A recession is when your neighbour loses his job. A depression is when you lose yours.

—Harry S. Truman

 

The year was 1973.

The first global oil shock was getting started.

The petroleum-producing Arab nations were seeking to punish the West for supporting Israel during the Yom Kippur War. So, they pursued an embargo. As a result, fuel prices would shoot up as high as 400%.

This created a situation known as ‘stagflation’ — where economic growth was stagnant, yet inflation was rising:

  • To make things worse, the Vietnam War was reaching its endgame. The Watergate scandal was in full bloom. And public trust in government had plunged sharply.
  • This was the golden age of terrorism. Notorious personalities like Carlos the Jackal, Andreas Baader, and Abu Nidal rose to prominence. They were radical leftists who behaved like rock stars even as they committed political violence on a grand scale.
  • This was also the golden age of the serial killer. Ted Bundy, John Wayne Gacy, and Son of Sam emerged during a season of social breakdown and urban decay. They were psychos who stalked and murdered innocents simply for the sport of it.
  • Indeed, it felt like the entire world was spinning off its axis. Everyone was going crazy. The collective mood was one of nihilism.

Yet, amidst it all, my grandfather in Malaysia was feeling optimistic. He said, ‘I’ve never seen such prosperity. There are so many jobs available. Young people today are so lucky.’

  • Was his comment a strange one? Especially given the messy state of society at the time? Well, yes. But you have to remember. My grandfather had grown up during the Great Depression, when a deflationary spiral was the norm.
  • Back then, the unemployment rate rose as high as 33%, even as consumer prices dropped as much as –10%, year-on-year. So, instinctively, my grandfather understood what it meant to grow up hungry. To grow up desperate. To grow up struggling.
  • Therefore, in my grandfather’s mind, the 1970s wasn’t that bad. In fact, it was heaven compared to the hell of the 1930s.

Now, I’m using this fascinating anecdote to make a very important point:

  • The human perception is always relative. We tend to ‘anchor’ our expectations based on our own experiences. And our own experiences are always shaped by the times that we happen to live in.
  • Indeed, for people of my grandfather’s generation, the experience of living rough during the Great Depression had left a deep mark on them. It would define their personal values. It would define their work ethic. And this would flow all the way down to the way they raised their children.

The subconscious is a powerful thing. I dare say that the Great Depression has become the anchoring story of my family’s destiny — and perhaps of yours too. This is why it remains a topic of intense fascination for me:

  • So, last time, in Part One of my investigative series into the Great Depression, I explored the hidden history of this seismic event. How did it happen? Why did it happen? And what were the biggest lessons? Indeed, I gave you the hard facts that they certainly didn’t teach you in school.
  • Now, in Part Two, I want to provide you with some additional connective tissue. I want to bridge the economic gap between the past and the present. I will also try to answer the biggest question of all: could another Great Depression happen again in our lifetime?

 

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