The Difference Between A Silent Depression & The Great Depression

Economic gurus have been predicting an economic collapse for years, especially since the Great Recession of 2008/2009.

They don’t necessarily agree on how soon it is coming or just what will be the trigger to set it off; but more and more of them are getting on the bandwagon, striking the same drumbeat.

By and large, the forecasts of these economic experts make it appear that the coming financial collapse will far outpace the problems of the depression that started in 1929. But is it possible that they’re ignoring the silent depression that is already happening today?

By definition, an economic depression is a “steep and sustained drop in economic activity featuring high unemployment and negative GDP growth.”

Based on that, the only thing that kept the COVID-19 pandemic from being considered an economic depression is that the drop in our GDP didn’t last long enough to technically qualify.

So, the economists only call it a recession, at least those who recognize what COVID did to the economy do. There are others who don’t.

But these terms, depression and recession deal with the “macro-economy,” what’s happening to the economy as a whole, either nationally or even globally. Yet that can often ignore the realities of the economy, as they relate to real people trying to live out their lives.

That causes both economists and the public at large to see “the economy” as referencing what they refer to as “corporate greed” and “the rich getting richer.” But in reality, the economy is more about people having jobs and being able to afford the goods and services they need.

Great Depression vs Silent DepressionRoughly 25% of the US population lost their jobs during the Great Depression, making it so that they couldn’t afford the goods and services they needed.

That affected the personal economy of others, in a snowball effect, until all but the very richest were affected. Everyone lost something and some lost all.

The question we have to ask ourselves is if it is possible for there to be another depression, without the signs that the economists look for. If the end result of any depression is people losing their ability to buy goods and services, then we are going through a depression right now.

The Silent Depression, unlike its predecessor, the Great Depression, seems to be overlooked by politicians and public figures, leaving the burden of dealing with it on ordinary families.

A quick examination of common expenses reveals the reality of this Silent Depression. It is essential to compare the costs of various items during the Great Depression to their current prices and the percentage they represent in relation to the average family income.

Housing:
Let’s consider housing costs, a significant monthly expense for many families. In 1930, the average cost of buying a house was $3,900. Today, the average cost has skyrocketed to $410,200 (Source). For those who couldn’t afford to purchase a house, renting was an alternative. Back then, the average rental cost was $18 per month, equivalent to $216 per year. Nowadays, the average rent stands at $2,000 per month or $24,000 per year. It is worth noting that rent in major cities tends to be even higher, affecting a large portion of the population. Renting an apartment instead of a house can save money, but the average monthly rent for a two-bedroom apartment sits at $1,588 (Source).

Transportation:
The second significant expense for families is often a vehicle. In 1930, the average cost of purchasing a car was $600, compared to today’s average of $47,000 (Source). Taking into account the shift towards electric vehicles (EVs), the figure is expected to increase by an additional $10,000.

Although the price of cars has increased roughly 78 times since 1930, gasoline prices have not risen quite as dramatically. In 1930, gas was priced at 10 cents per gallon, while today it hovers between $3.30 and $4.00, depending on the region. Nevertheless, this is still at least 33 times what it would have cost in 1930, even considering the lower mileage traveled back then.

Inflation’s Impact on Salaries:
These figures provide insight into the effects of inflation on prices over the years since the Great Depression. However, to truly understand their implications for today, we must compare them to the average household income in 1930 and today.

In 1930, the average household income amounted to $1,368, accompanied by an unemployment rate of 18.26 percent. At present, the average household income stands at $59,429 (Source), representing an increase of 4,344 percent.

When considering the cost of key necessities listed earlier, we observe the following percentages in relation to the average household income:

Buying a house 3 times annual income 7 times annual income
Renting a house (yearly) 16% of annual income 40% of annual income
Buying a car 40% of annual income 79% of annual income

While it’s true that most of us don’t purchase homes or new cars outright, opting to finance them, we still make payments for years. Ultimately, the more we allocate towards housing and car expenses, the less we have available to spend on other items.

Moreover, apart from inflation, the cost of living has escalated in various other aspects. Many modern conveniences that rely on electricity didn’t exist during that time. Refrigerators became commonplace in homes, while air conditioning achieved widespread use in the 1940s.

In regions with warmer climates, the expenses associated with cooling our homes exceed those of heating them. The rotary dial home telephone gained popularity in the 1930s; however, the costs of those devices and phone services are incomparable to the expenses of today’s smartphones.

Television sets were just beginning to emerge and were not yet present in households. In 1947, only a few thousand privately owned televisions were in existence. This means there was no need to pay for streaming services as they simply did not exist, nor were there satellite TV options available to pay for.

We could continue listing commonplace items today that did not exist back then. For example, the idea of paying seven dollars for a cup of coffee or purchasing designer drinks had not yet materialized. Buying ice cream entailed getting a cone rather than indulging in custom-made creations from establishments like Cold Stone or Marble Slab.

As the cost of living rose, more women joined the workforce full-time instead of remaining at home. However, this brought additional expenses such as the need for a second car, a work wardrobe, and childcare for their children.

Food expenses will increase due to a shift towards more frequent consumption of prepared meals or dining out. Additionally, taxes will also rise, resulting in a decrease in available income despite the second salary contributing less than a quarter of the overall increase. These circumstances are part of the Silent Depression, as we find ourselves spending more without making substantial improvements to our lives; rather, our focus is primarily on maintaining our current standards.

Unfortunately, the government is unlikely to take significant action to address this Silent Depression. Acknowledging the issue would require them to admit its existence, which they are unwilling to do. Moreover, their approach to resolving economic struggles usually involves providing financial assistance to the less fortunate. However, this perpetuates dependence on the government, as they redistribute wealth by taking from those who have and giving to those who do not. It is worth noting that redistributing wealth does not solely affect the rich but also impacts the middle class whenever discussions arise about taking from the “one percenters.”

Given this situation, the solutions available to us lie within our own efforts. Firstly, one option is to strive for such wealth that economic fluctuations become inconsequential. However, achieving this level of affluence is a complex endeavor that I cannot provide guidance on. Therefore, the second option is to focus on enhancing our self-sufficiency. Self-sufficiency is a crucial skill in today’s world, as exemplified by the experiences of individuals like small-scale farmers and homesteaders during the Great Depression. These resilient individuals managed to provide for themselves during challenging times.

Sarting your journey towards self-reliance serves as a valuable resource. It’s important to gain knowledge to help you attain independence in vital areas such as food production, water supply, and heating.

Gradually reducing our reliance on conventional currency is an effective way to adapt and thrive in challenging economic times. History has shown that those who exclusively relied on purchasing everything, much like we do today, were particularly affected during the Great Depression. Furthermore, avoiding debt played a significant role in helping people weather that challenging period. Struggling banks often resorted to calling in their loans as a means to compensate for their own financial hardships.

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