Echoes of the Past

If you kick me between the knees today, I’d get upset. Well, first I’d be on the floor in pain, then upset, then angry. Do it to any man without steel boxers on and you’d get the same results. Do it to someone two years ago? Same thing; pain, confusion, anger. Go back two thousand years, it’d get the same reaction, probably with expletives from an ancient language, but the same reaction nonetheless. Us humans are funny that way. Over ten thousand years of technology, hundreds of nations and empires rising and falling, the invention of internet-enabled-toilets, and still – a kick in the nuts is a kick in the nuts. 

Believe it or not, this is why the study of history is indispensable. People are people, no matter the era. If you take a person from this year and put them in Rome, 200 A.D., they’ll cheer the same way for their favorite colosseum charioteer like any other Roman. Place them in China, 1200 A.D., and they’ll panic the same way against the thundering hooves of the charging Mongol horde like any other Chinese villager. You could even stick them in Pugad Lawin, 1896, they’ll rage the same way for the dismantling of an oppressive foreign empire like every other Katipunero. People tend to repeat themselves. History is simply the stage where we can hear the echoes of the past, to understand the people of the past. Through them, we get a greater understanding of us in the present. It gives us a sense of perspective; to see what has already been tried and failed. Hopefully, to help us avoid echoing the same mistakes in the future. 

In the here and the now, if you listen closely, you can hear a soft whisper of something from the past. An echo that seems to be reverberating more and more as of late. Around a hundred years ago, in the recently united States of America, people were stuck in their homes panicking. Businesses were going bankrupt or closing down in fear, families were stocking up on food and basic needs, and the stock market was falling down a cliff with no bottom. This was the start of the Great Depression. Now, this particular period in history is endlessly debated by both economists and historians over its causes, complexities, and ramifications. The arguments can range from the first world war all the way to mice, men and mockingbirds. Fortunately, I’m neither a historian nor an economist, so I have the luxury of ignoring all the complexities and just forcing it into a convenient narrative.

At the start of the Great Depression, the people did what people do – follow their fear. They started to run to the banks and pull out all their money before it disappears like the stock market did. The simplest way banks work is that they hold money from the people to lend it out to other people and businesses (they get a small cut both ways as profit). This means they only keep a fraction of the money in their physical vaults at all times, because the rest is out there circulating in the economy. Well, when a whole load of scared people start to pull out money, and the banks start running out of it, word tends to spread to everyone else. And, when banks start closing down, lending grinds to a halt. When lending grinds to a halt, businesses have no money to spend on doing more business, and people stop spending money on things like buying houses or that newly invented automobile thing. When people stop buying things, businesses start losing money, so they start cutting down on spending, and people get laid off. When unemployment rises, people stop having enough money to buy food, let alone other things. When people can’t afford to buy food, they start to take out loans from banks just to afford food. Oh, wait. That’s right, the banks are on fire. I guess it’s time to be greatly depressed and eat bark for the next few years. 

This is just one abridged part of the Great Depression. It gets much, much worse. The government tried to get out of the economic hole by making the hole bigger and digging even deeper. Then even more banks started imploding. Then the world stopped trading with America, and everyone started raising tariffs. It took a new president and a New Deal just to start rebooting the economy and start overhauling an entire system of financial regulation.  But, why should we talk about any of this? This isn’t the 1930s USA, it’s the 21st century Philippines. It’s not like this sort of great economic collapse is going to happen again, right? We have a hundred years’ worth of economic evolution to help prevent just that sort of thing. We have the Bangko Sentral to act as a safety net for our banks, the government has access to economic expansionary policies, we even have the ever-flexible FIAT money instead of the ye olden gold standard. 

Although there might be one thing. The Great Depression happened in the United States. Yes, it had a heavy global impact, especially in Germany. But it was still a somewhat American phenomenon. The world as we know it today, has changed drastically. It’s gotten to the point where the shirt I’m wearing was designed in America, made with cotton from India, manufactured in a factory in China, transported by a German shipping vessel, and it all cost me the a little under the price of a Big Mac. The world economy is hyperconnected, hyper-efficient, and very easily breakable. Our economies are so woven together by trade that when one domino falls, the whole room goes with it. There are 7.5 billion people in this web today; there were only 2 billion people back in the 1930s. An economic collapse of just one country from say, a global health pandemic, could echo throughout the entire world in a way that no financial system or safety net is prepared to deal with. And that… That is a kick in the nuts.