Not many people are still alive that remember The Great
Depression of the 1930’s. I remember it through stories my parents and
grandparents told. It was very vivid to them.
The Great Depression was a perfect storm of two man-made
disasters. The first was a financial crisis brought about by unregulated
banking and financial markets run amok. The whole thing collapsed on October
29, 1929. The solution was to shut everything down, banks and everything, and
start with a new system of regulations, a strong central bank and regulated
markets. The federal government then had to step in with massive spending to
basically jump start the economy again.
The second man-made disaster which happened about the same time
has been called the “dust-bowl.” This was a massive erosion of topsoil caused
by poor farming methods. The solution here was a huge soil conservation program
which led eventually to the Environmental Protection Agency and the environmental
movement in general.
We have not had similar disasters since then because of
government regulations led by agencies such as the SEC, EPA, Department of Agriculture
and so forth. We came close to the financial part of the disaster in 2009 when
banking regulations were backed off. Because of the lessons learned during the
Roosevelt administration in the 30’s, the Obama administration was able to jump
in and save the economy from a more serious collapse.
Hopefully we have learned our lessons about lack of
regulations from this experience that started 88 years ago.
