Today’s unemployment rate is fast approaching the worst levels seen since the Great Depression.
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The Panic Is On!
by Keith Johnson
What this country is coming to
I sure would like to know
If they don’t do something bye and bye
The rich will live and the poor will die
Doggone, I mean the panic is on!
–Hezekiah Jenkins
Many economists, intent on disproving any comparison of today’s unemployment with that of the ‘Great Depression’, will often cite the non-farm unemployment figure of 34%. But it should be pointed out that during that time, 27% of America’s employed worked on the farm. Today that number is only 2%.
Unlike today, The Great Depression of the 1930’s was deflationary. The Consumer Price Index was at 17.3% when it began in 1929. By 1933 it was down to 12.6%. In other words, as the depression progressed, the cost of things dropped; what cost $1.00 in 1929 only cost 73 Cents in 1933.(2)
Not so with the depression of today. Ours is an inflationary depression that is fast becoming hyperinflationary. Hyperinflation comes when the increase in the money supply causes prices to rise so rapidly that the highest denominated bank note becomes less valuable than toilet paper. This is being facilitated by industry bailouts, unnecessary wars, foreign aid to Israel and entitlement programs that were not factors in 1933.
Since 1933, inflation has increased 1,627.23%. To calculate its decimal equivalent you need to move the decimal point two places to the left. So 1,627.23%=16.2723 in decimals. This means that what cost $1.00 in 1933 costs approximately $16.27 today.(3)
The average American’s annual income in 1933 was $1,550.00. Today, that would be the equivalent of $25,218.00. According to the last Bureau of Labor Statistics report for 2009(4), the average American’s annual income was $28,592.00 (mid range between highest and lowest by State for 1 person). This may seem like we’re ahead of the game compared to the Great Depression. However, when you consider that the lowest bracket of income tax was levied at 4% in 1933 compared to 15% in 2010, you can see that we are almost on par. But you also must consider the plethora of other taxes and deductions that have since been siphoned out of the average American’s paycheck. Contemporary sales taxes and compulsory enrollments like mandatory insurance (both auto and health) must also be added into the equation to get a better gauge as to where we are now compared to days gone by.(5)
Prices of things, on average, were much more affordable back during the Great Depression than they are now. Here are some basic items for comparison:
Cost of a new house 1933: $5,750.00 (equivalent to $93,565.72 in 2010)
Cost to rent a house in 1933: $18.00 per month (equivalent to $292.00 in 2010)
Brand New Plymouth in 1933: $445.00 (equivalent to $7241.17 in 2010)
Gallon of gas in 1933: 10 Cents (equivalent to $1.62 in 2010)
Loaf of Bread in 1933: 7 Cents (equivalent of $1.13 in 2010)
1 Lb. Of Hamburger Meat in 1933: 11 Cents (equivalent to $1.79 in 2010)
Can of Campbell’s Vegetable Soup in 1933: 10 Cents (equivalent to $1.62 in 2010)
Dozen Eggs in 1933: 5 Cents (equivalent to 81 Cents today)
Take the equivalent monetary values listed above for 2010 and do your own research. Can you buy the same items today for that little cash? According to the 2009 census, the cost to rent a house is approximately $775.00 per month, on average. The cost of even the cheapest automobile is in the tens of thousands and I don’t need to tell you about everyday household goods. Consider these the good times. When hyperinflation sets in, these prices will soar. We don’t live today like they did back in the 1930’s when people were, at most, one generation removed from the farm. As was pointed out previously, 27% of American workers made their livings on the farm and were able to provide many of their own basic needs from that culture. Today, that number is only 2%.
Despite this data, deniers will refuse to believe that they are living through a depression. Some need tangible, salient evidence. They need to feel the depression, or at least have a cognitive reference point that coincides with the black and white images they have come to associate with a depression. Where are the soup lines? Where are the shantytowns? Where are the armies of disheveled hobos playing harmonica as they roast a can of beans over a roadside campfire?
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Now Heck will agree on how annoying the "since the great depression " catch phrase is!
WSS
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Very interesting read. While I don't think that the term depression actually applies at the moment, if the dollar becomes so over-valued that it collapses, then a depression is imminent.
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