The crash of 1929
By Arkie69
@Arkie69 (2156)
United States
March 29, 2009 8:36am CST
If you study what happened in the 10 to 15 years prior to the 1929 crash and the one we are in now you will see one big difference. Prior to 1929 the money supply pooled up in the hands of the rich and the working man went broke. This round it is the exact opposite the rich man was the first one to go broke. Sure the working man is hurting bad now but in the last crash the rich still had their fortunes to start over. This time they don't and that is causing some major problems.
For one thing our government is using the last crash as an example and trying to use the same methods used then. This will not work and I think people are finding this out. What are we going to do when the stock market comes back and our economy continues to crash? In the past couple of weeks this is exactly what has happened. This trend will continue until people wise up and then the stock market will completely crash just like it did in 1929.
The general public spending money like it was water during the "roaring 20's" is what caused the last depression but this time it was the banking system that were spending everything they could get hold of and calling it "Investing". This fact alone puts us in uncharted waters so what worked in the last depression will not work now.
Here is something else we must consider. When we got into WWII the rich had the money to set up and start producing the supplies for the war but this time they don't have the money to do that. If we were to get into an all out war the Federal Reserve would have no choice but crank up the printing presses and start printing money 24/7 to pay for it.
The money that was lost during the last depression was hard cash and this isn't the case this time. Most of the money that is being lost now is floating around out there in cyberspace in the form of unpaid loans. The money never actually existed to be lost. This added some new rules to the game we are playing here. Putting the working people back to work is the only thing that will bring us out of this thing. People will learn this but by the time they do our Nation will be broke. Obama's spending spree had bankrupted this nation and we the people are the ones that will wind up holding the empty bag.
Art
2 people like this
4 responses
@quinnkl (1667)
• United States
29 Mar 09
Uh, no, the rich man is NOT broke! They just spend the same amount of money no matter how much they make and then ask the government to get them out of it. The rich are still rich and doing quite well as the middle class as well as the lower classes, lose jobs, money, benefits. Reality. And it isn't just the Obama camp or Democrats stating what a REAL mess the country and economy is in, it is the Republicans as well. It is real and it is scary. Will the way it is being handled do the right thing by us and makes things well? Time will tell.
1 person likes this
@Arkie69 (2156)
• United States
29 Mar 09
If the rich are still so rich then why in the he** are we giving them all the $Billions? Our government not regulating big business and enforcing the regulations is what has caused this mess in the first place. If they had done the job we are paying them to do this wouldn't have happened. Say what you want to it is high time for some very strict rules for big business and rules that are enforced to the letter. You can't just let people do what ever they want to and ever have a stable economy.
Art
Art
@Tony78 (89)
• United States
29 Mar 09
Arkie,
Regulations is part of what caused this mess, deregulation would be a better choice. Most of these banks have more than enough money to operate, but congress wants them to use a specific accounting (mark to market) method that shows great losses on paper when such losses are not nearly as bad as they appear. Also the Community Reinvestment Act forces lenders to make loans that they would refuse otherwise. The government should let businesses continue with business without interference. The bigger our government gets the worse our economy gets. Small government is best for the economy, unfortunately neither Bush or Obama seem to realize that. We can not spend our way into prosperity. It seems that Obama is more of the same instead of McCain, at least economically.
@loudcry (1043)
• India
1 Apr 09
I think you have nailed the issue in the last two paragraphs. One more thing that has changed since the 1929 is the abandoning of gold standard by the U.S somewhere in the 70's. You have rightly put it by using the phrase 'hard cash'. This time around we have lost a lot of paper ,we THOUGHT had value. The problem now is we can go on minting money except that it has no value. Even countries that have not completely abandoned gold standard( for instance India) have overstreached their credit. There is more money in circulation than there is gold in the banks. This time around the problem is fundamental in nature. Nothing will be corrected by pumpung money into failed banks and companies. It will infact worsen things.
The WW 2 was indeed what lead to the recovery in the 1920's crash. But such a solution is not possible today. The two exixting wars in Iraq and Afganistan are proving to be a liability,not the mention the catastrophc humanitarian situation that has resulted.
The only way out is to visit sound economics again. This view has no takers whatsoever. What do you say?
@Arkie69 (2156)
• United States
1 Apr 09
People won't admit it but we are in the most dangerous position the American People have ever been in. This thing could very easily get deadly in a matter of only a few days. Thank God at least most of our food is produced within our own borders. We are not importing any food we couldn't get along without. We did it during the last depression and during WWII and we could do it again but... If we loose our diesel fuel supply we couldn't get the food to us. Our imported oil just could be cut off. We could loose our electric grid. Either one would dry up the Diesel supply real quick.
Art
@snowy22315 (180687)
• United States
29 Mar 09
I think that the situation now is slighlty differnet. We have alot more protections in place FDIC for example. I think that we have probably reached near the bottom of our economic crisis and we will be able to see some light at the end of the tunnel.
I don't think anyone can blame Obama for the current economic plight, because ti was well underway by the time he took office.
@Arkie69 (2156)
• United States
29 Mar 09
What I hold against Obama is he has made this thing a lot worse than it had to be. What he has done will make it a lot harder for us to come out of this. Right when the government needs a lot of money they are broke. Government backed jobs is the only thing that will get us out of this mess and now the government can't afford that. Don't kid yourself we are a long way from the bottom yet. You are going to see small improvements here and there but it is nothing more than people changing their spending habits. The companies that are producing our every day needs will improve but the ones that are producing all the junk will continue to fall like flies. We are just getting started on this part of it.
Art
@Raven1 (577)
• Australia
28 May 09
I think the switch from gold-backed currency over Fractional Reserve Lending, which now gives the bank to create money out of thin air has added fuel to the fire.
Printing more money to bail everyone out will only mean the government has to pay the Fed back at interest, which means higher inflation as a result, which means a bigger negative spiral on the economy.
