Actually, it shows considerable “common wisdom” to go into a defensive mode during a depression.
During good times, people tend to overspend and lose their reasonable sense of frugality and savings. “Living day by day” is a good thing when you are a recovering alcoholic, but when “the pressure” is outside of us, it is far better to try and plan ahead.
After an extended slump like now, those who live “ahead of their means” get nailed hard.
Right now millions of Americans pay their rent and utilities, and buy their food and fuel on credit, so as soon as they get paid, it has to go to the credit card company. If they get fired, they are instantly a month in debt and cannot meet their bills. This is why so many are utterly dependent on their unemployment checks right now.
Checks that are soon to end. And even with unemployment, many people slowly deplete their “fat”, other savings and assets. So that when their unemployment stops, they are totally broke.
This next January shows all the signs of a major disaster, because of a confluence of bad things all happening at once. And the Democrats have made it abundantly clear that if they are turned out of office, they will use their lame duck time, up to January 20th, to block any Republican effort to stop a huge crisis.
In fact, they will likely try to do anything they can to make things as bad as possible, while blaming the Republicans who are not even in office yet.
So the bottom line is that for the next 3 months we all have an opportunity to go into maximum defensive mode before January 1st. This means the following.
Keep extra cash at home, not in the bank, and be prepared to act quickly in case their is a bank run, a stock crash, or a Mideast war.
In 1966, when I graduated from HS, minimum wage in Southern California was $1.65 per hr. One hour’s labor would buy eight gallons of gasoline or ten McDonald’s Hamburgers. A glass of beer was five cents. A loaf of bread fifteen cents; you could buy ten of them for one hour’s work at minimum wage and get change back.
A blue collar worker could expect to earn $5.00 an hour. In three months at 40 hours a week he could earn enough to buy a new full size American Car; In a year, enough to buy a modest single family home in the suburbs of Los Angeles.
Today, in California, Minimum wage is nearly $10.00 an hour, but it now takes two hours of labor to buy five gallons of gas. How much is a burger these days? I had a beer yesterday. It was five dollars plus tip. A loaf of bread is anywhere from three to six bucks - a half hour at minimum wage in California. At $50.00 an hour it would take four months to make enough to buy a cheap import car and at least five years to earn enough to buy a house in that same LA suburb (But you would not want to live there today).
It’s not just that the money is worth less. It takes more hours of labor to buy the same commodities.