I'll admit that I am not really that educated in a lot of things. I hold a GED and the only higher learning I received is a certification as a motorcycle repair technician. Add that to the fact that I'm also part of the 37 million working poor in America and you can easily see why I don't "get" a lot about the current economic crisis.
To try to understand more, I did what I always do and started looking things up. As I said, I only have a GED, but this doesn't mean that I've ever stopped learning about different subjects.
Since I've heard this current issue compared to the Great Depression I decide to look it up. What I found were some strange parallels that have made me worry even more.
Being so uneducated I'm probably wrong, but here are the things I've found that are most often attributed to being causes of the Great Depression: Free credit that was later defaulted, a series of weather events that affected commodities, bank failures, and unstable markets.
What these things lead to was: loss of jobs, reduced availability of basic commodities, loss of homes, and a drastic reduction in consumer spending.
For some reason I see a lot of similar things in that crisis and the one happening today. But it just may be me.
For example: In the 20's and 30's people bought things like cars, radios and other luxury items on credit. The unstable market lead to job losses and people began defaulting on those loans. Right now, people bought cars and homes, lost jobs, and now are defaulting on those loans. In the 20's and 30's this meant that banks were less likely to make new loans, same as today, which reduces consumer spending on everything causing even more instability in the market.
So knowing all of this, why are we giving $810 Billion to bail out Wall Street? When it's consumer spending at the bottom rung that's causing the biggest impact why are we giving so much money to the top?
Part of the problem of the Great Depression was the distribution of wealth. There was a huge gap between the classes that meant a small portion of the population had a large portion of the money. If only that small portion could buy base needs on a regular basis the economy would continue to be destabilized.
How does handing a small portion of the population a large portion of money help the buying power of your average American? Banks are going to get a bunch of money to help settle their debts; but I still won't be able to get a basic student loan so that I can go to night classes to get something better than a repair certification.
There are 37 million of us that weren't responsible for this problem, but are feeling the fall out harder than anyone else, who are still going to be struggling day to day just to survive. Banks still won't give us loans and we still won't be able to buy our basic necessities on a regular basis.
We're the ones that lost construction jobs when the housing market fell. We're the ones who have felt the cut backs of sending industry jobs overseas. When a small gas station closes because it can't compete with big oil, we lose. When a store has to cut all their employees back to part time and we can't even see the ends, much less make them meet, who helps us?
So now who wins in this? Is it the guy who's been a construction worker his whole life without any other job skills now vying for the position at McDonalds? Is it the single parent who just lost their job because they can't afford the gas to commute? Is it the family trying to live on food stamps that haven't been reassessed to match recent inflation?
No. We still lose. In fact it makes it even harder for us now. 10% of the population now holds a huge portion of the wealth. That leaves 90% of us who can't buy anything. Well we can still buy gas, but that's because we don't have any other choice.
In 1929 banks stopped making loans so that they could increase their financial holdings. We just gave them $700 billion to just basically hold onto. This is to cover loans they already have out, not to increase the loans they are willing to give. Banks not wanting to take risks and make anymore loans is one of the major attributers to the market crash of 1929.
So, if I'm interpreting what I'm reading correctly, and I may not be because I'm so uneducated, we just handed ourselves another Depression.
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