Is Australia Hurtling Towards Another Great Depression?

In 1929, sugar cookies were a rare treat.

It was a simple meal — a humble combination of flour, eggs and sugar. But in those times, if you had those ingredients on hand, it was a sign that the week had gone exceptionally well.

If you were really lucky you’d have some coffee with the cookies, and have a complete ‘depression breakfast’.

However, as the Great Depression raged on, with money dwindling and food scarce, things weren’t always so sweet.

Families often had to make do with some rather unholy combinations of cheap ingredients. Using anything available to fill up the stomach sufficiently enough to stave off insanity.

One popular makeshift meal was peanut-butter-stuffed baked onions. Another was ‘creamed-chipped beef’, which was also referred to as S.O.S (‘Save Our Stomachs’) by US soldiers during World War One.

And how could we forget delicious liver loaf! Mmm…



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You also may be surprised to know that the Great Depression gave rise to the now universally-loved instant mac and cheese dinner by Kraft. In 1937 for just 19 cents, you could buy four servings of noodles and cheese for your family.

Unsurprisingly it was a hit. A popular advertisement for the mac and cheese at the time featured a husband incredulously asking his wife: ‘How the deuce did you make this keen macaroni and cheese so fast? Why, we just got home!

Needless to say, a time when a plastic-y, gloopy instant cheese meal is considered a delightful treat is not one we want to go back to.

But if things continue the way they are, we may have no choice.

A return to poverty?

In the wake of the Great Depression and the Global Financial Crisis of 2008, extraordinary measures were taken to revive the economy and prevent another disaster from recurring.

To give people the opportunity to borrow money and rebuild their lives, interest rates have remained ultra-low. In Australia, the Reserve Bank has left rates at 1.5% for 26 consecutive months.

Meanwhile, governments and central banks decided to prop up the economy by pumping extra money into the system. They carried out asset purchases, tightened lending standards and issued deposit guarantees.

The Aussie Recession Survival Guide. Download your free copy now.

These measures worked well for a while. They got us out of trouble and kept other looming crises at bay. But looking at the global economy now, it appears that these measures may have been a temporary Band-Aid for a larger, all-encompassing problem.

As the International Monetary Fund (IMF) warned in their latest world economic outlook:

The extended period of ultralow interest rates in advanced economies has contributed to the build-up of financial vulnerabilities.

The large accumulation of public debt and the erosion of fiscal buffers in many economies following the crisis point to the urgency of rebuilding those defences to prepare for the next downturn.’

As the IMF warns, the global economy’s heartbeat is slowing. Debt levels are higher than they’ve ever been. Global economic growth has stagnated and so too have wages. And as the report states: ‘the extraordinary policy actions to prevent a second Great Depression have had important side effects.’

Our attempts to prevent a second great depression and GFC have, unfortunately, made things worse. Low salary growth has meant we have taken on more debt to meet living costs and buy inflated assets. A dilemma that can only last so long before imploding.

Harry Dent has been well aware of this incoming crisis for a while now. And has been attempting to warn his readers, especially Australians, to prepare for what the IMF is only just now noticing.

If you’d like to jump off the ship before it sinks, you can read his latest research report, here. 

This week in Markets & Money

After the GFC, governments and central banks around the world pumped a lot of money into the system to stop it from collapsing. They issued deposit guarantees, tightened lending standards, cut interest rates to record lows and carried out asset purchases. But as Selva wrote on Monday, those measures to prop up the economy are now destroying it.

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Then on Wednesday, Selva wrote that the Euro could be in for a bumpy ride in the near future. You see, Italy is knocking heads against the European Union (EU), which could bring turmoil to the zone. So it’s best to keep your eye on the Euro’s movements…

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Up until now, buying an apartment off plan was all advantages. The time it took to finish it gave you more time to save for it. And, as property prices rose overtime, it made it easier to get financing. But as Selva wrote on Thursday, as property prices are now falling, owning a property is no longer the investment it used to be…

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More and more payment companies are using blockchain and crypto, and more ICOs in general are popping up. So as Selva wrote on Friday, it appears crypto is not just for crims anymore…

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Until next week,

Katie Johnson,
Editor, Markets & Money

Katherine Johnson, usually going by just ‘Katie’, is a member of Port Phillip Publishing’s editorial team, as well as the Editor of the Saturday edition of Markets & Money. Katie works with all of your editors to maintain the quality of their research and analysis. In her Saturday Markets & Money articles she specialises in cryptocurrency and technology stories, and brings you a recap of the week from your other Markets and Money editors.

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