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The Great Depression was the seminal financial and economic event of the 20th Century.

Hopes and dreams were shattered.  Millions were ruined.  And in its wake was a lost decade of unemployment and poverty.  Regrettably, it’s happening again.

Here at the Great Depression Online we offer the key insights you need to protect your hard earned savings and family from the unfolding economic destruction…and we look for opportunities to acquire massive wealth along the way.

Browse through these pages for facts and information on the Great Depression and How to Survive the Great Depression as it comes to pass.

 

 

 

 

 

 

 

 

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Current Great Depression Online:

The Lumberjack Slam Indicator

Great Depression Online
Long Beach, CA
June 30, 2009

The Lumberjack Slam Indicator

Great Depression Online
Long Beach, CA
June 30, 2009

Inside This Issue You Will Discover…

*** Pure Unadulterated Hogwash
*** The Mechanic and the Storeowner
*** The Lumberjack Slam Indicator
*** And More

Pure Unadulterated Hogwash

We have to hand it to our fellows.  While man’s collective behavior is typically reduced to that of animals and idiots – soccer riots and running up the price of beanie babies – every now and then we all come together, hold hands, and do something of unified intelligence.

What is it exactly we’re talking about?

Saving money.

That’s right.  The Commerce Department reported last Friday that American’s are saving more money now than anytime since 1993…the personal savings rate in May was 6.9 percent.

“That’s a vast improvement from what had been an official U.S. savings rate near zero for much of the time from 2005 through early 2008,” reported the Los Angeles Times.

“The rate was just 0.4 percent in 2007.”

~~~~~~The Buffett System~~~~~~

Let’s face it, there are literally hundreds of thousands of people out there trying to invest just like Warren Buffett and only a very rare few are actually getting Buffett results.  Of course, it’s no wonder why so many people want to invest like Buffett.  After all, Warren Buffett is, unequivocally, the greatest stock market investor of all time.  And now you can invest just like him.  “Invest Just Like Warren Buffett”

~~~~~~~~~~~~~~~~~~~~~~~~~

Still, you can always count on economists to disparage sensible and prudent behavior.  One economist, and a notable moron, Walter “Bucky” Hellwig of Morgan Asset Management, explained, “The consumer is hoarding cash and that’s an economic headwind.”

Whenever an economist tells you spending lots of money brings wealth to the world…first check to see you still have hold of your wallet, then run for the hills.  For the true cornerstone for building wealth is saving more money than you spend.  The idea that it could be otherwise is pure unadulterated hogwash.

We’ve even heard that saving money is somehow unpatriotic.  Typically for such nonsense, the term ‘hoarding’ is replaced for ‘saving.’  But hoarding money is precisely what everyone with half a brain should be doing at a time like this…particularly since unemployment is still increasing.

If you lost your job right now, finding another won’t be easy.  Should that happen, you’ll be glad you squirreled away some extra nuts for the winter rather than having listened to some economist who told you spending money would bring prosperity.

The Mechanic and the Storeowner

The velocity of money is what economists who ridicule saving money point to as the critical determinant for economic growth.  In this respect, velocity of money is the average frequency a unit of money is spent in a specific period of time.

For example, a mechanic buys $40 of maintenance supplies and detergents from a storeowner in the morning.  Midday the storeowner spends $50 to have his car tuned up by the mechanic.  That evening the mechanic picks up a $10 case of Budweiser from the storeowner.

Thus $100 changed hands over the day, even though there was only $50 of actual money.  The reason it was possible for the $100 to change hands is because each dollar was spent twice…the velocity of money was 2 per day.  For the day, based on these transactions, the storeowner and the mechanic each contributed $50 in gross revenue to the economy.

But what happens if the storeowner takes the proceeds from the initial $40 sale and stuffs the money in his mattress…and the mechanic, not having earned $50 in tune up services, passes on the beer? 

In this example, just $40 in gross revenue would be contributed to the economy’s GDP.  But is the world a less prosperous place in the second example than the first?

In terms of GDP growth it appears to be.  Still, we’re not convinced…

For what if the economy has zero savings and the mechanic uses credit to make the initial $40 purchase?

In this case the economy would get an initial boost to GDP, but the acquired debt would serve as a future drag on economic growth…a portion of the mechanics future income would go towards servicing the debt.

Here’s the point.  Consumer spending makes up 70 percent of the economy in the United States.  But over the last economic boom, consumer spending was based largely on credit rather than savings. 

Hence, when 70 percent of the economy is based on consumer spending, and consumer spending is based on credit rather than savings, then GDP stops being a measurement of economic growth, and becomes a measurement of the rate at which consumers are going into debt.

So contrary to what an economist may tell you, spending lots of money doesn’t bring prosperity to the world.

The Lumberjack Slam Indicator

Nonetheless, how will you know when the consumer’s getting ready to go on the next spending binge?

One novel indicator is the Lumberjack Slam.

For those who’ve never heard of the Lumberjack Slam…it’s is a feast of pancakes, ham, bacon, sausage, eggs, and hash browns served at Denny’s.

“When the economy gets better, people will start buying the Lumberjack breakfast again and more appetizer samplers,” said Denny’s CEO Nelson Marchioli.

If we had our druthers, we’d prefer there not to be another bull market in Lumberjack Slams.  During the last one, the population became so abnormally large it seemed every flight we were on there was a portly chap next to us sitting in his seat and half of ours.

Perhaps the economic contraction will also contract waistlines, and folks will be less eager to wolf down pancakes, ham, bacon, sausage, eggs, and hash browns all at once.

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  Did you know that $1,000 invested with Warren Buffett when he started in 1956 would be worth more than 30.6 million today?  Discover The Quick, Easy, And Automatic Way To Invest Just Like Warren Buffett.  “Invest Just Like Warren Buffett”      

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Keep reading about the causes of the Great Depression, the 1929 stock market crash, and more…

What Were the Causes of the Great Depression?
Many like to blame the stock market crash of October 19, 1929, as the cause of the Great Depression.  It wasn't.  It was just the triggering event.  It was what led up to the stock market crash that caused the Great Depression.  Let's explore...

The 1929 Stock Market Crash and the Great Depression
From September 3, 1929 to November 13, 1929, the DOW lost 47.9 percent.  Then, as rarely noted, it rallied 48.1 percent through April 17, 1930.  But alas, it was the bear trap of all bear traps…the market subsequently crashed 89.2 percent from its initial peak along with the hopes, dreams, and aspirations of a generation.

Gold Confiscation During the Great Depression
In 1933, at the height of the Great Depression, the U.S. Government, under the Gold Confiscation Act, confiscated gold money from its citizens and replaced it with paper Federal Reserve Notes. 

What is the Difference Between Recession and Depression?
The difference between recession and depression stems from where the economy is in the business cycle.  And when so many debts have been contracted and so much capital has been misallocated to value subtracting endeavors…the whole structure of the economy breaks down.

How to Survive the Great Depression
Here it is…from the heart…practical, discretionary advice on how to survive the Great Depression.

The Business Cycle and the Great Depression
We believe that the business cycle exists.  That following a period of economic expansion, there comes a period of economic contraction.  And then, following a period of recovery, new economic growth resumes.

The Great Depression and Stockpiling Food
“If you like to eat, you better save some [food],” was the advice of one Thelma May Beets in a front page story titled “Depression Lessons Last for a Lifetime,” in Sunday’s Los Angeles Times.

What Was the Unemployment Rate During the Great Depression?
“From an estimated annual rate of 3.3 percent during 1923-29, the unemployment rate rose to a peak of about 25 percent in 1933.  The economy reached its trough in 1933; but although unemployment had reached its peak, economic recovery was slow, hesitant, and far from complete.”

 

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