The Coming Depression:History Repeating Itself

[true_notes]

DUers, A little research I have done. Tell me what you think.

In the aftermath of World War I, The United States of America enjoyed a decade of unevenly distributed wealth and a decadent decline in social opportunity all around the country. In one decade, the nation simply could not handle the underlying beast of poverty that was lurking underneath the good times.

This was due to many factors, but the primary ones were a poor war debt plan,rampant uneducation, and easy-money policies led to an inordinate expansion of credit and installment buying and fantastic speculation in the stock market. To put it into perspective, at the middle of the 1920's the GNP was $103,828,000,000, and by 1931 it had shrunk to $55,760,000,000.

After the market crashed in 1929, the nation sunk further into a depression that left people hungry, homeless, and disheartened. The "Conservative" government that was headed by Hoover was ousted and Franklin Delano Roosevelt took office. FDR, of course introduced the "New Deal", which gave jobs to the common man, for a common good. It was a win win situation that provided so much for the nation, and also brought it out of a devastating time in our history.

Today, we are faced with many of the problems of the past. With a larger than ever government that force feeds money into war, corporate lust(s) and the thinning of social equality, it is time for us to start analyzing the possible outcomes.

The workforce of America is increasingly becoming white-collared, thus producing a vacuum of monetary solutions for our blue collared workers. Just like the 1920's farmers and factory workers are being met with cut wages, and these citizens are apprehensive of their outcomes. Without a firm heavy labor platform, our nation simply cannot produce the amount of simple money it depends on so much.

The war on terror is actually a war on the worker. The war is funneling money at an alarming pace from every facet of our treasury. The numbers speak for themselves. Since the invasion of Afghanistan, the USA has spent $200,567,626,816 on the war, and that number increases $1,000.00 roughly every half second.

This money is essential for our infrastructure, social services, but most importantly our education system. Education is the primary backbone of an economy, and the United States is beginning to lack the smarts it once had. On the money that is being funneled to Iraq alone, America could hire hundreds of thousands of new teachers, or better fund the classrooms of tomorrow. Instead our youth are gradually falling behind to the point they can't even point to the countries we are at war with.

Lastly, the uneven distribution of cash is wreaking havoc on the financial system. Much like the 1920's, many people aren't saving their money. In a survey 2 months ago, the question of how much money people put aside for the month was taken. 94% answered "none". When private citizens aren't saving, then how can the country. Then again, the idea of social justice is so far gone in this country.

The formula is here, comrades. The need for a better balanced budget, savings campaign, social justice, and a strong anti war movement is strongly needed. There is a feeling that this coming depression will cripple the nation worse than the Great Depression did.

-But we keep spending

[enid602]

1. actual dollars

"To put it into perspective, at the middle of the 1920's the GNP was $103,828,000,000, and by 1931 it had shrunk to $55,760,000,000." Are these actual dollars, or adjusted for inflation?

[true_notes]

4. yes, adjusted for inflation.

[unpossibles]

2. well said (n/t)

[katmondoo]

3. I feel it coming and I am preparing for some hard times.

I have my credit card payed off, the car is close to being payed off, I have a small savings account and I am ready as long as it doesn't last for too many years.

[rainidame]

5. ditto,

I've been seeing this coming for a while in spite of the market analyzers and I too have just paid off my car and will NOT be looking at a new one, my business has been brought home with a shop in the backyard saving me tons in lease payments, AND I have resisted the urgings of others to get an equity line of credit so I own nearly half of my home which gives me some room to get a line if needed later. Credit cards are paid off monthly here, always have been. Hoping all of you are prepping similarly.

[Skidmore]

11. We've done this too.

Owe no debt now, made all major repairs on the cars, car titles are free and clear, stocked cupboards and freezer, weatherproofed the house, and am waiting for the other shoe to fall. If we conducted our household business the way * and the Rs have this nation's business, we'd be standing along side the street with a cardboard sign looking for work for food.

[BrotherBuzz]

6. Coolidge? FDR ousted Hoover...

:shrug:

[true_notes]

7. honest error,it's corrected.thanks.

[wurzel]

8. Capitalism worked when it had to compete with Communism.

Back in the 50s thru 70s Capitalism was in a struggle with Communism to prove it could provide a better general standard of living than Communism. And it did! But Communism collapsed. Having no competition Capitalism could go back to its prewar behaviour. And it has! Working family standard of living has relentlessly eroded ever since.

[true_notes]

20. Democracy is only a step away from socialism

Karl Marx said something to that effect. Sooner than later, the US has to switch over because we will cave in on our capitalist values. The corporate rich will be eating steak while we eat rat. Fair is fair, and socialism is the way.

[indepat]

9. Food for us all to ponder

[Skidmore]

10. My 72 year old uncle has a friend in his 80s who has

redrawn all his money from the bank and socked it away in a safe he purchased. He has cashed in all his treasury notes and CDs and stashed those monies away also in said safe. He liquidated his stockholdings and that safe is full now. Told my uncle that a depression is coming that will make the depression of the last century look like a veritable party. Told my uncle, "That's what you get for trusting banks. We forgot the lessons we learned then."

[bbgrunt]

23. don't trust the banks or fiat money either

all we need is some runaway inflation to ruin the value of any cash you hold. Of course, if prices tank, holding gold is not much good either.

[Bushwick Bill]

12. Add in an energy crisis

Good work, TN. Throw in a permanent, irreversible decline in world oil production and the North American natural gas cliff, and you've got yourself an economic disaster that industrial civilization has never seen.

http://www.lifeaftertheoilcrash.net/
http://www.rollingstone.com/news/story/_/id/7203633?pageid=rs.NewsArchive&pageregion=mainRegion&rnd=1111689845570&has-player=true&version=6.0.12.104
http://www.peakoil.com/sample/
http://globalresearch.ca/articles/PFE307A.html
http://www.energycrisis.com/
http://hopedance.org/new/issues/47/article2.html
http://www.simmonsco-intl.com/research.aspx?Type=msspeeches
http://www.globalresearch.ca/index.php?context=viewArticle&code=FIG20050403&articleId=195
http://www.theoildrum.com/
http://dieoff.com/



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[brokensymmetry]

14. Good point!

Both the initial post, and your addition, Bushwick Bill.

If oil has peaked - and I believe it has - we could see (easily) a 50% decline in GDP over a period of 6 or 7 years even without any other problems. Add in the consequences of * mismanagement, and we could see something that will make the 1929 depression look like a boy scout picnic.

The scary thing is that people in such dire straits embrace demagogues and extreme solutions. I cannot know what the future will bring - but if we don't wake up and smell the coffee, I suspect it will be a challenging, painful time.

:-(

[SheilaT]

13. Two things.

First of all, as far back as I can remember (and I'm 57) I've been hearing or reading stuff warning everyone that the next Depression is Coming Soon. Usually it's in the form of hysterical pleas to put all one's assets into cash -- sometimes gold is suggested -- and keep it under the mattress. I've never bought into the panic.

However, to get some perspective into how the next quarter century or so might play out, read The Fourth Turning by William Strauss and Neil Howe. It's a slightly simplified and updated (as of 1997) of their excellent book Generations which came out five years earlier. But they, too, fall into a degree of "Everything is going to be terrible and society as we know it will collapse." kind of hype.

Nonetheless, we are still in the beginning stages of a Crisis Era, as they call it. Things will get worse before they get better, and for my money the most prophetic thing they say is this: Soon after the catalyst (which they say will be a sudden event which changes everything), a national election will produce a sweeping political realignment, as one faction or coalition capitalizes on a new public demand for decisive action. . . ending the era of split government that had lasted through four decades of Awakening and Unraveling. The winners will now have the power to pursue the more potent, lest incrementalist agenda about which they had long dreamed and against which their adversaries had darkly warned. This new regime will enthrone itself for the duration of the Crisis.

I really wish they'd get around to writing a new book, as I'd like to see their take on 9/11 and what's happened since. But it certainly seems to me as if things are playing out very much as they say things would.

[susanna]

28. Oh my...

The Fourth Turning is one of my favorite books.

I also love 13th Gen (same authors). Great recommendation!

[SheilaT]

29. I have posted over and over

again about both Fourth Turning and Generations, and you are the very first person I know of who has acknowledged or read those books. I was beginning to think that everyone had me on ignore.

I keep on telling people about those books, and I think they should be required reading. As I said, I really, REALLY wish Strauss and Howe would write another one, since it's been nearly ten years since The Fourth Turning, and I'd like very much to read their take on how the beginning of the Crisis Era has unfolded. Alas, it doesn't seem to be happening.

[susanna]

30. Funny thing is, I read them years ago.

Sometimes S&H get it wrong, but there are enough spot-ons in their books to give them a listen. As for 4th Turning, I have thought time and again that I am watching either a Crisis Era (or its lead-up) unfold.

You are right - I have never seen a post talking about those books until yours! I must admit, though, that I read them so long ago that I kind of forget them during normal conversations. I am going to re-read T4T in the next couple of weeks, now that you reminded me of it! Thanks. :-)

[Ksec]

15. Its already here

My county (Ohio's Columbiana) lost three thousand jobs in the past five yrs. Neighboring counties have lost even more and thats a huge percentage of our workforce that have no jobs now. Ohios growth is non existent,and people are bailing to other states to take junk jobs. People arent saving because they dont make enough to pay bills, let alone save.

[enid602]

16. depression

I think we Dems seem to see the coming depression (based on accumulated Republican sins) much in the same way that the Republican and fundies see a Rapture (no doubt based on Dem sins). Personally, I don't think either is likely. Sure, we will pay for the Bush economic policy sins, but probably in terms of protracted economic anemia and lack of investment, rather than a full-tilt depression. Look for little growth, little advancement and perhaps even back-pedaling in terms of income growth. And of course, we will eventually have to pay back the debt. Should be painful, but don't look for starvation in the streets. Too apocalyptic.

[true_notes]

17. Remember the "Roaring 90's"?

Well, somebody's gotta pay, and the corporate scum suckers aren't, the little man is. My home county (Humphreys County), Tennessee is in a "full tilt depression" because of the farming bust that is going on, and not only that TVA is laying off employees in thros because of "labor priorities". Needless to say the welfare lines are long, but so are the recruiting lines. Most of these people are married right out of high school and have no other means than heavy labor/industry to support their families. The jobs simply aren't there.

What I'm getting at, it's starting as we speak. Sure some of you are sitting in the comfort of your suburbia homes not thinking about these things,but the farmer that doesn't have any profit from his cattle, the factory worker that can't break even, and the single mom that works as a clerk is certainly feeling it.

This social structure we pride ourselves in is quickly eroding much like it did in the 20's, and it seems to be yet another lesson that we didn't heed.

[MadHound]

18. Great synopsis, but you aren't going back far enough in history

The Great Depression was the end event that arose out of excesses that had gone back for decades, in fact back to the days of the robber barons, also known as The Gilded Age.

This period in our history started in the 1870s. Crony capitalism ruled the day, and ordinary working class people were treated horribly. Low pay, impoverished lives, child labor, all of the Dickinsonian horrors that you can think of and more. It was the era when it simply didn't matter what party was in power, for crony capitalism triumphed over all.

Sure, there were some attempts to change the system, though most, including the most notable, Teddy Roosevelt the trust buster, were more show than action. This is the era when the gap between the rich and the rest of the populace reached canyon size proportions. Sadly though, that record has been broken under Clinton, and kept growing ever since.

The twenties were really the last hurrah of the Gilded Age. People speculated wildly in the stock market, and many, especiall urbanites, partied like there was no tommorrow. But out in the Midwest, signs of things to come were everywhere. Rampant unemployment hit the farmland, as did the dustbowl days. Farms were repossessed, familys kicked out, misery abounded. Even in urban areas there were ever increasing signs of the looming disaster. Loads of margin buying in the markets, lots of consumer credit, a scarcity of well paying jobs. But the country partied on, oblivious to the ever increasing warning signs.

The house of cards had to collapse sooner or later, and when it did, the sheer catastrophe was awe inspiring. Twenty five percent unemployment, starvation, death, all of these scourges and many more were unleashed.

Thankfully we put a good man in the White House who, with a bit of prodding from the Socialists, instituted many of the programs that we were to take for granted in our modern society. FDR implemented massive government works, unemployment insurance, and a boat load of other initiatives. But even all of this, while staving off the worst of the Depression era troubles, still didn't help the US to really move forward. That impetous came from WWII.

Today, we have been on the same sort of crony capitalist binge for many many years now, and a lot of the warning signs that we saw pre-Depression we're seeing now. Unemployment, underemployment, whole sectors of our society that live their lives in anonymous poverty, politicians of both parties whose only real masters are their corporate ones, a yawning, record setting gap between the rich and the rest of us. We have rebuilt that house of cards once again, only much higher this time, and thus the fall will be even further.

When will it come? Who knows, I certainly don't. But as sure as I shit, it is coming, and probably will be here within twenty years. I myself am fairly prepared for it, living in the country, few debts, and becoming increasingly energy and otherwise self sufficient.

Can we stop it? Sure, but it is going to require one important action on our parts, and that is to take Corporate America out of our government. And the only way to do this is to make publicly financed election campaigns the law of the land. Once politicians have to respond to we the people rather than Corporate America, a lot of our problems will be solved. But if we don't do this, then we are going to see another Great Depression, big enough and bad enough to make the original Depression look like the Roaring Twenties.

[true_notes]

19. That's Great,Hound. I really enjoyed what you wrote...

However,

"Can we stop it? Sure, but it is going to require one important action on our parts, and that is to take Corporate America out of our government. And the only way to do this is to make publicly financed election campaigns the law of the land. Once politicians have to respond to we the people rather than Corporate America, a lot of our problems will be solved. But if we don't do this, then we are going to see another Great Depression, big enough and bad enough to make the original Depression look like the Roaring Twenties. "

I beg to differ. The reason the depression in the 20's was cured is because of what you stated above. The New Deal put so many people to work that it made money from no money. On top of that, WWII was brewing so factories were pumping out war supplies (though not as intensive as it was from '41-'45) but we were still to a degree throwing iron out of these factories.

Today, we contract everything out. Our steel industry is nothing but a joke. The defense industry is ran by the president and his goons. I do not see a saving grace from what I view as certain disaster in American economics.

[Nay]

21. Don't forget--there was starvation and homelessness EVEN THO

80% of the population lived on farms and grew their own food and heated the house with their own wood, for the most part. Can you imagine the regular Joes you know being able to grow enough food for even the cat? No room in the apt house or small lot in the burbs. Plenty of people will be very susceptible because they must have money to feed themselves and heat their houses -- they can't do it themselves. It won't be pretty.

[true_notes]

22. Exactly n/t

[KayLaw]

25. It's hard to grow food

Except for potatoes, I've had rotten luck with my garden the past couples of years, and I couldn't even grow the potatoes if I couldn't turn a spigot and use my water. If you seriously believe food will be a big issue, long-term storage will be necessary. It's still fairly cheap if you shop carefully. Today I got 30 cans of beans and vegetables, 10 one-pound bags of frozen vegetables, bread, apples, pretzels, toilet paper, corn flakes, and a 12-pack of soda and I spent less than $30. I watch the ads the stores send out as if my life depends on it. I've been doing this for a year now.

[Nay]

27. Agreed--but my point is that most people won't have lots of food

on hand (not food for the length of a real depression) and cannot grow it. Thus the problem. I also have extra food on hand for short emergencies, but few people have years of food stored for emergency.

[lovuian]

24. When over 90 % of a country's assets is owned by a few

thats when a Depression happens ... its a economical fact!!!

[ignatius 2]

26. $88 Billion in outstanding corporate debt will likely be reduced to

junk status this year including Hertz and Clear channel. That on top of GM,Sears and Ford who were declared junk bonds this summer.This has been the worst year since 1929 for corporate debt downgrades and with the cost of fuel soaring, that is most likely eating into corporate profits,bigtime.

I suspect this is what is causing the selloff in the stock market that began on October 1.