The Biggest Similarity Between the Great Depression and the Current Economic Crisis

Many financial planners, stock market gurus, and economists are beginning draw many different conclusions about the similarities and differences between Americaâ??s Great Depression and the economic hole we have been falling into for the past year or so. Some of these comparisons are meant to scare and possibly even entertain those who enjoy the â??doom and gloomâ? predictions. But there is one similarity that is staring everyone in the face and the time is now to begin to recognize exactly that similarity is as well as the impact that drawing these comparisons has on American culture.

Remember the depression-era mentality of squirreling away as many resources as possible, whether that means financial, emotional, capital, or otherwise? As a whole, Americans realized that saving for the future and creating even a small pillow with which to fall on during hard economic times was very important, and meant the survival of many individuals’ well-being. That same realization is beginning to sink in I believe, but not quite as deeply as I’d like to see. More and more people are beginning to save for the future. They are slowly realizing through this most recent set of economic hurdles that buying on credit, and spending more than they have is a failing philosophy. People can only live beyond their means for so long, and there are millions of Americans who are waking up to this realization each day. Whether it’s a gentle shake or an ear-splitting alarm bell waking them up depends on peoples’ individual circumstances, but by and large, the message that saving is a good thing for their personal economic health as well as the financial health of the nation is striking a chord.

Perhaps this most recent economic downturn is the remedy needed by millions to begin to reshape how they manage their money. Perhaps just like the huge spike in gas prices we saw last year, and the corresponding but very short-lived shift to more fuel efficient cars, is an indicator that Americans are far more dense or stuck in their ways when it comes to spending than anyone previously would have predicted. I tend to fall on the optimist side of the argument and hope that even though things are very bad right now economically for many people and businesses, itâ??s the American way to adapt and learn from previous mistakes in order to never repeat them.

If more and more people are waking up to the fact that their credit cards are poor substitutes for living well within their means and paying cash whenever possible for instance, perhaps we will, in our lifetimes, observe a real sea change of economic behavior. I can only hope so because without a real change in behavior, the same financial vices and poor decisions that got everyone into this mess to begin with, no matter how subtly felt in the past, will give rise to another economic downturn somewhere in the not so distant future. Smart saving is the least sexy option for many Americans, but it is certainly the way to begin to build real wealth, and real insulation from any future economic woes.