Welcome to the Depression

Minyanville ^ | 26 Jan 2009 | Bennet Sedacca

[Pelham]

The stock market crash may have been incidental to the Depression. The real damage to the economy, at least in the opinion of Schumpeter, and Friedman & Schwartz was the collapse of thousands of banks in the years 1930-33. Banking collapse caused the money supply to shrink by one third and credit became impossible to get.

[FFranco]

It started in America.

[Pelham]

You mean you were only paying attention to what was occurring here.

[wbill]

Wartime rationing wasn’t really part of the Depression. True, true. I really just told the story more to make a point of where things are today, vs where they were years ago. It's hard, at least for me, to believe that 1) Something as commonplace as a Safety pin was unavailable and 2) That people couldn't afford them anyway. In that same vein, my grandmother told me about knitting diapers (called "soakers") for my father. I can't imagine what it was like to need to hand wash knit diapers. Bleah! Things are a whole lot better with disposables, now.

Even pennies lost their copper and became zinc. yep. In '43 they were made out of steel, and '44 out of spent shell casings (I think....)

But the causes of this current downturn are eerily similar to what led to the Depression. I agree with you there, as well. Populist pres, running on a "Tax the Rich" strategy and protectionist policies, banks in turmoil. However, I disgree with many posters on this thread that are saying "The depression is already here!".

I don't have a lot of room for drama queens and doomsayers. There's still a long way to go before we're reliving the 30's, and honestly, society is substantially different (more robust financial safety nets, for one. Europe hasn't just finished dismantling itself via WW I, for another), so I don't see 25% national unemployment on the horizon. Could it happen? Sure, but not next week, or even this year.

For what it's worth (exactly nothing)....my opinion is that we're somewhere around the bottom right now. We'll bounce around here for another year or so, then things will start to pick back up again. Usually, when all of the Doomsayers crawl out from under their respective rocks, that's when things start to turn around....just like when all of the Pollyannas come out and say "Stocks are all going to the moon! This time it's different!" I start putting money into cash and hoarding canned foods. :-)

[Toddsterpatriot]

Even pennies lost their copper and became zinc steel.

[GregoryFul]

Oh, come on! I’ve been using credit cards for years - because of convenience. I pay them off in full every month - no fees, interest, & etc. Friends & relatives do the same thing. Using a credit card is not a solid indicator of living beyond one’s means and drowning in debt as some would have you believe.

[April Lexington]

Oh, come on! I’ve been using credit cards for years - because of convenience. I pay them off in full every month - no fees, interest, & etc. Friends & relatives do the same thing. Using a credit card is not a solid indicator of living beyond one’s means and drowning in debt as some would have you believe.

Welcome to the 1% of Americans who understand consumer debt!