between 7.9% and 14%. So we haven't hit Depression levels by a longshot.
On the other hand, the stock market bubble that preceded the (still) collapsing stock market in today's recession is bigger than anything anyone has ever seen in modern history. One economist likened the realization of what the world is currently facing to the scene in the movie Jaws when Richard Dreyfus first sees the shark and runs in and says to the captain, "You're going to need a bigger boat."
Judging from the level of denial most Americans seem to be in at the moment, I'd say we're still at the "You're going to need a bigger boat," part of this movie. If you've ever seen the movie Jaws, you know what happened to the boat. On the up side, Richard Dreyfus's character does survive in that movie. Barely.
So, in answer to your question, the current recession has all the parallels in place (to the Great Depression) except a disaster of major proportions that makes it all worse (for example, the Dust Bowl), and except for the fact that the current stock market crash is in some respects much, much bigger and much more dire than the Crash of '29. The current crash is happening over a longer period than the Crash of 1929, which literally happened overnight, but it also seems to be accelerating as time goes on. At this point, it looks very bad.
Finally, although people are still arguing over whether the New Deal saved or hurt us (my own family had this same argument every single Thanksgiving), my own view in reading the history of the Great Depression is that World War II saved us--The New Deal kept people from total despair, but what saved us was industrial activity sparked by WWII.
What happened was, Roosevelt didn't want to go to war and the American public was against it, but Britain needed weapons badly and couldn't afford or build them. So the U.S. started a massive push to build arms for Britain because we did have the manufacturing infrastructure and the unemployed people available to work. We leased the arms we built to the UK, which helped to win the war, and had the fortunate side effect of pulling our nation out of the worst economic downturn in history.
Today we have almost no manufacturing infrastructure; most of it has been shipped overseas through the twin processes of globalization and corporatization. And the last thing we want to do in the world as it is today is go to war, again. So what will happen to pull us back from disaster this time?
Wow, I don't know, but if you want my opinion, I think we need a bigger boat.
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Comments
Wow. And ouch. This is (strangely) a fascinating read, Pgr: I can't help feeling it must be like watching a tidal wave approaching and being rooted to the spot, mouth open. Your descriptions and analysis are clear and concise. As always, an excellent hub. Thank you for this explanation.
Very good article and it sounds alarmingly close to a depression. Were you aware that Bush, before leaving office, rewrote the legalities for Marshall Law? He sat it up so the president can impose Marshall Law without the consent of congress or their knowledge. He also left a loophole that allows “whatever” as a reason to impose it.
Marshall law or Martial law? The second might be very alarming, especially if it's manned by some of the gun-happy 2nd Ammendment folks who have been posting on one of the forums here on HubPages. . .
Hi robert & teresa,
I was just answering Sir Dent's request of me--I don't pretend to know what is going to happen. I would be so great if Obama really could turn this around, even if it took five or six years. It's a big mess and nobody is going to be able to fix it instantly.
I have concerns though that aren't being addressed (yet!) by the Obama administration, the biggest one being that the root of the problem--the mortgage-backed structured investment vehicles on the books of major banks and the downward pressure on housing prices--that isn't being addressed at all. For all the money that has flown out the door, those issues have not been touched. Housing prices, it seems to me, have to continue to fall--they were so insanely high during the bubble that a full correction has to happen, so all this hysteria about "where's the bottom! stop the fall in home values!" How? They have to find their own bottom, and they don't seem to be there yet.
The SIVs on the bank books--that is still a disaster and that hasn't been touched. First we got Paulson saying the government would buy them up with the first $700 billion kind of like they did with the S&L crisis. Didn't happen. Then Geithner said, umm, uh, I'm working on it but it'll be more like private capital will buy them and the government will hold them, but we're uh, working on it. That hasn't happened either. Meanwhile AIG and Citi just got billions more, and still the root of the problem is untouched. What nonsense. Have FDIC seize the failed banks, break down the big ones, and get them back in private hands now, let the losses fall where they fall. All this "too big to fail" business is starting to look like a flimsy cover for a bunch of looting rich people.
that was a good article...I like you personalizing it by adding stories about your family...because it didn't just effect a nation, it effected individuals...just like it is doing today. both my husband and I are unemployed (since July) and I see the changes it has made in both of us...besides the fact that it put our house (that we raised 8 kids in ) into foreclosure. As I sit and watch the news all day with my husband I think about other families that are probably in this same state of limbo....
Hi EnLydia,
Thank you for your kind comments. I'm very sorry about your house. I read a weird thing today--Banks are starting to refuse to complete the foreclosure process on some of the homes they take back. If they foreclose and the home doesn't sell at sheriff's auction the first time around, banks have started walking away and leaving the home deeded to the owner that defaulted. Here's a link about it:
http://www.npr.org/templates/story/story.php?story
My grandmother had so many Depression stories--and recipes too! Thanks to her I know how to make food out of, I don't know, sawdust and powdered eggs. Might come in handy.
This is indeed a well written article. I asked the question of you because I wanted a good answer. I have read your hubs on the banking system and things of that nature.
I love your perspective on things. Great job of writing.
Thank you Sir Dent. I am really honored that you would think that way about me. I enjoyed writing this and I appreciate that you thought enough of me to ask. Let's hope things go better than any of us imagine!
This time is eerrily similar to the depression. We started removing regulations in 1970 set in place for banks after the depression so that it would never happen again. Well those regs need to be back and in full force. We humans are a greedy lot.
Hopefully we will wake up and start realizing we are all connected. Thanks for thinking.
A boat big enough to hold 305,941,162 and a life jacket for each. No need for buckets, because no one is going to bail us out, only corporations which I guess have their own boats. Great hub!
Its curious that dispite the "new deal" that people could still starve in the US - you don't have unlimited unemployment benefit to this day do you? You have to lose your assets and your savings in Australia and NZ but after that then you do get a basic few hundred a week from the government so long as you are a registered job seeker and more for kids as well. So no one will starve here - well except for those who don't know how to cook and think mcdonalds is food. I think one huge difference is mobility too. You have those evocative pictures of men (after all only men counted as needing jobs right! ) walking from town to town - but in towns such as Perth where I live I expect the end the end of the mining boom to see a exodus of people out of the state - its just too expensive to live here without a job.
My brother is in Ireland and will loose his job in the next 6 months or so (he'll get paid out its no big deal) - but th reality is that the family needs to get out of ireland within a month of this happening - the money he will get will keep them comofortably in Ireland for one month OR in Australia for 6 months.
If I was desparate and really had to live one what I earn onlilne - I'd be on a 1-way flight to Asia tomorrow - where I could live fine on $500/week - I certainly can't do it here! China has already seen large internal migrations of people back to the country as the city jobs dried up.
zdog--I am all over that! The repeal of the Depression era regulatory safeguards really kicked this meltdown into high gear.
Jerilee, sadly I think you are right. We're on our own, that much is clear. Some of us are better at coping with that than others. Hopefully we will help each other and not go the other way with it.
Lissie--You are earning $500 a week? Wow, I am in awe of you, I'm serious. You must work sun up to sun down. I write for about 5 or 6 hours a day, sometimes less, but I do clear about what I did working half time at the bank--which wasn't anywhere near $500. I am Ok with it, since last year I made about half of what I figure I'll make this year (on the writing), and next year I hope I will double what I make this year. We'll see.
But yeah, the rules for receiving unemployment compensation are fairly strict here, and even when an employer lets you go that employer can dispute your claim when you file and its up to you to appeal it. Sometimes people win sometimes they don't. The bank had an especially nasty reputation for canning people over trumped up reasons and then denying the unemployment claims on the grounds that the employees were let go for cause. Most often the 'cause' was attendance violations--5 days allowed in a year, which sounds like a lot but for people with children it was very tough. Basically they kept that policy in place as a ready excuse to 'cull' their employees regularly and keep a steady supply of 'fresh meat' on the floor.
If unemployment hits Depression era levels there will be hunger, because it will be too tough to get food to market, so things will start to run out, and people won't have money to buy them. It could be scary. I hope it doesn't happen.
Unemployment stats lie. They don't count the under or barely employed or those who are off unemployment and still unemployed. And they are legion! And I doubt there were so many marginalized folks before the depression.
The minutia of what caused these two economic disasters is very interesting in a historical context.
The bottom line is that it was the same class of greedy, callous, self-interested money worshippers that caused that mess and this one.
I really like to keep things simple.
As you have rightly pointed out, there was that little drought problem back then. Well, wait a little while longer. I think we might be able to fill that void with a variety of natural disasters.
The worst part of the story is that most everyone seems to believe the way to solve this problem it to restore the same conditions that caused it so that we can just keep doing the same stupid crap that got us here!
Ya know what? We can only keep putting our hands back in the fire for so long. After a while, someone will have to amputate.
Seems to me I’ve been hearing someone talking about change an awful lot recently.
Has anyone else heard about that?
Sorry pgrundy. This stuff is just really starting to chafe my ass.
as always an awesome hub.
Pam: Sometimes, I almost afraid to read you because I know you write honest hubs, whereas in the media sometimes we can't tell what is fact or fiction, so I try to stay away from the news. I read you because you always inform the reader, and we can choose to do what we want with the information.
Read Lissie's comments, and it true, my nephew who as I have mentioned before, lives in Thailand, earns an American salary as a teacher, and he lives so much better than he ever could while living in NY. He has a beautiful apt on the 30 something floor overlooking the city, with a doorman, a huge balcony that has a hot tub, which would cost at least $2,000 a month in NY or more; He pays about the equivalent of $400, and earns basically the same salary he would have in NY. So, yes, moving overseas could be an option for some, should the economy get worse. By now you guys know me and I have hopes, it won't because its in my nature to hope for the best, but... I am not one with blinders on either. :)
As usual, high quality hub!
hot dorkage--I agree. I think unemployment is much worse than the official figure because of everything you mention. I'm in the same group you are. If there was a job out there that paid a living wage was wasn't abusively structured I'd take it in a heartbeat, but there is nothing here, and I mean NOTHING, and it's been building to this level of nothing for at least 15 years. Very scary.
CWB--That's OK, stuff is kinda getting to me too. I think a person would have to be comatose not to be upset and angry right now.
TKIMWRSVC--Thanks!
VioletSun--I don't mean to be scary! lol! I wrote this because Sir Dent asked me to. Thank you for being brave and reading it. I'll try to be a bit more upbeat in my next couple of hubs. ;o)
Unfortunately Pam you have got it dead right. However there are two events the one is the sub prime crisis and gearing on instruments to leverage debt with no substance and the other is the stock market crunch. The banks are going belly up causing the money supply to dry up (being replaced by the fed and bailout package) causing the dollar to lose value and the recession is causing whole towns to shut up shop because the core industry in the town, supplying the motor industry is no longer viable. The other phenomena which is not well document is the back to nature, move to the country, grow and make your own movement which is gaining currency. This can lead to a reinstatement of an informal barter system (goods for goods) because of the lack of trust in the monetary system.
Hi sixtyorso, Yes it all looks bad, you're right. kerryg has a great hub about what could happen to the suburbs in a good way though--kind of along the lines of your back to nature comment. Here where we live the city just changed the building codes to allow wind generator towers on private property. Not like we can afford one (they run aroung $30K) but it's surely a step in the right direction.
Hi Pam. In my opinion, this article was well-written and largely informative. However, I don't feel as though you stressed enough that war is not the answer. Yes, you mention it briefly at the end, but not before going in depth on how WWII cured The Great Depression. While everything I know about the Great Depression agrees with your assertion that WWII was the cure for the economy, the cost in human life was certainly too great a price to pay. I believe that human life is more precious than money (and I hope you believe so as well). The Wikipedia article on WWII estimates that 60 million people were killed in the conflict. It was certainly one of the greatest tragedies in human history. Also --with the exception of Hiroshima and Nagasaki-- WWII took place before the nuclear age in which we currently live in. A large-scale war in this day and age would most likely be even deadlier! I'm sure you did not intend to propose war as a remedy to the current recession, but I believe the overall tone of your article suggests otherwise. Please remember that the USA was mired in a recession in the beginning of George W. Bush's tenure. The Second Iraq War proved to be a short term solution for our financial woes; yet we are in an even worse recession now, and most people view the Iraq war as a mistake.
Thats a very well written article in a very interesting manner, considering such economic subjects get very academic and dry.
i my self have my views on recession and in the process of expanding them. each recession comes for correction of the past excesses but in the process it makes massive erosion in the investor and consumer confidence.
It is the process of rekindling that confidence and triggering economic chain of activity, once again that throws up ecconomists like John Mynard keynes, in a generation.
regds
G.P. Tripathi
Thank you for both of your comments. I appreciate you taking the time to leave your thoughts here.
On the subject of WWII, I didn't intend to suggest that world wars are a good thing, I was just stating what looks to me to be the truth, which is that the industrial activity that came with the U.S. alliance with Britain was what revitalized the economy, not so much the New Deal. Certainly getting involved in war is not a good economic strategy. I guess I just assumed most people already 'get' that. In no way do I mean to suggest that war is cool, war is great, jobs for everyone, whoo ha, let's go. You are exactly right in what you say.
Confidence--yes, that's a terrible problem, and so much of the lack of confidence on the part of consumers and investors right now is warranted. It's hard to restore confidence when the erosion of confidence is based on some reality. It will be interesting to see how this gets better. Scary times.
Thanks for your insights. All valid seems to me. There are some major differences between the two points in time. We are in somewhat uncharted waters. The lack of manufacturing in this country was a slow drain and I do believe those chickens are now coming home to roost. Great hub as always.
Fascinating insights on what it was like in the depression era from your grandmother. I imagine she was one very tough and resourceful lady.
As for the movie Jaws, one correction:
Your text - "Richard Dreyfus's character does survive in that movie. Barely..."
It was actually Roy Snyder's character that survived. Dreyfus was chomped in half by the shark prior to ol' Roy shooting the oxygen tank and blowing up the great mean white shark.
-TRiG
War on any scale is not worth it. We have been engaged in a cycle of violence during which wars have helped the economy short term, but have been unable to prevent fututre recessions.
OMG TRG you are so right! I guess that is why you are the Total Review Guy! I will have to get back in there and correct that--or maybe not. Maybe it was a Freudian slip! Oh no! :(
PGrundy, I've reread this hub for the second time now. It deals with important issues, and it is well worth the read, but I also found it confusing. You write so well that it flowed and that made it hard for me to find what it was that confused me right away. The first time I read it, I had a general feeling of "it does not compute" but couldn't have said for sure what my problem was. On the second reading, there are two specific things that confuse me:
(1) If your grandmother lived on a farm, and they grew their own vegetables and had their own milk source, why did she have to go fetch potatoes that were handed out for free? (Potatoes are just starchy, empty calories. -- Didn't the caloric value of the food grown on the farm equal and exceed that of the free potatoes?)
And, come to think of it, where did these free potatoes come from? Who grew them? Were they compensated for them at true market value?
Why were soda crackers such a prized food? They have hardly any nutritional value. Is it because they were a store-bought item?
It sounds as if your grandmother might have had very nutritional food available to her, but she was craving empty calories. Of course, if someone is starving, any calorie will do. But was she starving? Was she underweight?
Why couldn't they make their own butter, if they had a cow? Why did they need margarine?
(2)The other point of confusion is more theoretical. You write:
"A deflationary spiral is a situation in which everything a society produces suddenly begins to lose more and more value, causing a massive loss of wealth."
Value is always a relative matter. When one thing goes down in value, it means that something else goes up. If everything a society produces has gone down in value, it must mean that the currency goes up in value, being able to purchase more and more things. This would not cause a loss of wealth to those people who have currency. Right?
Now, I know how Roosevelt fixed that problem -- he took gold away from every single person who had any. But before he did this, there was not a general loss of wealth. There was a loss of wealth to those who were dependent on wages and on future transactions. There was a gain in wealth to those who had savings in gold and did not keep them in the bank. There should also have been a gain to any person who could sell food on the open market. If potatoes were scarce, people who grew potatoes should have made a killing.
When one commodity goes down, another goes up. That's how the market balances.
Hi Aya,
Sadly, my grandmother is not around to answer those questions, but thinking this through I see the error is mine--I mashed a lot of things together in non-chronological order.
My grandmother was born in 1902, so when the crash hit she would have been married and no longer living on the farm--she'd have been living in South Bend with my grandfather. But I agree with you about the empty calories. As to the free potatoes, I just don't know. My grandmother has been dead for some time now and my folks are long dead too, but I do know the government distributed food during those years. In fact, as recently as the 1970s the U.S. government still handed out surplus cheese and milk and various other products to anyone who wanted them. Of course, that doesn't happen now.
My grandmother was very thin for most of her life, and she did have a sweet tooth. The soda crackers with milk story is one I've heard other elderly people affirm as a 'treat' during that era, although it sounds dreadful to me. I visited her father's farm once when I was very young. He grew mostly soybeans--a cash crop--but he did have some dairy cows and some pigs. I would never characterize my family's dietary habits as healthy. Like lots of Americans during that era, they ate lots of starch, meat, and gravy, and not much in the way of fruit or vegetables unless the vegetables were cooked to death and the fruit was in a pie.
It does raise the question though of why my grandmother couldn't get milk and meat and vegetables from him during the Depression. The house she and my grandfather had in Indiana was only about a 45 minute drive from his farm. I do know my grandmother and her father had a very bad relationship--he drank heavily and cussed all the time and her mother died when she was very young, and she spoke often of how much she hated him. But aside from that, all I have at this point are the stories I remember her telling, and there is no one to ask for clarification on those.
I see though that I had my timeline quite messed up. Thanks for pointing that out.
PGrundy, thanks for clarifying that. I'm sorry that all those involved have passed away and there is no one to ask about the details. This is such valuable information.
I have a friend who is in her eighties who might be able to answer some of these questions. I have a feeling that food prices were somehow affected by government intervention after the crash, but don't have enough facts to substantiate this hunch.
I do know that during WWII there was rationing, and that there was an active black market where rationed foods could be obtained -- for a price. A steeper price than it would have been, if they hadn't been rationed.
Yes, one of the most frustrating things about being the oldest surving immediate family member (at 55 no less!) is that questions come to my mind all the time and there is no one to ask. Some day I would like to write a family history, as much for myself as my grandson--and do some research to answer some of my own questions. One drawback of being third or fourth generation American is that often, family history disappears, and it's such a loss. I don't know that it's all positive, that blank slate thing that happens to so many people here.
I hope you do write that family history. The melting pot doesn't have to imply forgetting what happened or becoming a blank slate. Jerilee Wei has some very interesting hubs about her family's history. I would love to read about yours as well.
Thanks Aya. Maybe now that I am at home I will take that project off the back burner and put it up here in installments.
When you think about the upswing in the USA's economy after the second world war. You have to remember that the industrial infrastructure of all the major countries was devastated. Germany, Japan, the UK, France, Russia, China. The only country that could build complex products, like cars, was the USA.
Also people tend to blame companies for moving factories overseas, the truth is if they can build a better cheaper mouse trap, they should be the ones building it.
My intentions are not to be overly preachy, however I myself feel this is a matter only fixable by the creator of this world. Obviously speaking of God. A scripture that comes to mind is 2 Timothy 3: 1-5 it reads:
But know this, that in the last days critical times hard to deal with will be here. 2 For men will be lovers of themselves, lovers of money, self-assuming, haughty, blasphemers, disobedient to parents, unthankful, disloyal, 3 having no natural affection, not open to any agreement, slanderers, without self-control, fierce, without love of goodness, 4 betrayers, headstrong, puffed up [with pride], lovers of pleasures rather than lovers of God, 5 having a form of godly devotion but proving false to its power; and from these turn away
Also another good one is Matthew 24:7 which reads:
7
There are so many scriptures in the bible that God has provided us with to help us get through these last days as well and to actually have joy through the pain and suffering going on in the world around us. His promised life of an eternal life on a paradise earth is something that keeps me going each day and happy as well as healthy to have a relationship with him.
It also helps me to breath because I know that the burden of the world is not heavy upon man to fix. There is so much more in the Bible to comfort man during these times, I could go on and on. haha.
Again I dont mean to be annoying or preachy I just like to share with some people what helps me and some people may find that it helps them as well. Others do not and I understand that as well because I used to not believe in God or the Bible at all, but have since come to see proof within the scriptures themselves with how this world is spiraling downward for the last century. I think people forget sometimes that our approximate 70 years of life on earth is so miniscule compared to how long life has been here on earth, so to us humans we look at our time with tunnel vision, but from a Godly point of view our time started with the first man and women so it INCLUDES all the World Wars, meaning we are living in the worst times possible since about 1914 on everything has taken place that The Bible foretold and continues to foretell.
Like the Prophecy that is written of "Money being tossed in the streets" or the Prophecy stated in Proverbs (24:21,22) written: With those who are for a change, do not intermeddle. 22 For their disaster will arise so suddenly, that who is aware of the extinction of those who are for a change?
Hey, Theresa.
Just because a person owns a gun and exercises rights guaranteed under the constitution doesn't make my voice any less important than your voice. The world is not coming to an end because I choose to exercies my rights and own a weapon.
This was a good article and exchange of thoughts, but I don't know how putting down law enforcement and individuals that own guns is a plus. "Gun Happy" is a degrading and offensive comment that is based on fear and ignorance.
I have a news flash. I'm not going to be thrown into the Lake of Fire because I own a gun legally. When I'm the person that disarms someone during a robbery and actually knows how the weapon works maybe you'll appreciate the group of people that you call, "Gun Happy."
Gun happy has got to be the most stupid expression I've ever heard. People that own guns legally have respect for firearms. It is the person that pulls the trigger and kills that is bad.
I remember reading an article written by a photographer that witnessed one of the latest shootings at a public mall. The photographer who didn't own a gun stated, "I only wish I didn't have the camera, but I instead had a gun because I could have saved people."
I know if I'm in that situation I'll be pretty happy if someone is at the mall that is licensed to carry a firearm. Security at the mall isn't armed, so they can do very little to protect us.
It doesn't matter if you're a lion or a gazelle. Bad guys don't make distinctions!
Hi Pgurandy,
Well researched article suits to your credentials. Thumbs up! But the main question is how can we come out of it?
Please feel free to view some of my articles about the topic and comment on those.
Jyoti kothari
Excellent article, thanks. I appreciate your sharing the kind of comparisons and insights it'd be so nice to have coming from our national media.
The simple answer to this is that an abundance of credit caused both the Great Depression and our current one. The credit caused businessmen to make mistakes and they weren't sufficiently wary of the possible collapse of things. Much like the housing craze or the tulip bulb craze in years past, people lose their minds when there's that much money and credit floating around.
The problem with the bust is that even industries that weren't involved in the malinvestment, suffer when the banks they need for loans to expand their business go under due to the speculation.
The Great Depression actually had four stages. The first was the credit crunch that presaged the crash. Most people bought stock on margin and used credit to leverage their positions. Since they used credit and not their own money, when the market crashed the credit disappeared. The second was the tariff act. This had the effect of shutting down international trade. The reason was to protect American interests, but what they didn't realize was that people who were once involved in the export trade were now out of a job.
The third stage was price stabilization. This had the effect of putting more companies out of businesses and increased the unemployment rate. Because price was not allowed to fluctuate, profits were lost and companies could no longer stay in business. Not only that, now you had people who couldn't afford basic staples because not only were they unemployed, prices could not lower to the point where those goods would become affordable. This cause businesses to lose more customers, which caused more of them to close.
The final blow came in the late 1930's when the tax rate rose to 97% on the most productive members of society. These were the guys who would, in normal times, invest their wealth in new businesses and create jobs for people. In the 30's however, this was not allowed to happen, the government took it all and used it for their own purposes.
Has the Second World War not erupted, FDR would most likely have been out on his keister and history would have had a much different story to tell about him.
pgrundy: "Housing prices, it seems to me, have to continue to fall--they were so insanely high during the bubble that a full correction has to happen, so all this hysteria about "where's the bottom! stop the fall in home values!" How? They have to find their own bottom, and they don't seem to be there yet."
Couldn't agree more. I think that trying to stop house prices from bottoming out naturally is actually storing up more problems for the future.
pgrundy/ledefensetech: Both your comments about the New Deal are really interesting. We're told in history lessons that it's the policies of the New Deal (price and production controls, increases in public spending, tax increases) that pulled the US economy out of its rut. However, I can't help thinking that maybe the recovery would have been quicker if things had been left to their own devices, and maybe as you (rightly IMO) say, the US government wouldn't have "needed" to enter WWII in order to help its own economy. (Side note: the stuff I've read about the New Deal's Agricultural Adjustment Act is weirdly similar to the European Union's agricultural policies - i.e. subsidies, paying farmers to grow stuff that's never harvested or even paying them to allow fields to lie fallow. It's this sort of heavy subsidisation that allows EU produce to be dumped on Third World countries, with tragic effects on Third World economies. Gordon Brown & his ilk can crow all they like about how much government aid goes to the Third World, but such aid is only a fraction of the income loss caused by Western farming policies. But I digress LOL.)
Getting back to the New Deal: what's this I read about people's gold being taken off them? Did Roosevelt just confiscate it, or did he give them some sort of compensation? Or have I misread things - do you mean that he simply took the US off the gold standard?
Yeah he pretty much confiscated people's gold. He claimed it was "for the duration of the national emergency" yet so far as anybody can tell it's still buried under Fort Knox. Actually it's probably been divided up and stored in various Federal Reserve Banks across the country but the fact still remains that people didn't get their rightful property back.
In effect, Roosevelt had to do this because if people were allowed to board their goals, he would not have been able to continue to print Federal Reserve notes. What would've happened is that people would have paid their taxes bills with the worthless paper money and kept the real money in case of emergency. This would have caused problems. I'm not sure how well read you are on the theory of money, but let's just say that any time you have a currency which isn't worth very much it tends to be circulated where as the real money is hoarded.
In addition, it was illegal for Americans to own gold until, 1975 I think. Ron Paul and Strom Thurmond, of all people, who wrote a law that forced the US mint to Wayne gold and silver coinage and allow them to circulate in the economy. In addition, repeal the restriction on public ownership of gold. Then I go round and round about the gold standard, but if you want a stable currency that is difficult to inflate and pretty much tea's value through just about anything, gold is your best bet.
What her and I have the biggest arguments about its banking. She sees the need for a central bank, whereas I see the need for central bank has agreed evil. Really what I see as evil as fractional reserve banking, the end result of which is a central bank. Without fractional reserve banking, you would never see a bank run, bad loans wouldn't wipe out people's savings, really there would be no need for a central bank. The problem with central banks is that they wind up increasing the money supply so much that, sooner or later, the value of the currency becomes worthless. I really believe about see that today in the United States, probably within the next few years.
ledefensetech: "Yeah he pretty much confiscated people's gold. He claimed it was "for the duration of the national emergency" yet so far as anybody can tell it's still buried under Fort Knox."
Yikes. That sounds like theft to me.
About the fractional reserve thing: I understand what you're saying - I recently had a go at reading Murray Rothbard's "The Mystery of Banking" and while there was a lot I didn't understand, I got the general gist about the fractional reserve system being almost like a pyramid selling scheme, in which the amount of "virtual" money in the system ends up being several times the amount that was actually created in the first place. And the more money in circulation, the higher inflation rises. The best illustration of that in the UK recently has been house prices, which peaked a couple of years ago at ridiculous levels. They only reached those levels because banks were so eager to provide mortgages for six or more times people's salaries (and people were so eager to sign on the dotted line because if you don't own your home in Britain, there's something badly wrong with you... a pet rant of mine LOL). If there had been no fractional reserve banking system, then there wouldn't have been any ersatz money floating around for banks to lend. I guess.
It would be really interesting to speculate on how different our society would be if there was no fractional reserve system. Presumably it would mean that credit was much less freely available. Given that people in the West buy a hell of a lot of things on credit, an absence of credit would mean less in the shops (and fewer shops), less travel and fewer holidays, far fewer media publications ('cos they rely on advertising for much of their income... no point in paying for advertising if you haven't got anything to advertise), a much shrunken car industry... the world would be a more stable place, but a much drabber one.
I am nearly 40 and my generation suffered and still does more than the great depression. The older generation are neglectful to their children and elders, self-centred and abusive and violent. Mean, miserable, liars, and play the old games, I'm frightened rubbish. Thankgod, for childs rights today and for our generation not to follow and to change. If it was that hard in the past, elderly would actually be nice people. They are the spoilt generation. I remember my nanas generation, they had more heart. Not one sided and cared about others, not like these violent abusive selfish good for nothing elders
Actually WWII only solved the unemployment problem as millions were forced into employment to fight the war. Everything manufactured was for the war effort and paid for by the government. The economy was government to business not business to businiess or business to consumer.
The economy didn't take off until '46 when the government stopped its mass spending.
It started in the early 20s with a gradual down slide. Government regulations and taxes as high a 70% in some areas putting business out of business.
In the 1907 depression, government did nothing and it lasted a few months. But afterward government added new regulations to attempt prevent another.
In 1883 government interfered and the depression lasted about 7 years.
Even FDR's treasury secretary told congress all the spending did not work. The new deal failed then as it is failing now.
pgrundy, another great hub. Right now the economy is bad, people are out of work. Can they find work? Probably, but as you said, is the job available worth having? I'm hearing that more and more. Many folks simply will not work when it doesn't seem to pay enough or be fulfilling. Also employers do take advantage during times such as these. Folks who are lucky enough to have a job "worth having" work extremely hard to keep it. Its a tight spot for everyone these days. Thats a big difference between the 30's and now. The 30's represented a complete collapse. When haven't experienced that yet. Maybe that difference will be short lived if the economy continues in its downward turn.
This is a good hub in the study of our past. I just listed a list of new job cuts, it's scary. Good Hub!
Hi CJ & jiberish,
It's not like the Great Depression for sure. In terms of worth it or not worth it, I've worked for very low wages and would again. I don't have to be fulfilled to earn money, but my last job actually wasn't worth it in the sense that once I paid for gas and other expenses of working I really was at a pay level where it made more sense to work for myself, so now I do that instead.
I mean, if the pay is low enough and the hassle is great enough and you have a marketable skill, at some point you really can do as well or better without the commute and the corporate culture and the cubicle. The cost of living is very high now too, so if you are making $8-10 an hour and have to maintain a car and a career wardrobe and lost a couple hours commuting and hire a babysitter (if you have small kids)--then real soon you are out of paycheck and you haven't even shown up yet.
I'm live in Michigan and I'm not at all sure you are right about low paid jobs being available here. I mean, honestly, nothing is available here. Nothing. But unlike during the Depression, we do have the internet so often a person can scrounge up money online doing this and that. That helps.
P, Michigan's true unemployment numbers are at 27%, my heart goes out to you.
Pgrundy, I would tend to agree with you on the Michigan thing. From everything I've read..and I read a lot, Michigan is in horrible shape economically and has been for quite some time. Michigan seems to be in a place that much of the south was in the 80's when the domestic oil industry changed dramaticaly. I've been following the Time Mag series on Detroit. It's scary.
I will tell you this. You are a great writer! I certainly hope you are finding ways to market that talent for economic gain.
Thanks CJ! I try. :)
I get enough work to help pay the bills around here, but I'm not getting rich or anything. Not many of us are though these days!
P, your most welcome, keep writing please. I read affilate bloggers all the time for ESPN, FOX, CNN, etc all the time....most don't write as well as you and other Hubbers here!
The only Scholars that are siding with the Fed are those on Corporate Payrolls. The Federal Reserve System is a total scam on the American Public. Behind closed doors the people running the show laugh about it. Rockafeller and Morgan wanted the Federal Reserve system so they could profit. Their lies about how it would prevent fluctuations simply have no basis. The Federal Reserve did nothing to stop the Great Depression and here we are again full circle.
The vast majority of Americans have no idea What the Federal Reserve System is about. The do not know anything about Member Banks, Ownership, Treasury Bills, etc. They just continue putting blind trust in the puppets run by the Bankers.
The credit card did not appear until 1958, people didn't own homes (meaning massive mortgage debt to banks), they didn't have car payments. The United States has manufacturing jobs to help pull them out of the first depression. Seriously ask your Grandparents about Mortgages and Car Payments "Back in the Day".
What do we have now? We have tax and spend... and the taxes are coming soon... and the jobs? Until the Federal Reserve is abolished we can just all sit back and watch the inevitable march towards socialism. Stand in line for your Government Cheese and watch with dismay as the super rich just keep going about business as usual.
robertsloan2 says:
9 months ago
Yours is an interesting view on it. I think that whatever comes, it's important to do something to ride it out -- to achieve as much independence as possible and to count one's resources as real. There have been problems for a long time in this country around the cost of health care and the costs of living for anyone who has a job, the squeeze has been on for a very long time.
There's a thing I ran into on Qassia where someone's starting some big group wave to just go buy $20 of stock in something to turn around the stock market. I'm not participating because I'm not a gambler and because I don't do mass action like that. I'm not donating $20 to the stock market on the off chance that something's going to pay off eventually. But that's no big change in my habits -- it might be good for those who do have investment money to notice that now might be a time to buy low. And to buy intelligently on things that are ethical by your views.
Now is when an investment on moral grounds could have a profound impact on the company you get stock in.
Just some thoughts. There really isn't anything else to say to your prediction other than that time will show whether that's what happens or something else does. I have a lot of confidence in Obama's plans because he's dealing with the roots of the problem and the neglect for infrastructure that's gone on since the Reagan years.