Categorized | Business

Missed Opportunities

By Tom Irmen

In the fall of 1930, during the Great Depression, which started in mid 1929, the first bank panics occurred, starting first in Nashville and then spreading throughout the Southeast. Referred to as a “bank run,” hundreds and sometimes thousands of depositors who lost confidence in the security of their financial institutions would converge of their local bank, withdrawing all of their hard earned money. As a consequence, more than 1,300 banks failed in 1930, and it continued on through 1931 and 1932.

As a child born in 1950, I often recall the conversations of adults reliving their experiences of both the Great Depression and that period of bank failures that followed, which saw American depositors lose an estimated $140 billion in deposits. Because these bank failures occurred prior to the creation of the Federal Deposit Insurance Corporation (FDIC), which today insures your deposits held in participating banks, this money was lost for good. It was no wonder that many Americans continued to mistrust financial institutions for decades after, electing to keep their money elsewhere, just not in a bank despite the protection offered by the FDIC. People often referred to their mattress as their bank.

The experiences of the Great Depression, while far more dire than our most recent Great Recession, have nonetheless upended the economic confidence many of us hold for the future. And while our lack of optimism may be driving our desire to keep our heads down and our powder dry, the renewed confidence in our economy experienced during the last year is undeniable. So just what should you do?

Our history is filled with multiple examples of both economic hardship and periods of economic boom. I encourage you to closely examine today’s economic indicators, including the small business confidence index, which is at a new all-time high. Be careful not to allow previous economic challenges to limit your future for economic growth. Don’t throw caution to the wind, but don’t put yourself in a position where you will have missed what might become one of the biggest economic opportunities in recent times. The best place for your money may not be the mattress.

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