5 Lessons We Can Learn From the Great Depression
The Great Depression (1929-39) was the deepest and the longest-lasting economic downturn in the history of the Western industrialized world. It was caused by the stock market crash of 1929. Millions of investors were left holding worthless stocks and bonds. If you didn’t have cash at the time then your fortune was gone. Money on paper was not worth the ink it took to print the bonds.
It was estimated that by 1933 close to 15 million Americans were unemployed, and considering the population at the time, this was a devastating development for the country. No one had money to spend on goods so production nearly ceased in some sectors, thus, causing, even more, layoffs and the calculations were not precise so no one really knew the true unemployment rate at the time.
The cause was the rise in stock prices, which lead to a bubble because the rise could not be justified by future earnings. In other words, people were betting on a lame horse with no chance of winning the race. It fell apart and fast, overnight millions upon millions of dollars were wiped off the books. Panic ensued and the rest, as they say, is history.
Are There Lessons from the Great Depression?
1.) First, never put all of your eggs in one basket. This goes for money in banks and food and supplies in the pantry and around the home. The reason being obviously is that if something happens and you have all of your money or supplies in one place then everything can be stolen, damaged or destroyed at the same time leaving you nothing. In the case of a bank failure, your money could be lost for good.
Cash in the mattress is not a bad idea. Contrary to what some may say about cash versus gold, cash is still king, because the monetary system is far different from what it once was when the country was on the gold standard. This is not to say that you should not put some precious metals, gems and stones aside, but consider how you would value it, how much for a loaf of bread, a liter of water, and some diapers for the baby, for example. Cash is face value and always will be for the most part.
2.) Frugality is a word in which you need to become familiar. You will have to learn how to do with less. Pinch pennies, and save, save and save some more. There are things you need, and then there are things you want. Learn the difference. Save your money (cash) for the things you need first and then treat yourself to something you want, but make sure whatever it is, it performs a function, because during hard times everything you own must have a purpose and then be used, reused and then fixed when it breaks, fixed by you.
3.) Learn to get along with others, because you will need others whether you believe that or not right now. Unless you have extensive training and supplies for several years and know how to do everything that needs to be done, then you will need other’s knowledge and skills at some point. Keep in mind the vast majority of people will be in the same boat as you. There will be some comfort in that, and pulling together for a common cause is what rebuilds communities and towns.
4.) Getting out of debt is important. Despite what some may believe you will still owe the debt regardless of the calamity that befalls the country unless of course we all perish. Get out of debt and save cash.
5.) Never, waste anything, because you can’t afford to throw anything out that could serve a purpose later. However, you have to be careful you are not hoarding to the point you do not have room for needed supplies and equipment. Know how to keep and reuse items and know what can be used later and what is junk.