The Great Depression which began in late 1929 and lasted for about a decade was the worst economic downturn in U.S. history, and one which spread to virtually all of the industrialized world. The coming Grand Depression will be no less far-reaching. The "roaring twenties" was an era when our country prospered tremendously, much like we have done over the last few years. And, like then, it was all due to wild speculation and inflated assets. In the 1920's, the U.S. came to rely upon two things in order for the economy to remain on an even keel: credit sales, and luxury spending and investment from the rich. Same thing today. Our consumer spending is not funded by an increase in income wages, but by an illusionary equity in our homes. In other words, all the inflation has gone into real estate prices. Prices have reached levels that make no sense in terms of traditional patterns and rules of thumb for valuation. A range of evidence suggests that at the market peak in September 1929, something like forty percent of stock market values were pure air: prices above fundamental values for no reason other than that a wide cross-section of investors thought that the stock market would go up because it had gone up. Now, real estate investors think the same thing of the housing market.
In particular, the FED's efforts to lower interest rates have caused an asset bubble to form around real estate. People tend to over-invest when interest rates are low and when interest rates are raised to stave off the inevitable inflation, the bubble pops. That process is under way as I write this. Throughout the years preceding the Stock Market crash of 1929, the Fed did just that. The Fed set below market interest rates and low reserve requirements that all favored easy credit. The money supply actual increased by about 60% during this time. The phrase "buying on margin" entered the American vocabulary at this time as more and more Americans over-extended themselves to take advantage of the soaring stock market. Today, it is the housing market, and to some extent the stock market again. It was in 1929 that the Fed realized that it could not sustain its current policy. When it started to raise interest rates, the whole house of cards collapsed. The FED is starting to raise interest rates now for the same reason--to cool off consumer spending/speculation and reel in the trade deficit.
One of our members, somethingtosay, suggested I "interview and learn from the people that lived and survived the great Depression of the 30's. Report back to this Web site on the wisdom they learned the hard way." Some of the following is from some old-timers I talked with recently, and the rest from interviews posted on the Internet. I will let the following quotes speak for themselves. It is a chilling account.
$this->bbcode_second_pass_quote('', 'W')ell, everybody went on relief, and everyone raised a big garden. We raised everything from peas to potatoes and onions, and the extra vegetables we had we sold to people who didn't raise one. We lived off that garden for some time, and it was a big help. Once a month they'd give commodities out. You'd get dried beans, pound of bacon, pound of butter, dried milk, and sugar, and depending on how big your family was, was how much you got; and since we had the cow, we would trade the dried milk for coffee to people who didn't like coffee. That was supposed to last you a whole month, but that was government surplus, and they'd have a place that they dished that out; and I tell you we were so poor we had a gas stove, but we didn't even have the money to hook it up. We also had an icebox and couldn't even afford ten cents a day to put ice in it. When my son was born I'd mix his formula and put it down in the well on the rope and every time I had to feed him I would pull the rope up and get the bottle, but we had no refrigeration and everything we needed refrigerated went across the street to my mom and dad's place. When the war started in 1941, a lot of jobs were left vacant when the men left for war, so unemployment virtually disappeared after that.
PeakOil is You
The Coming Peak Oil Grand Depression
The Coming Peak Oil Grand Depression
by MonteQuest » Sun 13 Feb 2005, 15:28:31
$this->bbcode_second_pass_quote('', 'G')as was sparse, so when me and a group of buddies would drive down a hill, we'd turn off the car so we wouldn't waste gas.
$this->bbcode_second_pass_quote('', 'T')he city was affected more than rural areas. We always had food and wood from the farm, but city people had very little food or wood. They had to collect coal that dropped from the trains. Lived on a farm and had plenty to eat because we grew everything moved from town to live in Smithfield MO on a farm so that they could grow crops and have food to eat.
$this->bbcode_second_pass_quote('', 'A')frican Americans suffered more than whites, since their jobs were often taken away from them and given to whites.
$this->bbcode_second_pass_quote('', 'E')very tear I saw my mother shed was over the lack of money. All we seemed to do was to, literally, count the pennies in the house among all of us. We fought over money almost all the time, my mother would go into a panic if she could not account for every penny. Not one cent was ever foolishly spent and not one cent ever went for anything that was not vital to life. The memory that I retain to this day (77 years old) is that of my parents crying, singularly and together, about money! I remember one dinner where my mother, myself and my brothers and sister sat down to a meal. The meal consisted of 3 boiled potatoes and one slice of white bread which we divided up amongst us. I noticed my mother was not eating and I asked her why she was not eating. She answered that she was on a diet. When I was about 50 years of age it hit me that she had not been on a diet but was giving up what there was to us!
$this->bbcode_second_pass_quote('', 'W')hen I talk about the essentials of life I mean just that. The list is easy to put together and here it is:
Rent, food, but no ice cream, candy, baked goods; only the essentials, electricity, gas for the stove, clothing, medicine—and that was it. We walked everywhere and I do mean everywhere. If a trip was less than 5 miles we would walk it.
