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The “what if” game is certainly more fun to play if you think you could survive a shock to the global system. What would happen during an asteroid strike or a zombie apocalypse? While those scenarios are highly unlikely, something that isn't unlike is a second Great Depression.
Life has changed so much over the past century that imagining what a 21st century Great Depression might look like is challenging. Here are some reasonable predictions.
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Massive Unemployment
We spend a lot of time imagining disaster scenarios, but one of the first things to happen in an economic crisis–like the one in 2008–is mass-layoffs, resulting in mass-unemployment.
This is one of the main features of a depression—because when people are unemployed, money is scarce, and the entire economy retracts sharply. Without wages, the economy comes to a screeching halt.
If you recall, farmers suffered the most during the Great Depression. First, several years of strong production drove expansion even as the price of grain plummeted. Next, the “Dust Bowl” drought decimated crops through unprecedented erosion, leaving an entire generation of farmers destitute.
The stakes are different now, and what would break farmers today would be the lack of a market for their products. Meat and dairy farmers would be particularly hard-hit.
In the event of a significant tax shortfall, government layoffs typically happen—this is the event that puts the rest of us in danger. With the local and federal governments running on a skeleton crew, firefighters, police, and power plant workers will be stretched thin.
Devaluation of Currency
Imagine what would happen if your life savings lost most of its value overnight. This can happen when there is hyperinflation—one of the worst things that can happen after a shock to an economy. There isn’t much you can do in a scenario where your cash loses all its value.
The most recent example of this is in Venezuela, where the currency has lost 99.9% of its value in recent years. This can happen when there is a shortfall in tax revenue, leading a government to print money in order to fill the hole.
Unfortunately, it’s a little like patching a hole in cloth by using fabric from around the hole: eventually, the exchange rate is blown out of the water and paper currency is rendered nearly worthless.
Economic policy leading to hyperinflation is unlikely unless leaders are poorly informed and act irrationally–which doesn’t feel like a stretch at the moment.
Food Scarcity
In most doomsday scenarios, we imagine people violent and looting, but the historical record does not support this notion. Initially, there will be enough food to go around, thanks to well-stocked grocery stores full of non-perishable goods. However, that won’t last long, and people in cities will line up for food provided by the government.
Remember that in the original Great Depression, the majority of people were fairly self-reliant. These days, most people know little about how to produce their own food. Those of us with homesteads will be in a good position to produce our own food, but in the city, it will be another story altogether.
The reality of hyperinflation is that even if there is food available, it will be too expensive for most to afford.
Electricity Shortages
The electricity shortages we see in Venezuela are mostly caused by mismanagement. Fuel shortages, sabotage, and engineers fleeing the country for more stable conditions have led to the blackouts we’ve seen in the South American crisis. A 21st-century depression would not likely see nationwide blackouts of that scale in North America.
However, the American power grid is vulnerable due to its age and ever-increasing demands for power. Extreme weather conditions such as heatwaves, ice storms, and high-wind events that damage lines and transformers or put high stress on the system could result in city-wide blackouts lasting weeks.
Those living in rural communities may be in for the worst when it comes to power supply interruptions. Under the best of circumstances, response to downed lines can be sluggish outside city borders. Under depression conditions, expect longer delays. Being off-grid means that power disruptions don’t impact your life at all. Huge incentive.
Water Supply Issues
Water and electricity are closely connected: most municipal water relies on enormous pumps to convey it from station to station and into water towers. It takes very little mismanagement to disrupt or foul a water supply, which is important for city-dwellers to remember.
Folks in the country using small water companies have likely experienced disruptions and contamination from time to time. All the more reason to have your own well and a hand or solar-powered pump.
Hospital Issues
There is plenty of reason to believe that in a full-blown economic depression, hospitals may operate at a compromised capacity. This is not to say there won’t be adequate electricity, water, and hygiene maintenance, barring any disruption to the supply chain.
But obtaining pharmaceutical drugs may be a challenge for smaller hospitals and clinics, and even for larger facilities if there are major cuts to the government systems that many people rely on to manage skyrocketing costs of medical care in America.
During a major depression that includes hyperinflation, it may become impossible to pay for medical care. This would inevitably result in layoffs of medical staff and a cascade of resulting issues with health care facilities.
As is often the case in difficult times, infants, pregnant women, people with disabilities, and those with chronic health conditions will be the most vulnerable. Curable illnesses may see spikes in hard-hit areas.
Violence
It is impossible to say what the situation would look like on the ground in a country as heavily-armed as America, but if history is any indication, violence will be far less widespread than many might predict.
During the Great Depression, as city and state coffers grew thin, there was less money to pay the salaries of firefighters and law enforcement, and many abandoned their posts. This created a dangerous environment for the people in need of such services.
Looting and riots are not a typical response to an economic crisis, but rather a political one. So, depending on the root cause and severity, it is possible that we could see such violence–especially with understaffed law enforcement agencies keeping the peace.
Conclusion
Despite the divisive messages we receive from the media, Americans are largely a kind people who take care of one another. It stands to reason that decency will prevail even in the worst of times.
It has been several generations since Americans have suffered from the deprivation of a great depression, so it would come as a shock to the system. But a modern great depression might be just the thing required to realign a currently broken system.
One thing is certain: people living off-grid will fare better in a modern depression than those reliant on public infrastructure and logistics.
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