Lean times ahead?

The other day I was watching a movie based on the life of famous depression-era folksinger Woody Guthrie. One of the things that stood out the most to me about the movie was its stark depiction of how harsh life was for many Americans during the Great Depression.

Those of us who did not live through that trying time can scarcely appreciate just how bad things were, but seeing the fear and desperation depicted so vividly on screen did make a lasting impression on me.

Imagine losing your job and having no prospects for finding another one. Imagine losing your home and being forced to live in your car, which is a tight fit seeing as how it also contains all your worldly possessions. Imagine losing all your savings as well, and not having enough money in your pocket to even feed your family.

All of that and more happened to people just like you and me 70 years ago, right here in America. Our economy has had its share of ups and downs since then, but we haven’t come close to experiencing that sort of catastrophe again. Yet.

Right now we appear to be on the leading edge of a nasty recession. The cost of many basic necessities, including food and gasoline, has been skyrocketing. Unemployment is on the rise. People caught up in questionable mortgage deals are losing their homes, and the banks that sponsored those deals are not in the best shape either.

All of which may lead the average citizen to wonder – just how bad could all of this get? Is there a chance that we could be heading for another depression?

The honest answer is that no one knows for sure. Economic systems are closely tied to human behavior, and we all know that there is no sure way to predict that with any confidence.

However, most economists believe that another Great Depression is unlikely because of lessons learned during the last one. Back then, the Federal Reserve actually made a bad situation much worse by raising interest rates and tightening the money supply. Today the Fed’s playbook calls for a much different response to economic downturns.

So far it seems to have worked. But of course, there is no guarantee that they will be able to keep our chestnuts out of the fire forever.

There are reasons to be concerned. Near the top of that worry list, according to many economists, is our massive budget deficit and the ticking time bombs of Social Security and Medicare, set to blow up in our faces as the Baby Boom generation enters retirement.

We have no precedent for dealing with the financial situation that lies before us. How will a government that is already awash in such a financial crisis deal with the natural down cycles of our economy, like the one we are experiencing now? Will they be able to deal with them at all, or will we tumble helplessly into another depression?

Again, no one knows. But wouldn’t it be nice if we didn’t have to find out? Wouldn’t it be nice if we faced up to the greatest threat to our future economic prosperity before we fly over that cliff?

Yes, it would be nice, but it doesn’t seem likely to happen. We are much too busy spending money that we don’t have. We have open-ended wars to fight, natural disasters to recover from, and so many worthy projects in so many congressional districts that absolutely must be funded.

We are heading into uncharted territory, and the road ahead looks pretty ominous. This might be a good time to sit down with an old-timer and get some pointers on how to survive the lean times. It’s a skill few of us are proficient in, but it may be coming back into style.