US Economic Collapse 2015What was the Great Depression?

The Great depression had lasted for over 11 years from 1929 to 1940. It was a severely caused by over confidence, over extended market and a dearth the stuck South. In order to end this Great Depression, US government took some unprecedented actions to control the economy. And due to this, the Great Depression ended with the increased production for World War II.

It was the one of the biggest and long lasting economic recession in the history of Western World. It was begun after stock market crash of October 1929. The industrial output and employment rate suffered a lot due to Great Depression as it went up to lowest point. About 13 to 15 million Americans were unemployed at that time. But due to President Franklin D. Roosevelt efforts, his help lessen the worst effects caused due to Depression in 1930’s. The economy was kicked up in 1939-1949 after World War II.

The Stock Market Crash

Upcoming Market CrashOctober 29, 1929 was the Black Tuesday for American people, the day when stock market was crashed and there was an officially beginning of great Depression. Many people tried to sell their stocks but all failed as no one was ready to buy them. Market which had convinced people to get richer failed and took path to bankruptcy.

Banks also suffered as they had invested people’s money in stocks which closed the banks after stock market crashed. And this affected other banks as people started withdrawing their saving from banks and this withdrawing of moneys made few banks to close their banks. And those who failed to withdraw their money suffered and turned them in bankrupts.

After all this, many businesses started cutting employees wages and hours. And in turn, people started to curb their spending, avoiding to spend on luxury goods. And this made many businesses to cut back wages and firing of their workers. And some businesses couldn’t stay open for long time due to lack of workers.

The Dust Bowls

Farmers are the one who could at least feed themselves at this point. But farmers were also one of them who had suffered from this Great Depression. Unfortunately at the time of Depression farmer’s land was hit by droughts and dust storms, this made helpless. Droughts made grass to disappear and storms took all the dirt in their path and destroyed farmers.

Some small farmers were already in debt as they had purchased tractors as it cut the need of manpower on fieldand bank in turned closed their farms leaving them homeless and unemployed.

Riding the Rails

At the time of Great Depression, millions of people were unemployed and which made them to travel place to place in search of job. Few had their own cars, but most hitchhiked.

Many teenagers, older people and some entire families would travel in this manner. They would board goods trains and travel across country to find a job in one of the towns along the way.

Where there was job openings, people would find thousands of other people applying for same post. Those who weren’t lucky to get the job stayed in shantytown (Homerville) outside the city. Shantytown was made from things that are freely available like cardboard, newspapers, or even driftwood.

Roosevelt and the New Deal

When US entered the Great Depression, that time Herbert Hoover was the president. And people blamed him for the Great depression. Just as shantytowns were named as Homerville after him, newspapers were named as “Hoover blankets”, pockets of pants were named as “Hoover flags” and broken down cars were named as “Hoover wagons”.

And during the 1932 presidential election, Franklin D. Roosevelt was elected as the new President of United States. People had huge hopes on Roosevelt. And as soon as when Roosevelt took the position, he shut down all the banks and only let them open when they are stabilized. Then he established program as New Deal. It was known from its initials. It include helping of farmers like Agricultural Adjustment Administration (AAA). Others programs like Civilian Conservation Corps (CCC), Works Progress Administration (WPA) which helped unemployed people.

The End of Great Depression

President Roosevelt had become a hero for Americans. They truly believed him as he cared for common people and he was doing his best to end up The Great Depression. After the New Deal programs, US economy was still bad at the end of 1030’s.

The major turnaround happened after bombing of Pearl Harbor and entrance of the US in Worlds War II. When US were involved in war, both industries and people became essential to war effort. Men were trained and women kept the factories going.

The entry of US in World War II ended the Great Depression in the United States.

If you have been following US economy news closely, you might have heard of the looming 25-year Great Depression. Jim Rickards, the Financial Threat and Asymmetric Warfare Advisor for both the Pentagon and CIA, has forecasted that the next Great Depression will start in 2015 and it will last for 25 long years. While there have been reports about the threat of a downturn in US economy, the fear of a $100 trillion American meltdown is really scary. According to experts, there are a lot of reasons why the US economy might be headed for trouble in 2015. Let us take a look at these factors in detail.

Growing National Debt25 Year Great Depression 2015

The national debt in the US is growing with each passing day, and you may be surprised to know that it has grown by more than a trillion dollars in the last one year. The mainstream media might not think of this as a major issue, but the reality is that the debt levels in the US are alarming. The spending policies of the government combined with a lack of strong will to tackle this issue have brought the matters to a precarious stage. According to Jim Rickards, America has around $17.5 trillion of debt currently. The notion that debt could be used to give a boost to a stagnant economy is no longer working, and we have reached a stage where this complex system of bringing in more money is only going to boomerang.

Employment

While the mainstream media is busy telling people how the employment scenario in the US is constantly improving, the reality on the ground is different. If we compare the current employment statistics with that of the recession, we will notice that the patterns are pretty much similar. Before recession hit America in 2007, around 63% of all employable Americans had a job. As we headed closer to the recession, the percentage dropped to below 59, and stayed there for some time. In the recent past, the employment percentage has increased a bit, but one can’t call it a recovery in any sense. According to Jim Rickards, the ‘real’ unemployment rate today is close to around 23%.

The Velocity of Money

For an economy to stay strong, money needs to flow through the system. However, the velocity of money is low in the US right now. Despite the enormous printing of money, the people are not really borrowing or spending it. In fact, according to experts, the velocity of M2 money has dropped to its lowest ever. This is a cause of concern for many economists like Jim Rickards, but the mainstream media has chosen to ignore this completely. But, as the bubble bursts, which it will in 2015, these are the very things that every economist will point to in hindsight.

Outsourcing of Manufacturing Jobs

Big businesses have outsourced most of the manufacturing jobs out of the country. Big manufacturing cities in the US now struggle to allot resources for maintaining their basic infrastructure. Earlier, most people who wanted to work could find employment easily in the manufacturing sector, but the situation is completely different now. The loss of manufacturing jobs has hit the US economy hard, and years of neglect has only worsened the situation. The loss of manufacturing jobs is another important factor for the 25 year Great Depression that Jim Rickards is talking about.

Slow Home Sales

Another reason for the great depression for 2015 can be the slow pace of home sales in the US. Again, the mainstream media might make you believe that the housing market is in a recovery mode, but the fact of the matter is that the home sales are nowhere comparable to the pre-recession figures. The current home sales are around the 5,200,000 mark — which is similar to what it was at the turn of this century.

These are a few factors that make the case for the 25 year Great Depression strong. If an economic collapse happens in 2015, we will have to brace ourselves for some really tough times. However, we should also keep in mind that there are people who made money before the 2007 recession, and these were the people who could see the tide coming. They were armed with the right information which helped them make the right investment decisions before the recession wrecked havoc on the global economy. If you believe that the above mentioned factors can bring down the curtains on our economy next year, we recommend you too work to safeguard your interests. And, act before it’s too late.