(There seem to be parallels with the US in the Great Depression):
The statistics make really grim reading...
Statistics from the Great Depression*
+ Marriage........... : -15%
+ Divorce............. : -25%
+ GNP................. : -50%
+ DJIA................. : -90%
+ Wages paid...... : - 60%
+ Unemployment... : 3% to 25% (1933)
+ Farm income..... : $6bn to $2bn (1933)
+ new investments : $24bn to $3bn (1933)
+ defaults on debt. : 1,300 counties
+ lost homes........ : 600,000
+ failed banks....... : 5,000
*(from a Q-line call on FS, xx jan. 2008: about 34 minutes in)
= =
But look at these comments, from someone (my father!) who lived through those times:
My father's memories of the depression are chilling, like a scene from a movie about a distant country, or distressed planet. A lot of things we take for granted, like cheap food and energy, were simply not affordable. Prices were low, but no one had any money then:
"Our family situation was very bleak. I remember on several occasions, taking a bushel basket in my wagon and going down to a store on Wyoming Street to get a bushel of coal for twenty-five cents to keep us warm for the night. When we didn't have any money to buy a bushel of coal, which occurred sometimes, we all gathered in the kitchen and lit the gas oven to keep us warm. Usually after a few days of this, we would get our welfare allotment of coal dumped into our coal bin and be good for another few weeks.
For our food, we depended upon welfare coupons. We used them at our local C.F. Smith store, which in those days could be found at strategic locations all over the city of Detroit. We never seemed to have enough food! I remember we ate a lot of potatoes, pork and beans, eggs, homemade navy bean soup, biscuits and corn bread, but not much meat. When we did have meat it was cheap ground beef. I'm sure this was because my mother was trying to get as much as possible with welfare coupons." (Ibid., page 11.)
When I read this, I am amazed when I recall that our modern concept of "core inflation" excludes food and energy. As if we could ever get by without these items. Instead, our current low inflation has been kept low by all those cheap things, from clothes to shoes to phones, which can be manufactured in China, which is maintaining its currency link to the US dollar, perhaps artificially, by recycling all those excess dollars from export sales to us.
Here's what my father wrote about how his family coped with minimizing those other expenditures:
"We seldom got any new clothes, but my mother always kept the old ones clean and well mended. I came up with a system of wearing socks with holes in the heel. I folded the good part of the sock, which was above the hole, down under my heel before I put my shoe on. Ingenious! I also became quite adept at cutting out card board inserts to place over the holes in my shoes. I could go on with this list, but you get the idea."It does sound bleak, and very miserable. But the human spirit does not get crushed so easily. When everyone is enduring hardship together, something often blossoms from hardship: co-operation, generosity, and a sense of kinship. My father felt that too:
"Actually, we kids were happy at the time. I think one of the things that got us through the depression was that we didn't really know how bad off we were. Because most of our own neighbors were experiencing the same difficulties, I guess we thought that was the way things were supposed to be."If hard times do return to America, I believe that once we get over the initial shock over the changes in our living standards, things will be alright. In times of abundance, we forget our neighbors. In times of hardship, we remember them, and they remember us.
/see:
http://www.financialsense.com/fsu/editorials/2005/1003.html