Think About It

It’s been 80 years since The Great Depression of 1929. Makes you want to think about where we are today.

October 27, 1929, was just the start. By 1933 unemployment was roughly 1/3 of the non farm work force. On the day of FDR’s inauguration in 1932, the depression was world wide. Harlem’s unemployment rate was 50%. 40% of the farms in Mississippi were on the auction block. Farmers in the Midwest were hit by the Dust Bowl. This depression lasted more than a decade. It did not end until World War II, when the federal government recruited 6 million civil defense workers, drafted 6 million soldiers, and imposed rationing. This all required massive spending resulting in massive federal deficits to end The Great Depression.

Today, we have seen again massive deficits come into play as a result of the reckless lending and building that occurred in the first half of this decade.

Today, 18.7 million houses sit empty. These include foreclosures, homes for sale, and vacation homes. That figure comes from the second quarter of 2009. 937,800 homes received default notices in that period.

A little prospective is in order here:

• If you have $1,000,000 today, its value in 1929 was about $4,500.
• Price of gasoline in 1929 was 19 cents a gallon.
• Milk was 25 cents a gallon.
• Gold was $20.67 an ounce in 1929 and went to $35 an ounce in 1935.
• A pre-fabricated home from Sears was $495.

As you can see we have had inflation before. Prices are higher and will continue to climb because of our new and increased federal deficit. As always, there will be winners and losers as we go through the process of adjustments, whatever that ends up being.

My advice, buy a house, or two. We are at the bottom or at the very least near the bottom. Low 30 year fixed interest rates will insure that you win!