— I believe that the only way to predict the future is to study the past. I have recently re-read a historical account of the Great Depression.

I am amazed at how similar the recent great recession is to the Depression. The Great Depression was preceded by three consecutive Republican presidents who believed government had no role in regulating commerce. They all aggressively endorsed the theory that market forces will correct any and all errors or abuses made by corporations and financial institutions. This trust in self-regulation led to the practice of controlling stock shares by putting up as little as 10 percent of the market value of each share. While the investor didn’t actually own the shares, they could profit when share prices increased. This sounded like a great deal to millions of Americans. They could get the profits from a hundred dollars worth of shares, while only risking $10.

The result was unbelievable wealth created on paper, without any corresponding increase in real value. This get rich scheme had one usually undisclosed weakness. If the controlled stock fell in value the investor must increase his cash investment to keep control of the stock. If he failed to meet the so called “margin call” with new cash, he lost his total investment and control of the stock. The whole scheme was based on the premise that stock values would always increase and never decrease.

When stock prices started to decline in 1929 it started an avalanche of stock values returning to their actual value in goods and services. This unstoppable return to reality reduced the value of national wealth by 90 percent. Life savings invested in stocks were completely lost. Banks started to fail, wiping out deposits that were obligated for wages, supplies and creditors. There was no federal depositors insurance, so nothing stopped the financial destruction to individuals and businesses small and large.

Now come forward 70 years to 2008. Republicans again controlled the White House for 20 of the last 28 years. Each president and Congress again enacted laws that deregulated financial institutions based on the premise that market forces would self regulate those institutions. Our own senator Phil Grahm was a champion of deregulation.

The only difference was that instead of speculating in stock, the public was now speculating in real estate, using their homes in another get rich scheme. People bought houses they couldn’t possibly afford, using loans that were programmed to fail in two or three years if the house wasn’t resold at a higher price. Again the scheme was based on the assumption that housing values would increase forever and no matter how great the risk was, the home owner could always sell the house for a profit before the loan payments ballooned or the owner could no longer borrow from other sources to meet living expenses (i.e. credit cards).

In 2005, when a small decrease in housing values occurred, it started an avalanche of loan and bank failures that resulted in a 40 percent decrease in national wealth. Only massive action by the federal government stopped what would have been another decades-long depression. Federal deposit insurance saved bank depositors. The Wall Street bailout stopped the complete destruction of banking and Wall Street. A $800 billion stimulus bill reduced taxes, aided state government and avoided the 25 percent unemployment rate experienced in the 1930s. The resulting political upheavals in 1932 and 2000 are very similar.

In the 1930s, the actions of President Roosevelt and a Democratic Congress could not quickly reverse the damage done, but they definitely stopped the economy from getting any worse. Roosevelt stopped the bank failures and the bleeding of national wealth.

For his efforts, he was accused of being a “Jewish Communist” for regulating Wall Street and banking. He was reviled by so called fiscal conservatives for not being able to quickly clean up the horrible mess they had created. Roosevelt did not end the Depression by increased federal spending, but he greatly reduced the human suffering and prevented the destruction of capitalism and free enterprise in this country.

If you want an example for what could have happened in this country, look at Germany and Italy, which didn’t recognize their people’s degree of suffering during the Depression. These countries didn’t just reject capitalism as a result of the Depression, they replaced democracy. Both countries willingly installed fascist governments headed by the most despicable leaders the world has ever known. In the depths of the Depression if Roosevelt had repudiated the capitalist system and nationalized the banks and corporations, a desperate public would have supported anything that promised improvement.

But there are real differences between America in the 1930s and the 2000s. In the 1930s, people had more realistic expectations. They understood that it takes a lot longer to rebuild a house than it does to burn one down. In the Depression people took heart at any improvement, instead of demanding an impossible quick fix.

But, most of all, the people who speculated in stocks and gambled with money they could not afford to lose, accepted some responsibility for their foolishness. They learned that people who know nothing about finance should not speculate in stocks. They realized they shared responsibility for this disaster and it was going to be a painful recovery.

It took stocks until 1952 to return to the pre-1929 values. It took 14 years for employment to recover, even with the never-seen-before-or-after federal spending of World War II.

What we need to do now is adjust our expectations to reality. We elected presidents and legislators who claimed business didn’t need regulation, even though there is not one example, anywhere in the world, past or present, of successful free enterprise without strict government regulation. We bought the lie that government is the enemy, when in fact it’s the peoples’ only representative at the table where all wealth and power is divided. Without government to regulate and, yes, redistribute wealth and power we end up with feudal capitalism, where there are only two classes, the super wealthy and everyone else.

Capitalism is like our system of highways and roads. It only works when there are enforced traffic laws, which place the safety of the many over the rights of the few to drive as they wish.