Monday, June 8, 2009

Why doesn't right now "feel" like the Great Depression?

From commenter "Shargash" over at Zero Hedge

I'm convinced that the social safety net is the main reason a lot of people don't realize we're in a depression. None of it (social security, food stamps, unemployment insurance, etc) existed at the start of the Great Depression. The safety net now accounts for 16.2% of income. It is probably an even higher percentage of consumer spending, as that kind of money tends to be spent as soon as people receive it.

And a follow-up comment:

IMO, without food stamps, unemployment insurance, and social security/medicare, we would be totally screwed. The spending from these things is preventing the bottom from falling out of the economy. It is also preventing an enormous amount of misery which, besides the inherent badness of misery, would produce large amounts of social unrest.

My point was simply that things are worse than they "feel", because our meager social safety net is masking (for now, at least) how bad things really are. Also, one of the big dangers going forward is that our budget woes may cause government to cut back on social programs, just as they need to be increased. This is happening already in California.

Happily the internet has arrived! Many states now require unemployment benefits to be applied for online. That should prevent scenes like the following from occurring at most unemployment offices. This is important, as 26 million Americans are currently under or unemployed.

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