Silent depression?

I came across an article recently called “Lessons from the Great Depression” that recapped a memoir of that decade. This sent me down a links-leading-to-links rabbit hole about other wisdom from the 1930s. I thought it might be worthwhile examining and consolidating these stories, especially since so many economists and other experts are predicting something similarly catastrophic for America (and the world) in the upcoming year.

My parents were born in the middle of the Great Depression: My mother in 1931, my father in 1935. Mom was born in poverty in the bayous of Louisiana; Dad was born to working-class immigrant parents in Buffalo, New York. Both bear mental scars from that decade of their youth because of how their parents and neighbors coped with the hardships.

While people are stating unequivocally that currently we’re not in a depression (largely on the basis that the stock market hasn’t crashed in a suitably dramatic fashion), others claim we’re already in a “silent depression.”

This hit home after watching a short video comparing the costs of homes, rent, and income between 1930 and 2023.

“You’re in a Silent Depression,” says a man calling himself Wall Street Silver (Freddie Smith, a realtor based in Orlando). “When you compare the Great Depression to today, this is absolutely going to blow your mind. In 1930 during the Great Depression, the average home in America was $3,900. The average car was $600. The average monthly rent was $18, or $216 a year, and the average salary was $1,300 a year. Fast forward to today. It is $436,000 for the average home, $48,000 for the average car, and the average rent is $2,000 a month or $24,000 a year, and we have a $56,000 income for the average American right now.

“So if you look back to the Great Depression, the house was only three times the average salary. Now it is eight times the average salary. The car was 46% of the salary. The car today is 85% of the salary. And here’s the craziest part. The rent was 16% of the average salary. It is now 42% of the average salary.”

And of course, there’s the issue of unemployment. During the Great Depression, unemployment famously reached 25 percent. Now? Well, it depends on what sources you consult. Shadowstats (which uses the original metrics that were used to calculate such things) reports a current unemployment rate of, well, 25 percent.

Additionally, a frightening 62 percent of Americans are living paycheck to paycheck (this being called “the main financial lifestyle among U.S. consumers”) and 74% of Americans (understandably) say they are stressed about finances. Sadly, as one economist pointed out, “Because real wages have declined so much over the last three years, consumers have turned to debt to maintain their standard of living.” Food pantries are struggling.

Tucker Carlson, in interviewing economist Stephanie Pomboy, noted people used to be suspicious of debt, but now the entire economy is based on that vice (rather than being built on real things, which are now outsourced overseas). But, though policymakers still have their blinders on regarding the dollar remaining the world’s reserve currency, all that is changing … and changing rapidly. Pomboy says, The demise of the U.S. hegemony is really upon us, and … so many in Washington are just sleeping right through it as if it’s not a reality.”

As Ayn Rand so memorably put it, “You can ignore reality, but you can’t ignore the consequences of ignoring reality.”

If we are in a depression, it behooves us to learn from the last one. I’ve often wondered if people knew in 1928 what would happen in 1929, what could they have done to brace themselves? In light of the current situation, I think that question is just as pertinent today. What is the best way to brace for a looming or current economic depression?

To answer this, I drew advice from several pieces on the subject of “Lessons of the Great Depression” (here, here, and here) and plucked out some pertinent concepts. If nothing else, it strikes me that these pertain to current and future times as well.

• Diversify everything from investments to skills (generalists and jacks-of-all-trades thrived).

• Fewer bad things happen to those who are debt-free.

• Need less and waste less. Get lean.

• Multiple income streams are better than one solitary stream, no matter how large.

• Wean yourself off dependency wherever possible, everything from addictions to government aid.

• Tangible investments are often better than intangible investments. Livestock and gardens reproduce.

• Band together whenever possible (family, neighbors, church) to help each other out. There is strength in numbers.

• Belief in a Higher Power was a massively sustaining force for when people were at their lowest.

• “The situation at hand had the final say.” People were forced to roll with the punches and adapt to their circumstances. No amount of anger, despair, or bargaining could change reality.

• Be generous. Personal circumstances can change in an instant.

• Always look for work. This doesn’t (necessarily) mean you’re working a second 40-hour-per-week job; but it does mean you’re taking advantage of side gigs or odd jobs that come your way. Even unpaid “work” has its merits, as it teaches you skills, develops your reputation, and broadens your influence.

• The concept of “retirement” changed completely. People worked as long as they were able.

What other tips would you add?