During the Great Depression, people would pay for services with food because they had no money and no credit. The situation was so bad that in some areas of the country, local governments issued their own currencies called depression scrip. The scrip were often pieces of paper used as money because government currency was nowhere to be seen.
While some people believe that another Great Depression won’t happen again any time soon, the frightening reality is, experts believe that a sudden deflation leading to a national or international money shortage can still very much happen today.
As reported by Off The Grid News, wealth preservation experts Will and Bill Bonner believe that “the next financial crisis will begin with a “violent monetary shock’ similar to the one that occurred during the Great Depression. They predict that money could suddenly disappear overnight, causing the economy to come to a grinding halt.”
What happens, then?
The sudden collapse of prices. “Everything you have — your investments, your home and your possessions — could suddenly lose all of its value. We saw this happen during the mortgage bubble of 2007-2008, when many people found themselves ‘underwater.’ That occurs when the amount a home is mortgaged for exceeds the property’s value.
“The collapse in prices during the Great Depression particularly hurt farmers who relied on commodity prices. Newsreels from the early 1930s show farmers dumping grain on the ground and pouring out milk because they could not sell them.”
Bank runs and the collapse of financial institutions. “A bank run or banking panic occurs when all of a bank’s depositors try to take their money out at once. Bank runs often trigger the collapse of financial institutions, which prompts even more bank runs. Between 1930 and 1933 nearly 10,000 banks failed or were suspended.”
Massive unemployment. “At the height of the Great Depression in 1933, 24.75 percent of the nation’s labor force, or one in four workers, were unemployed. Around 12.83 million people were out of work at a time when America’s total population was only around 93 million people. That unemployment persisted for years, with 8.1 million Americans still out of work in 1940 in the 11th year of the Great Depression. The unemployment created by the Depression only ended when World War II created ‘jobs’ in the form of the draft and war production.”
Hunger and starvation. “Not surprisingly, hunger and in some cases death from starvation can become a problem after deflation. Historians disagree on the number of people who died during the Great Depression.”
Massive expansion of government and its power. “In his first 100 days in office in 1933, Roosevelt signed 15 major pieces of legislation, several of which established massive new bureaucracies. During the 1920s there were 553,000 civilian employees of the federal government, but by 1940 the federal government had more than 1 million civilian employees.”
Increased taxation. “When money disappears government gets desperate and imposes more and taxes in an attempt to squeeze more money out of the economy. During the Depression, the maximum income tax rate was raised from 20 percent to 55 percent, gift taxes were increased from .75 percent to 33.5 percent, and new taxes were levied on automobiles, gasoline, telegrams, telephone calls and even checks.”
Why it could be worse today
If such an event were to occur in today’s world, the effects would be far worse than what happened during the Great Depression. People were far more self-sufficient in the 1930s, as many knew how to grow and harvest their own food. Nowadays, people rely solely on supermarkets and take-outs for sustenance.
Indeed, if our money were to disappear now, many would definitely not survive in the long run.