I saw this story today about how the Dow Jones is repeating the same pattern that appeared just before markets fell during the Great Depression. Of course the story quoted the line of those who don’t remember history are bound to repeat it.
If we have a similar type of economic hardship that happened in the 30’s this one will be drastically different. Over the last year or so I’ve done more reading and research on this time frame than ever. I’ve also listened to a fair amount of audio and podcasts such as Russ Roberts EconTalk. There is one comment I’ve seen recently that sums it up:
You can’t compare the Queen Mary to A 747 just because both get you across an ocean.
That is the essence of what we face. Our difference today is stark in comparison. If we have a economic depression ours will look vastly different than the 30’s–mainly our technology.
- Technology is vast and available to all the population. From televisions, computers, to the internet. This simply wasn’t the case during the depression era.
- Communication is instantaneous and abundant. Making any event amplified also making the ability for families and friends to stay in touch. In the great depression you had family members dispersed looking for work. This changed the fabric of many households.
- People Live Different. Have you driven around the suburbs lately? The average house, yard, cars, and toys is rather abundant–this wasn’t the case during the depression.
- The Gold standard. All countries left the gold standard during the depression era so we’ve been accustomed to fiat currency for a while. Our fiat currency has become even less tangible by the rise of the computer. Now our deposits, bills, and other commerce is conducted by digital numbers. It’s difficult to see how this plays a factor into any future decline.
- I was in the Apple store this weekend and literally every Ipad, Iphone, and Mac was occupied. The store was packed and I watched as products where purchased left and right. While anecdotal it didn’t feel like the start of some major economic decline…
If you haven’t spent a little time really diving into this era of our history here are some great links to get started: