Through The Art Of Small Talk.com,and "Money Talks", we'll compare Recession versus Depression,and will examine the financial options for your survival!
"Money Talks" will explore various topics regarding finance,Investment and other money making ideas, to get you through these tough times.
With all of this Small-Talk or Big Talk about recession,and comparing the various economical down turns in the past 30 years, we have been reading up about the Great Depression of the 1930s and here are some startling comparisons to the 2008 financial turmoil we are all enduring.
Who says money talks?
We do! Because nothing much have changed since The Great Depression of the 30's.
The rich get richer and the poor, gets poorer!
One obvious solution to the problem of the vast majority of the population not having enough money to satisfy all their needs were to let those who wanted goods purchase products on credit.
The concept of buying now and paying later caught on quickly.
By the end of the 1920’s, 60% of cars and 80% of radios were bought on instalment credit.
Money Talks and Talks! They caught up with the idea, just like today, why waite and save, when consumer credit were so available?
Between 1925 and 1929 the total amount of outstanding consumer credit more than doubled from $1.38 billion to around $3 billion.
Consumer or Instalment credit allowed one to “telescope the future into the present”, as the President’s Committee on Social Trends noted.
This strategy created artificial demand for products which people could not ordinarily afford.
We, at least so it seemed, had "Money To Burn",and here we go again "Money Talks" very very loud!
It put off the day of reckoning, but it made the downfall worse when it came. By telescoping the future into the present,when
“the future” arrived, there was little to buy that hadn’t already been bought.
In addition, people could not longer use their regular wages to purchase whatever items they didn’t have yet, because so much of the wages went to paying back past purchases.
Now add in a stock market slump:
This speculation and the resulting stock market crashes acted as a trigger to the already unstable U.S. & The global economy. Due to the unequal distribution of wealth, the economy of the 1920’s was one very much dependent upon confidence.
The market crashes undermined this confidence. The rich stopped spending on luxury items, and slowed investments.
The middle-class and poor stopped buying things with instalment credit for fear of losing their jobs, and not being able to pay the interest.
As a result industrial production fell by more than 9% between the market crashes in October and December 1929. As a result jobs were lost, and soon people starting defaulting on their interest & mortgage payment.
So let’s see what is different today?
Then, people suddenly became afraid of losing their jobs, so they stopped spending.
This meant businesses stopped making money, so… people lost their jobs.
Eighty years later, here we are getting mailed “economic stimulus” Government cheques! At least here in Australia.
But if people are truly scared, why wouldn’t they just hoard it as well?
We here at The Art Of Small Talk still don’t understand macro-economics for the life of us!
Perhaps you can enlighten us and our friends, about your particular financial opinion regarding your country?
Drop us a little note with your thoughts about the financial crises you and your country are facing, perhaps you have some great ideas?
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