Great Depression 2

Since we're all about sequels these days......

So every day I drive to work in my fuel efficient 10 year old Honda (156,000 miles and hoping for 300,000!) and I watch the gas prices jump and jump and jump and I listen to NPR which this morning reported that 8 gas stations in the Philadelphia area ran out of gasoline yesterday and I wonder how soon it will be before people reach the breaking point. The last time I filled up my car it was the first time ever that it was over 20$. That hurt. But I cannot imagine what it is like to routinely have to pay $50 or 60$. And I only have to fill up my car every two weeks if I'm just doing the commute to work and running a few errands on Saturday. I wonder if they will start rationing soon or if people will start stealing gas from cars like in the 1970s? One person I work with, who in years past has made fun of my conservationist leanings and actually was proud of their gas guzzling SUV is now selling said car becasue they can no longer afford to fuel it.

Then I read a a letter in one of my financial newsletters that scares me. Scares me only because I've been thinking about it a lot recently and it freaks me out to know that other people are having the same thoughts. I couldn't find it online (it was in an email) so I'm just gonna copy and paste it here. It is from the Daily Reckoning Financial Newsletter:

"The dollar of my childhood is worth about 7¢ today and I expect to see it
plunge to 2¢ or less before I die," writes John Wrisley, of Columbia, SC.
"It's a shame inflation can't be suspended and attempts made to restore
the dollar to a little of its former glory, but that's not the way long
episodes of monetary inflation end. Unfortunately, the chips must fall
where they will, the chickens must return to the roost, and people will
notice the punch bowl is empty and the party will be over.

"As a child of Great Depression 1, I grew up believing 'they' would never
let anything like that happen again. Not that being raised by grandparents
in a small rented house was an unhappy experience. They couldn't afford
luxuries like an automobile or vacation trips, but life was not
unbearable. Besides, radio entertainment was free! Not until I became an
adult did I realize how Spartan my childhood was.

"I don't look forward to enduring Great Depression 2 because I think it
will be far more unpleasant than the episode of the 1930s. I fear the
level of violence most of all, as young people trained by movies, videos,
and vicious 'music' notice the raunchy party is winding down and they must
go out and take what they want to sustain themselves.

"I remember the adults of the 1930s being very adept at growing food in
the backyard and raising a few chickens to augment the vegetables. Clothes
were repaired when necessary, and no one worried particularly about
drifters coming through town looking for handouts. You either helped them
if you could, or shrugged in sympathy if you couldn't. They usually
understood and roamed on.

"Not only will average people be less self-sufficient in Great Depression
2, but the new social phenomenon of huge numbers of old people must be
faced. In the '30s, the over-65 crowd usually lived with family when they
couldn't work any more. Now, they live apart from their families and
science is keeping them alive longer. A preview of things to come can be
found in the mailing piece of an upscale retirement center in our town,
which asks for contributions to help certain residents who have 'outlived
their reserve.' Imagine! These are people who thought they had provided
for their future and plunked their money down to be taken care of until
the Grim Reaper came to fetch them. And now, they have 'outlived their
reserves!' (There's a book title there.)

"There is no way to avoid this difficult economic setback, unless the laws
of nature have been rescinded. No inflation has ever not ended amid pain
and confusion. And no economic boom, funded mainly be debt, ever led to
anything but a depression. We've been very clever devising ways to
postpone the grim payoff, but an awareness of the fictions is creeping
across the land, and here and there people are saying, 'Wait a minute!
Maybe all this debt is not such a good thing! Let's find the guy who told
us we could borrow ourselves rich and hang him!'

"Arnold Toynbee remarked, 'The fall of a great nation is always a
suicide.' I have a vague understanding of why all the great empires of the
past did themselves in, but I never expected to live long enough to
witness this strand of history repeat itself in the United States.
"However, it will only be another transition. It will be grossly painful
for some, and a minor inconvenience for others. Life will continue. When
the going gets tough I shall walk the streets with a sign that quotes
Thomas Paine; 'We have it in our power to begin the world over again!'"


When I transpose the world of the Great Depression of the 30s with how things are today, it is scary. People are less self sufficient and I do think crime will rise rapidly. The families with the Hummers and the 10,000 sf homes they can no longer afford to heat, that were living paycheck to paycheck won't be able to take this hit. The majority are unprepared. What will happen to them? Will these same families be coming to my backdoor looking for handouts? I know I'm being paranoid, and I don't think this will happen this year, but it could happen soon. It will be an inconvenience for us. We will have to tighten things more. But we live almost debt free. We have no car payments, no credit card balances, no latest gadgets, I dress cheaply...we bought a house in the middle of our price range that we could easily afford. We live realtively simply although certainly there are things that we could give up to save even more money. But I'm an island as far as I can tell. With the exception of the farmers and Mennonites around us, the majority of people that live in our area are maxed out. I think things are going to get really bad.