Questions about the possible economic depression
September 16, 2008 9:06 PM Subscribe
Questions about the best course of action to prepare for a possible economic depression
posted by mintchip to work & money (12 answers total) 9 users marked this as a favorite
I'm no economist, but I'm trying to learn about the possible economic depression everyone's been talking about since the recent financial upheaval. I have a number of questions.
1. I have always read that there are huge bargains to be had when the stock market tanks. If this is so, what stops investors from jumping INTO the market when there is a huge crash? For example, why not invest in an index fund as soon as the market drops off 500 points? Why *wouldn't* this be a good idea for the individual investor (assuming it isn't).
2. What would happen to people's outstanding debt if the companies they owe $ to went under? For example, did people's debts get wiped out with the banks that closed up shop during the Great Depression? What about nowadays...for example, what would happen to student loan debt if virtually nobody could afford to make payments?
3. Let's say you've got some extra cash flow right now...what's would be the best bet when preparing for a possible period of economic depression? Pay off outstanding debts? Stockpile money in order to buy up things once they've lost value? Etc.
4. How were some people able to purchase "bargains" during the great depression if indeed inflation caused money to lose most of its value?
5. Does FDIC insurance REALLY ensure that money is safe and accessible (up to the limits specified)?
6. Anyone care to venture a guess about what the next few years are going to look like economically?