Do We Need Another Great Depression?

[jeffrey]

Had a discussion with a bunch of friends today and one was adamant that what the US really needs is another great depression. His argument is until people really understand hard times and it is forced upon them against their will, only then will they learn to be frugal and spend less than they earn and then take these lesson forward as well.

While I don't think that another Great Depression is the way to teach personal finance, he made some good points that people are often only willing to learn when they are forced to do so. I kind of look at it like me learning Japanese. Had I been in the US, I couldn't taken classes forever, but I would have never learned it. When I came to Japan and was placed in the countryside to teach where there was nobody that spoke Japanese, I really didn't have a choice in the matter - it wasn't easy, but I did learn.

I'm curious to other member's opinions. Would a depression ultimately be a good thing after the hardship was endured? Would it be good for the population as a whole to learn the lessons of frugality and is the only way for them to learn through a depression? What other ways could the people of the US become more financially responsible?

[jIM_Ohio]

My answer to the question would be like I need an enema, rectal exam or lobotomy.

You think you don't want one, it is uncomfortable when going through it, and when your done you either might not remember, do not want to remember, or remember and want to forget.

[kork13]

I mostly agree.... While your friend makes a vaild argument (hardship is often one of the best teachers), it's fairly clear that nobody really wants another 'great depression'. What did it take to pull us out of the last one? "The Great War" (World War I), in which the entire nation basically became dedicated to building up the war machine. If Berkley's crying now, they'd all pull out the kool-aid if that were to happen.

Rather, I think what is happening now is actually a good balance of hardship while not crushing America. Credit is much harder to get, and people are becoming more wary of automatically pulling out the plastic. High fuel and food prices have led people en masse to look for ways to save. It's not a huge, dramatic shift in thinking, but it's slowly progressing. Americans are learning a hard lesson about financial responsibility, and I do believe that it's good for us in the large sense. So on that point, I think your friend brought up a good observation/argument.

[Gruntina]

I can see the Great Depression can be a life lesson for those who overspends and live outside of their means. But not at the expense for the people who do not earn much money and do not overspend. We need the people who work for non-profits like the Red Cross, Salvation Army, agencies that assist people with disabilities, animals and etc. In that sense, the Great Depression would hurt everyone through that channel.

Some of the most important jobs positions have low wages. Can you imagine if we didn’t have anyone to clean out the bathrooms and stock up on toilet papers for our workplaces, schools and public? It just seems that these types of people who accepted low pay jobs that are important suffers through the time of the Great Depression more than others who were at fault for overspending and misusing loans and credit cards.

[cipixul]

I agree I don't think a new great depression is really needed... the effects of it would be far too long and too great. Do you really want that? People live better when the economy goes well not when the economy is depressed...

[PrincessPerky]

On a purely philosophical level..sure, folk don't like to learn, and a great depression is a great teacher.

On a personal level NO! Aside from my own family (extended relatives on totally fixed incomes retired and the like) I couldn't knowingly be the cause of so many orphans suffering, older folk dieing....children raised without the benefit of enough food (bad enough folk can feed em junk, but at least that junk has the calories they need)

Sink or swim is a great teacher to all those who swim..to the rest it is
drowning.

[disneysteve]

I mostly agree.... While your friend makes a vaild argument (hardship is often one of the best teachers), it's fairly clear that nobody really wants another 'great depression'.

Rather, I think what is happening now is actually a good balance of hardship while not crushing America. Credit is much harder to get, and people are becoming more wary of automatically pulling out the plastic. High fuel and food prices have led people en masse to look for ways to save. It's not a huge, dramatic shift in thinking, but it's slowly progressing. Americans are learning a hard lesson about financial responsibility, and I do believe that it's good for us in the large sense. So on that point, I think your friend brought up a good observation/argument.

I agree completely. Some hardship is a valuable lesson. In recent decades, we as a nation haven't experienced real hardship. We haven't experienced major economic struggles. We haven't experienced a war that hit close to home in the way that WWI and II did. Overall, we've been leading pretty blessed lives, at least all of my 44 years and beyond.

That said, we don't need a total knock-down, drag-out depression that has folks jumping out of windows or selling apples on street corners. I'm not sure that benefits anyone.

I heard something yesterday that made me hopeful that just maybe folks are starting to get the message. Good Morning America visited a grape juice producer in NY state. The company makes juice for Welch's and said they're business has been off quite a bit because more consumers are buying generic brand juice instead of brand due to the economy. So I think people do know how to be frugal. They just don't do it unless they have to.

[disneysteve]

Some of the most important jobs positions have low wages. Can you imagine if we didn’t have anyone to clean out the bathrooms and stock up on toilet papers for our workplaces, schools and public? It just seems that these types of people who accepted low pay jobs that are important suffers through the time of the Great Depression more than others who were at fault for overspending and misusing loans and credit cards.

One think that I think we do need, and I haven't seen evidence of yet in the current economic downturn, is for people to get over the sense that certain jobs are beneath them. Everyone complains about the illegal alien worker problem, but those folks are taking jobs that nobody in this country wants. Companies need workers to clean the toilets and mop the floors and harvest the crops and mow the lawns and do all the other menial tasks that are very much under-appreciated but keep things moving smoothly. Kids come out of school today (or still in high school) and refuse to even consider doing something that might get their hands dirty and we need to get past that somehow. Some measure of economic hardship where it is work a crappy job or lose your home or starve might not be such a bad thing.

[My English Castle]

I think people who think we "need" another depression have no idea of what the depression was actually like. Starving American children? Disease? Dustbowl? No thanks. But I also don't think that the past years of no-thinking spending, credit for everyone on everything was a good idea.
There must be a middle way. Economics needs to be taught to everyone and personal financial planning too.

[cschin4]

No, we don't "need" a depression. That is kind of like wishing starvation, famine, disease, whatever to make people "appreciate" what they have. The point, why not learn to enjoy what we have and be glad of it? There are people who seem to think even if you have what you need and want that you should not really enjoy it. The truth is we will be more frugal when we have to be. I COULD live in a one room apt, drive a broken down hunk of junk and get all my clothes at Good will. But, why should I and why would I want to? I work, so I will enjoy the fruits of my labor to some extent while also saving for a rainy day.

[tripods68]

I don't need someone to tell me when I'm hungry, sick, or out of money. I know what's ailing me.

Perhaps, your friends who are fortunate enough with jobs weren't the right people to asked that question. Just ask homeless or the less fortunate on the street. I'd bet my money, you'll get a different answer.

[maat55]

I'm personally more worried about the national debt, but that aside, I've always wondered what would happen if everyone started using good financial sense. Many would stop buying things they don't need. I wonder how this would effect the economy.

I believe proper money management should be taught in school, but the arguement of what the curriculum should be would last forever.

[osadg]

Funny that you posted that. Last year my husband's grandfather gave the family a very similar speech. He survived the great depression and said that it forced him to learn how to live frugally to say the least, but also how to be a provider when there wasn't much to go around. He was going on, (as Grandpa's tend to do), but I remember being completely intrigued and talking with him about it privately after dinner.

He didn't want to see our nation come to that, but he said that somewhere along the lines everything he had always had to work so hard for, started coming easier and easier, and he always felt blessed and remained very careful with his money. He said that he felt like things were just coming to easy to us "youngsters" (I suppose he meant those of us under 100), and that surviving another great depression would remind us all of our humble needs.

When we discussed how "people" as a whole could survive such a thing, when most of us simply aren't equipped to handle such simplicity, he just said we would-that in times of feast or famine, you figure it out. He said the biggest shame today was what people thought of as being poor. and that all the programs out there that were designed to help the poor were failing us as a nation. He felt that helping the poor, was what he saw growing up, literally going to someone's door and providing them with food, water, etc. He felt that another nationally tragedy would change all that and force people to see what poor means, and said that there will be those that survive, as they always do, and that the poor would too. He felt it was time for the whole country to learn how to take care of themselves.

I certainly don't ever want to see our country forced into another such depression, and I would hope that even in these times of foreclosures and overwhelming debt, that we would not ever come to that again. I will say though, that I certainly haven't forgotten that conversation. As I look at my personal surroundings and how fortunate I am, I remind myself that there are some things I'm very lucky to have been born into. And as I let my mind wonder I imagine if the country had to survive that, and I just can't see it....

[Joan.of.the.Arch]

I'm sure there is much to be said about what a full depression would be like nowadays. I think of the possible unavailability of food, the farmers no longer able to afford to grow the food, the lack of transportation, people stuck in the suburbs with no resources around them, people stuck in their cities with too many desperate people at hand, increased crime, lack of jobs, being unable to buy heating, cooling, and cooking fuel, governments not able to repair roads, public buildings, public utitlities, sewers, upkeep water and wastewater treatment plants, police departments not able to keep car and equipment in best order, fire and ambulance responders in similar position, hospitals shutting down....

Depression could be awful. And I'm sorry, but being a current practioner of frugality and careful stewardship of resources would not necessarily help you a lot during a depression. Depression would be a whole new ballgame.

Anyone who thinks depression might be a good shaking up---how would you like people at your door everyday begging for food? (That happened at my father's childhood home. His mother cooked extra everyday to feed people who asked at her door. His family was fortunate never to miss a day of work & pay through the Great Depression.) Or how would like like to be the one begging at your neighbor's door for something to feed yourself or your kids? How would you like to be a single parent with kids who has to move across country to family who is willing to let you move in with them? (That happened to my grandmother and mother., and it was not the cozy, loving experience one would hope. ) How would you like to be the person who takes up wandering through the city or through the country looking for work? Could a depression again make for throngs of homeless people? What if that is who knocks at your door?

No depression, please!

[maat55]

When I first heard the word "Recession" before the first of the year, I got very proactive on cleaning up my finances. 5 years ago, my business slowed down dramatically and we had too much debt, with our IRA as an EF.

Fortunately, months before this happened, I began to listen to DR. I put my home up for sale( before my business slowed). We sold our home and paid off our debts and were having our new house built when the recession hit us. By the time our home was finished, business had picked back up.

But I realized that had we not put our house up for sale at the time we did, we would have been in a major pickle. Since we have paid cash for everything except when we bought my truck when my beater broke down. Last year, I again got proactive about paying off the truck quickly.

But, back to the hearing the word recession. I had a little left to pay on my truck and no EF. We dropped everything unnecessary in order to build an EF and payoff the truck. Which we did quickly and are investing heavily.

This year has been the second slowest year in my 20 year business, but we have accomplished more financially than at any other time. I know I'm rambling but the point is: having a significant wake up call in my past has made a difference in my thinking. This time, I'm planning for the next one everyday.

P.S. I believe divine intervention occured in my situation 5 years ago.