Sounds like a crazy question but let’s take a look at what a depression would mean to our country. A depression can be viewed best as a sustained recession. The demand for goods and services declines because our economy halts or starts reversing. This leads to market fears so the stock market takes a big hit. People start spending less money which negatively impacts a variety of retailers.
Essential products are still purchased like groceries; as a matter of fact grocery stores sales would go up because people would start eating out less. The value of goods drops (i.e. appliances, cars, homes, etc.) because retailers have to do something to turn inventory. But the bottom line is that money gets tight so non-essential products take a significant hit which means that companies that provide these types of items lay people off to stay afloat. This of course leads to a variety of problems as more people are out of work and not adding to our country's GDP and instead draining it due to the need for government assistance.
This certainly doesn’t sound good but let’s look at the flip side. Because we are now dealing with a global economy the prices of our goods and services directly competes with the rest of the world. As we know countries like China, South Korea, and Taiwan, are by far outperforming us due directly to their much lower prices. The fact is, when the value of our dollar is depressed the cost of producing our products goes down allowing us to provide lower retails making our products and services more attractive across the globe. It's kind of funny if you think about it that a lot of countries root for us to not experience a depression because it directly impacts them. They want us to be financially well off so we'll continue to buy their goods and services. International trade is something The Great Depression didn’t have going for it and it's something that will expedite us getting out of one.
Americans would have less money because the value of our dollar drops in a depression but keep in mind prices go down as well so the impact wouldn’t be as dramatic. Now if an individual was doing business with another country (or even travelling to another country) he or she would take a financial hit because the U.S. dollar would be worth less than their dollar. For example someone travelling to England might plan on spending $500 on clothes while there but the currency exchange might make their $500 turn in to $400 to spend. Basically the clothes she purchases would take 20% more U.S. dollars to buy.
Another example is a U.S. investor who invests $5MM dollars in another country might have their investment devalued to $4.5MM because of our depressed dollar. Meaning what would be a good investment if our economy was strong turns into a bad one just because of the negative exchange rate.
Another positive when people go through a depression is they are reminded what needs and wants are. Never before have Americans spent so much money on non-essential items; we work harder and harder to buy things we don’t have time to use. Believe me a depression would help us get our priorities straight.
We’d survive much better in a depression than our ancestors did. There are a variety of reasons for this including our much better access to food and water. People were scattered more back in those days so communication and supply routes were terrible. We certainly don’t have those issues today. Most homes across America have not only phone service but internet service as well (unless they discontinue it for their budget's sake), which improves things from a mental perspective because being connected to what's going on around us makes a huge difference on our mental toughness which softens the blow during challenging times no matter what they are. One of the worst parts about the Great Depression according to those who were there is they knew nothing about what was going on. We won't have to deal with this fear.
Another reason we’d be better off is most people have transportation something that wasn’t common in the 20’s and 30’s. Their ability to get to where the resources were was practically non-existent. Lastly, access to fuel is substantially better now. Gas shortages wouldn’t be a problem like there was back then; of course people would change their driving habits to save money on fuel which is a good thing. No more driving a few blocks to go to the convenience store, instead the oldest form of transportation is used...walking. This is a positive too.
I don’t want to experience a depression but it’s good to know there are some positives. Plus it’s good to keep in mind that opportunities always exist during good times and bad. It’s been the same for thousands of years; some people keep their optimism and take advantage of opportunities even in bad times while others just complain about the situation and get lost in the daily grind. So if an economic depression does hit you just have to decide which person you’ll be.
Essential products are still purchased like groceries; as a matter of fact grocery stores sales would go up because people would start eating out less. The value of goods drops (i.e. appliances, cars, homes, etc.) because retailers have to do something to turn inventory. But the bottom line is that money gets tight so non-essential products take a significant hit which means that companies that provide these types of items lay people off to stay afloat. This of course leads to a variety of problems as more people are out of work and not adding to our country's GDP and instead draining it due to the need for government assistance.
This certainly doesn’t sound good but let’s look at the flip side. Because we are now dealing with a global economy the prices of our goods and services directly competes with the rest of the world. As we know countries like China, South Korea, and Taiwan, are by far outperforming us due directly to their much lower prices. The fact is, when the value of our dollar is depressed the cost of producing our products goes down allowing us to provide lower retails making our products and services more attractive across the globe. It's kind of funny if you think about it that a lot of countries root for us to not experience a depression because it directly impacts them. They want us to be financially well off so we'll continue to buy their goods and services. International trade is something The Great Depression didn’t have going for it and it's something that will expedite us getting out of one.
Americans would have less money because the value of our dollar drops in a depression but keep in mind prices go down as well so the impact wouldn’t be as dramatic. Now if an individual was doing business with another country (or even travelling to another country) he or she would take a financial hit because the U.S. dollar would be worth less than their dollar. For example someone travelling to England might plan on spending $500 on clothes while there but the currency exchange might make their $500 turn in to $400 to spend. Basically the clothes she purchases would take 20% more U.S. dollars to buy.
Another example is a U.S. investor who invests $5MM dollars in another country might have their investment devalued to $4.5MM because of our depressed dollar. Meaning what would be a good investment if our economy was strong turns into a bad one just because of the negative exchange rate.
Another positive when people go through a depression is they are reminded what needs and wants are. Never before have Americans spent so much money on non-essential items; we work harder and harder to buy things we don’t have time to use. Believe me a depression would help us get our priorities straight.
We’d survive much better in a depression than our ancestors did. There are a variety of reasons for this including our much better access to food and water. People were scattered more back in those days so communication and supply routes were terrible. We certainly don’t have those issues today. Most homes across America have not only phone service but internet service as well (unless they discontinue it for their budget's sake), which improves things from a mental perspective because being connected to what's going on around us makes a huge difference on our mental toughness which softens the blow during challenging times no matter what they are. One of the worst parts about the Great Depression according to those who were there is they knew nothing about what was going on. We won't have to deal with this fear.
Another reason we’d be better off is most people have transportation something that wasn’t common in the 20’s and 30’s. Their ability to get to where the resources were was practically non-existent. Lastly, access to fuel is substantially better now. Gas shortages wouldn’t be a problem like there was back then; of course people would change their driving habits to save money on fuel which is a good thing. No more driving a few blocks to go to the convenience store, instead the oldest form of transportation is used...walking. This is a positive too.
I don’t want to experience a depression but it’s good to know there are some positives. Plus it’s good to keep in mind that opportunities always exist during good times and bad. It’s been the same for thousands of years; some people keep their optimism and take advantage of opportunities even in bad times while others just complain about the situation and get lost in the daily grind. So if an economic depression does hit you just have to decide which person you’ll be.
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