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As early as 1935, "brain truster" Rexford Tugwell identified the root cause of the Great Depression as the failure "to pass on a fair share of the spectacular productivity gains of the 1920s" to both labor and consumers.
In the 1920s, Americans consumers and businesses relied on cheap credit, the former to purchase consumer goods such as automobiles and furniture and the later for capital investment to increase production. This fueled strong short-term growth but created consumer and commercial debt. People and businesses who were deeply in debt when price deflation occurred or demand for their product decreased often risked default.
That's nonsense. The US was already in recession by Spring 1928. The situation worsened in 1930 when the Republican controlled Congress passed what was then the largest tax hike in US history, and then they passed the Smoot-Hawley Tariff, which resulted in other countries enacting retaliatory tariffs which effectively stifled of world trade and shut down US exports, plus caused the cost of imports to rise dramatically.
If you consider "90 days same as cash" to be cheap credit, then you need to study economics a little more. Personal credit debt today exceeds $1 Trillion, and the average American carries about $8,000 in credit card debt, plus additional $1,000s in auto loans, but even adjusting for inflation, Americans carried nowhere near that amount of debt.
US population was 106 Million in 1920 with 51% in rural areas, and car ownership was 7.55 Million, or 11% of the population or roughly 1 in 10 Americans over 18 had a car.
"Cheap credit" might have been available to businesses (and considering that people were buying stocks on margin loans you could certainly say that), but it wasn't available to consumers.
While I agree that there are many similarities between 1929 and now, I do not agree with Tugwell on the root cause. The root cause then, as it is now, is debt caused by easy credit, and the overindulgence created by it. Whenever large amounts of wealth are created, or in the case now inherited, the Federal Reserve relaxes credit in order to encourage debt spending. By giving the working classes enough rope to hang themselves, the Fed is able to engineer an economic collapse through which the wealth is redistributed from the masses to the rich.
I'd suggest another difference between then and now would be, people had the skills to "make do" back then.
People today are utterly unprepared to get by without cars to make weekly trips to the grocery and turning on the power and water with the flip of a finger.
We don't know what it's like to have to subsist or live off the land, and we would suffer greatly if anything were to happen, even like a long power outage or truckers shutting down because of gas prices.
People back in the great depression lived off the land and pulled together with family and members of the community to help each other get through the hard times. We have no idea how to do that.
That's my opinion, anyway. Not like anything like that'd happen...
The concept of buying now and paying later caught on quickly. By the end of the 1920's 60% of cars and 80% of radios were bought on installment credit. Between 1925 and 1929 the total amount of outstanding installment credit more than doubled from $1.38 billion to around $3 billion. Installment credit allowed one to "telescope the future into the present", as the President's Committee on Social Trends noted. This strategy created artificial demand for products which people could not ordinarily afford. It put off the day of reckoning, but it made the downfall worse when it came.
I find the similarities to 1692 to be more terrifying.
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