08/09/2008 05:12 am ET Updated May 25, 2011

Reincarnation Alert! The Depression Generation Is Returning! Meet the Upside-Down Generation

Ever meet anyone who staggered through the Great Depression? Most people alive today probably haven't. So here's some insight. They've never really gotten over it. Never. They're the ones with an IMAX imprint of a society on the brink. The cheap ones who won't throw out a bar of soap till the slippery little lozenge is rendered unlatherable. The scared ones always waiting for a relapse.

It's hard to imagine this mindset. The post-War prosperity and epic indulgence of the boomers -- the inescapable hegemony of the consumer economy -- have made the Depression Generation a quaint irrelevancy, as emotionally distant as Gettysburg or the Alamo. And if we think about it at all, we derive comfort from the regulatory apparatus that it spawned.

Sure, we've had our share of business cycles since then. We've had to suck up some stagflation; we saw the Dow Jones plummet in 1987 and the dot-coms burst in 2000. But through it all, the only Apples we've had to sell are the glinty, erotic packages out of Cupertino, which we peddle on eBay's secondary market to make way for the next wonderment.

But wait. Suddenly, comparisons to the Great Depression are real and jagged, as opposed to distant, reassuring, anodyne. And if we're not feeling them, the press is reminding us of them all the time. Most recently, it now appears that the richest 1% of the population are earning more than at any time since 1929.

We've been time-shifted to another era, when everything that we believed to be solid and soaring became vaporous and free-falling. When banks were running out of dough. When the government was two steps behind, belatedly propping up our economic pillars, issuing words of grand grandiosity and small comfort. When trust liquefied.

We saw the emotional consequences of this to the Depression Generation. And we'll be seeing it again. Imagine the long-term psychological damage to those suddenly looking down the barrel of monthly payments they can't afford, to those witnessing the grim reaper of foreclosure activity in their neighborhoods -- in some cases block after block of abandoned dreams. Those streets have lovely and fraudulent names, like Meadow Lane and Vista Drive and Green Valley Lane. But there is blood in them.

Conventional wisdom is that Americans have short memories. But the Depression Generation was positively elephantine, and I think there's a really good chance that the Upside-Down Generation will be equally shell-shocked. Which means not getting back into the real estate market so fast. Not changing jobs so fast, either. They might even start to recognize the value of saving a few nickels, applying the same self-glorifying virtues that drive them to work-out in the gym, to their personal finances.

Of course, it may be the last remaining slivers of Whole Foods Market's Rosemary Mint Glycerin Soap, as opposed to Lava, that the Upside-Downers will be hoarding. But they will have more in common with their grandparents and great-grandparents, who saw their world crash in the 1920s, than their boomer parents - who merely crashed in the 1970s.

Gen X and Gen Y are fed up with their boomer parents anyway, their selfishness, hypocrisy, refusal to let go and exit the stage. They're looking for a new kind of meaning and balance that is less logo-reliant. Rejecting their values in the wake of the current financial mess -- values, that, the argument goes, helped create it -- will come easy.

The prospect of a financially traumatized Gen X and Gen Y - bearing the burden of a new kind of PTSD (Post-Traumatic Subprime Disorder) - is a chilling thought, given that two-thirds of the economy is driven by consumer spending. And it's spending is only made possible by ever-increasing levels of credit card debt, and a near-zero (and sometimes negative) saving rate. Even the slightest tilt away from immediate gratification, the slightest shift of the foot to the brake pedal, will truly have devastating consequences.

Get ready.