Financial gurus of all types have been predicting that the United States is heading for a financial collapse; enough of them that we have to take it seriously. While they may not agree on when it will happen or what the actual trigger will be, they agree to its inevitability.
Generally speaking, when preppers and others want to talk about the problems associated with a financial collapse, they turn to the Argentinean collapse of 1999 as their example. While that is probably the biggest such example in recent times, they often seem to forget that we have also experienced such an event, here in the United States.
It was called The Great Depression. The Argentinean collapse might be more recent, but the Great Depression happened to Americans. That means it can very easily be a much better indicator of how Americans would react to another such event.
Many people think that the Great Depression was caused by Wall Street, but it wasn’t. While the stock market crash of 1929 had a part in it, kicking it off, that alone didn’t bring the country to the point of economic depression.
With the great loss of wealth that the collapse of the stock market caused, people became more conservative in their purchases, saving money rather than spending it. But there were other problems too, which built on that.
Related: How to Keep Your Money Safe for When SHTF
We can justly say that the ultimate cause of the Great Depression was government monetary policies. The Smoot-Hawley Tariff Act of 1930, lauded as an attempt to protect American business, was actually an attempt to increase government revenue and control, by implementing tariffs on over 20,000 imported goods.
This caused a collapse of world trade, which also fed into creating the Depression.
Even that wasn’t the ultimate cause of the Great Depression. Ultimately what took a recession and turned it into a depression was the public losing faith in the banking system. This loss of faith was a natural result of some banks failing.
People looked at that and realized their bank could fail just as well and decided that their life’s savings were better off under their mattress, instead of in the bank.
There are some politicians who can’t keep themselves from messing with the economy, as if they understand it and think they can make it do what they want to. But the truth is that our economy is so complex, that it is unlikely that anyone fully understands it.
Even economists, who are supposed to understand it, can’t come to an agreement on the rules it operates under. So, when Congress or the sitting President start messing around with monetary policy, it’s likely that the outcome will be negative.
That leaves you and I with the need to take precautions, so that we don’t make the same mistakes our ancestors did back in the 1920s and 30s.
Another Great Depression could be right around the corner and we could be setting ourselves up to be victims of it. We need to understand the mistakes they made, so that we can at least try to avoid making the same ones.
Too Much Debt
The first and probably biggest mistake that people made, which led up to the Great Depression was too much debt. Common people of all professions were buying into the new Stock Market, using borrowed money to do so. This sort of “leveraged buying” was fine as long as the companies that they bought stock into were making money.
But when they lost, the people who had taken out the loans didn’t have the money to pay those loans back. This ultimately led to the collapse of many banks.
Many of those same people were overly encumbered with debt in their own lives as well, just as people were before the Great Recession of 2008/2009. When they didn’t have the money to pay for their losses in the stock market, it hurt their families as well, with people losing their homes and other things bought on credit.
Today, the average American family lives on 110% of their income, putting most family’s finances at risk, should they lose a source of income. Just as happened during the Great Depression, we can expect many people to lose their homes, cars and even furniture, if the economy turns south and they lose their jobs.
Not Having Sufficient Cash Reserves
This mistake ties directly into the last, as the only way to protect yourself from too much debt is to have cash reserves you can use to pay the bills, should something happen to your personal finances or the economy in general.
Related: Money Saving Tips From Survivors Of The Great Depression
The same people who were investing in the stock market, making leveraged purchases, were doing so without any cash reserves to protect themselves against loss.
This is largely a problem with being overly optimistic about your chances for success. That optimism can cause someone to put everything into their investments, a classic example of “all their eggs in one basket.” As long as that basket is intact, they are okay; but if anything happens to it, they are in trouble.
Living On 100% Of Their Income
The same people who were investing in the stock market, were doing the same thing that many of us do today, living the best life they could, based on the income they had. What this means is that they had no buffer between their monthly expenses and their monthly income, to take care of unexpected expenses.
When you buy a house today, the lender will generally calculate your maximum monthly payment to be equal to 28 to 30 percent of your income. This amount is considered to be the maximum most people can pay.
If they already have monthly payments, for something like a car, the amount will be reduced to reflect 28 percent of the income, after the car payment is taken out. In either case, that 28 percent means that the family is living on their entire income.
During the Wall Street crash, many people suddenly found themselves having to make payments that they couldn’t afford, because there was no extra buffer in their monthly income.
Some of these people lost their homes. Others lost cars. Those who also lost their jobs ended up losing everything.
Buying Into The Panic
An important part of the Great Depression was the crash of the banking industry. Some banks failed, because they had lent money to people making leveraged stock purchases.
When those people defaulted on their loans, the banks were left holding that debt. In some cases, the amount of debt was enough to run the bank into bankruptcy.
Related: The Great Depression Was Nothing Compared To This
The population in general panicked, starting a run on the banks, as people withdrew their funds, putting more and more banks into financial jeopardy.
Although I’m listing this as a mistake, I’m not sure there is a solution to this problem, as that would require convincing large masses of people that their money was safe, when they could see it wasn’t. The banks which have failed recently have received a lot of attention, leading us in the direction of the same sort of thing happening again.
The only way to protect ourselves is to get our money out of the banks before a run happens; but that just might help to bring on the general panic.
Not Having Secure Deposits
When the Great Depression happened, only the largest banks were directly connected to the Federal Reserve.
The FDIC, which we are all familiar with, was in its infancy and most deposits were not insured in any way. Small, local banks had nothing to back up their deposits, other than the loans they made with that money.
Today, deposits in many banks are insured by the FDIC.
Deposits in other banks are insured by state organizations, similar in organization and operation to the FDIC. This should mean that almost all deposits are insured, protecting the average American from losing the money they’ve deposited in the bank.
But there’s a catch to this. Deposits made into a bank that is backed by the FDIC are limited to $250,000 per deposited, per bank. If someone has $500,000 deposited in a bank and the bank fails, they won’t receive the full $500,000, but only $250,000.
The state institutions I mentioned above, which perform a similar function have limits as well, generally lower than that of the FDIC.
No Fallback Strategy
Probably the worst thing that anyone did, leading to their own demise, was to not have a fallback strategy, to be implemented in the case of a financial or other sort of disaster. In other words, they weren’t prepared to take care of themselves, should something happen to the country. They weren’t preppers.
In a way, this is somewhat amazing, as the Great Depression took place between World War I and World War II. During the First World War, the federal government was encouraging people to plant gardens and raise chickens, so that their families would have their own food.
The same happened during World War II, with the government encouraging people to plant “Victory Gardens” in their yards. Somehow, even though people were accustomed to being self-sufficient at the end of World War I, they gave that up in the 20 years between those two wars.
It would seem that after living through World War I, people would see the benefit of raising their own food and being self-sufficient. But that requires a lot of extra work; work that most people obviously didn’t want to do. They stopped raising their gardens, expecting “the system” to take care of them, much like people today.
When the next depression or financial collapse comes along, it is those who are prepared to care for themselves, rather than depending on the system, who will have the greatest chances for survival.
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Deadliest mistake they made was trusting in our government and “NOT” trusting in our Creator.
Another Demonrat as next president will finish America for good. The Hillary, Obama, Biden path we are on is typical, like all Roman Empire’s imitates in history. Too many liberal voters believe in big govt than believe in God given us a Christian nation of freewill.
Religion is not the end all, religion is a guiding force to make proper decision to where America goes. We got poly extremes leading our country in the wrong direction. Religious extreme evangelism, Unionism, Greeny environmentalism, Pedophilia, Satanism, elitism and other abnormalities, wokeism and feminized males.
Do we still have a core population left to upright a sinking ship country? Every year the socialist, marxist, communist, whatever we call them. Have taken over our education department in the DC Swamp command center.
One issue…I also noticed during/after covid…as you go thru preps it was hard, expensive and not always possible to resupply preps.
During WWI they had years of war, influenza pandemic, lost sons and husbands who helped farm and with labor….and pretty much were catching their breath when it all hit the fan…then WWII ….w/o a break as most effects of depression were still in place and actually lasted past WWII.
I think the “planed mix” was a psychological shock to most and reprep just didn’t get done (economy already getting crazy…some had lost jobs, some hadn’t been paid rent…many let debt slide and voila…
Always prep, always keep prepping, always keep eye on the ball…do not let the obstacles or day to day distract you.
Even asitgets harder…push harder!
Stupid spell assist…
Plandemic
Hello Monday morning quarterbacks, of the weekend warrior’s club!
We don’t need a Police State, Covid masking and poisonous injections. What we need is Dirty Harry, Frank Bullitt, Original Texas Ranger Walker, Colombo, Kojak type police. Maybe Blue Bloods without the family nepotism. Those who are for the people and not for the political. Not the weaponized left leaning governments in local, State and Federal agencies. The proverbial “Deep State.”
From man from Uncle – Thrush is the CCP Biden administration – the Technological Hierarchy for the Removal of Undesirables and the Subjugation of Humanity – THRUSH. America last! China is the World’s Dominatrix of absolute power in this 21st century.
We have the environmentalist trying make us buy EV’s and ban our gas stoves to go all electric.
The new woke fear mongering of the Covid variants. Pushing mask and injection shots of heart issue poison. Somehow these elites make for me, us and not for thee, the controllers are all exempt.
Why can’t we have both EV’s and gas vehicles? EV’s have more environmental hazard waste material to pollute our earth. Who profits? The corrupt officials, woke corporations, of course China does.
Wind mills kill whales and American fishing industry. Who cares? Mask up, take the vaccine, shut up!
When the elites are photo-op, do they really get the injection? Use water or the fake Hollywood syringes that retract, but look as though the patient is getting the shot, magic show trickery?
We have seen our America as last on the world stage. The world first with the current people in power at State and Federal level positions, the gatekeepers,doorkeepers, whatever.
We see the adversaries are weakening our physical and mental American resolve. Early education in Marxist ideology of 1619 Project, CRT into grade school, college to the US military service branches.
Feminized males of military service age. While open border illegal’s of male military age cross into the depths of our country. Like foreign owned American farmlands and businesses as staging areas.
Smuggled foreign weapons across the border and recently found illegal Chinese bioweapon lab in California. Where else are these labs? Then we have Chinese secret police stations operating in our cities. Washington DC is too corrupt to care outside of their political bubble. The richest counties in the USA are around the DC Democrat city. Then there are trickle down Biden economics to the Blue Sanctuary States to grease the palms of the Demoncratic operatives. That deploy their troops of Antifa and BLM to destroy the opposition of innocent American citizens.
Are conservatives willing to stay home give another defeat and win for the Marxist in 2024?
Paper and pen is better than electronic hackable voting machines are. Mall in ballots and voter ballot harvesting were part of the issues causing delays in processing vote counts.
Both parties have not purged the voting rolls of deceased voters and voter ID’s are used in Mexico elections.
One of those Marxist clowns is voted in as president your country as we know it will start SHTF for real this time.
What are we doing about it? Prepping is a short term solution to long term problems we face.
We have to do things civilly or we see the George Soros DA’s will get us for trumped up charges too.
The next step is to realign the corrupted legal justice system that is out of balance presently.
Immigration has and is the greatest chess game of politics. Most political parties play checkers in repairing an obsolete system. Flooding America with illegals getting American citizen benefits on our taxes paid. Defund the Income Removal Service, the FBI, Department of Education and reform Unions in public and private entities. We can’t afford to raise wages for failing unions, political laws and policies.
Are we willing to do what is right or hide in quiet prepping desperation as America circles the drain?
News from stinky SoCal border cities.
Wet back sewage spills from Mexico polluting the border area for about 50 years.
If this was happening in a city like Del Mar, hell would have no fury. This is happening in poor district neighborhoods. In districts run by demonrats and SD city council heavily demoncrat run.
Did you know the Tijuana Sewage issue is California man made political issue? Where are the environmentalist on this health crisis? Back in 1985 California agreement with Mexico, agreed potable or freshwater will be sent from America to Mexico. And none of the water that is currently sent across the Southern Border be sewage. Right now Imperial Beach in California is being flooded with tire, garbage and sewage from Tijuana. San Diego beaches, local and tourist spots are constantly closed to water activities. There are water boiling orders to locals. Businesses are loosing revenue from beach closures.
Does it matter there or any other railroad hazard chemical spill in America anymore?
Government will not make things better. Neither side of the aisle is going to fix this country. It is up to Patriots, but are there enough who are willing?
It always starts in California as there is enough gullible population that believes every radical idea on the face of earth. California has the largest electoral votes of ant State in the union. So this State is a bellwether trial an error State for the rest of the nation. Next to New York, it’s a trashy State.
Right now we Gov. Newsom as the potential replacement for Biden. He has continued to follow the same pattern of governing like his predecessors in the big “D” party.
Gun control, slack on pedophiles, lets Union with environmental groups steer the State into bankruptcy.
Newsom is a new face of the same, same old sloppy Democratic politics that we have in America.
He will follow in the footsteps of Jimmie Carter, Obama and Biden, Harris, all combined into one. Will America survive or become part of China?
The answer to much of our current situation is that we are consumers, not producers. We definitely need to grow our own food and energy and get out of debt. It would get us a long way toward dealing with any economic downturn.
Yes build the Southern Border Wall and stop Biden from selling off the taxpayer’s paid border wall materials. Secure the border, ASAP!
Drill for oil here and now!!
“F” the unions and the Greenie’s climate change BS!!!
Biden Administration selling border wall parts for cheap
Posted: August 22, 2023 – KUSI Newsroom
From the people’s republic of Californication coming nationwide soon!
*https://www.kusi*com/biden-administration-selling-border-wall-parts-for-cheap/
Build that wall and stop California sending water to Mexico an coming back as stinky sewage!
Friends in Texas who own oilwells (unfortunately not me) have been ordered by the government to cap their wells. There is much anger over this!
Biggest Mistake ever
Believing , trusting , giving any information to the crime, ridden Gov , who does know truth
liar, cheets , thieves , as sick and evil as any perverse person can get
NO CLUE
but put into positions to fill quotas , meet agendas , and do thier evil agenda bidding
JUST follow directives from WHO , WEF , CFR , and other crime riden 3 letter , NOT elected , appointed Positions in the Gov.
This why God who is Truth , Will Destroy the System , created, installed and managed by the corrupt elete who use power and influence to control
MONEY the True Root
all boils down to greed , lust , perversion and corruption
Money is not the root of all evil. It was coined by Christian preachers for marketing to increase their Sunday donations in church. Ha, Ha!
God or Jesus Christ never said we could not be rich. In Bible land some cherry picked verses clergy used for tithing to gain wealth. Look at these world religions owning tons of money, land and people too.
We have been lied to through the ages by elites in charges of the masses.
Question authority always, especially of our socialism in America.
The big one was the Spanish Inquisition. Organized Religion and politics always disruptor of man’s existence on earth as we know it in today.
Sandy, the Bible does not say money is the root of all evil. 1 Tim 6:10 , KJV or NIV versions, says “For the love of money is the root of all evil.” A lot of people think money is, but it’s the LOVE of money. Not all preachers are after the parishioners money, but I would agree that many, some preachers, civic leaders, government officials and elites are driven by greed and sell out the US people.
If SHTF and you have not already conditioned yourself to endure long sleepless days, eat garbage, live under harsh weather conditions, and know how to fully protect yourself and family, you and your family will either lose everything you have, be someone’s b….ches, or be dead.
There is not going to be a Happily Ever After Fairy Tale Ending to a violent, nation ending scenario.
Keep your Family close, your supplies hidden, and your daily actions out of public view. Basically, become an animal that protects its own. Do this and you should have a 50/50 chance of survival.
Yes liberals quit voting the “D” party line. You all are digging us deeper, closer to China, an deeper in debt. We are the debtor’s to China the debtee holder. Why do we think our America is being sold out? American farmlands up for grabs.
What can we do?
You want hardship experience join the military, try their boot camps.
Go live in a 3rd world country for awhile. Most people coming back to America appreciate what we have here. The modern Prodigal Son’s come home to roost after a touch of reality happens to them.
Meh endless wars are killing us
Considering the government has equipment in space that can track the hairs in a Moose’s ass from that distance, the 50/50 equation is a stretch on survival don’t you think?..
I sincerely doubt that 90% of US citizens could ‘become an animal’ in order to survive. However, I believe those who could become feral would have a 50/50 chance of survival. Once ‘feral’, actions would become a concious act of survival at any cost. Those who could act by instinct and not be driven by emotion would have rhe highest survival rate.
This guy forgot one MINOR detail when it comes to the FDIC!!!!! It only has enough to cover 3% ofALL of nthe accounts out there!!! Sure it will BORROW (another debt!!!!) from the US Treasury to cover the OTHER 97%!!! the problem here is thatv there will NOT be enough for that!!!!! So the whole article is suspect!!!!
Since Nixon and others took America off the gold standard our country’s decline started. The USA greenback money was based on petroleum. Which Biden shutdown our oil production system Trump energized it. Now we have a total fiat currency ready to fold. The advent of the American digital money is Biblical, the mark of the beast stuff.
The BRICS’ new gold-backed currency is coming, could possibly take over the USD soon.
Defund the Federal Reserve System, it really is not an American bank system.
Biden is a globalist first, America last. He will lap up this BRICS and the expanding nations to destroy America, as we know it, soon!
And a report in the news yesterday says Taco Bell wants to do away with cash transactions. For months I have heard of the plans to go to a digital currency, so that we cannot buy anything without the gov’t knowing all the details of everything. Not exactly the country I thought I was growing up in.
And didn’t the FDIC cover all the money in the first bank that collapsed this year. It seems like I heard that (Biden?) said all the acounts would be covered completely.
„And my God will meet all your needs according to the riches of his glory in Christ Jesus.”
Philippians 4:19 NIV
For 10 years before and the first 2 years of the Great Depression the United States had a Republican president……. Some folks need to review their history …..
You quoted “Today, the average American family lives on 110% of their income”.
I had not heard this stat before. Can you share the source?
Nice article.
After WW1, people left the farms for the mfg plants, the big cities, urban living,with electricity and indoor plumbing.
My Great granddad came back from WW1 to work on the railoads, got involved in running bootleg moonshine on the side. He was mentally messed up, his Dad died and his Mom was abusive towards him and his brothers.
During the Depression, there was domestic violence, drug/alcohol abuse,child prostitution/selling of children, husbands abandoning their families,etc . Society was falling apart