Lately, the news has been streaming with headlines comparing the recession to the Great Depression. The recession we are now facing is worst economic times since the Great Depression, but it is not comparable to the Great Depression. In the 1920-30's, the economy lacked shock absorbers, such as Social Security and deposit insurance, which now disable the economy from becoming as bad as the old times. The Great Depression suffered unemployment rates up to 25 percent, while it is now at 7.6 percent. Also, during the Great Depression around 4000 banks failed, compared to 19 current banks that failed. As the numbers show, this recession can not be compared to the Great Depression. The article brings up some good questions to think about: Do you think that Obama is the modern day FDR, and will fix the problems of our country? Will the current recession become even worse and then comparable to the numbers of the Great Depression? I think that Obama and the other leaders of the world will work as one to get out of the economic recession...it may take time, but nonetheless I don't feel as if this current economic situation can get as bad as the state of the Great Depression.
Article:
http://www.newsweek.com/id/170340
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4 comments:
I do not think the economy will get as bad as it did during the Great Depression. Not only do we have the Great Depression to look at and learn from, but if the economy were to get a lot worse, we have had plenty of time to prepare for it. Obama is taking an active role in the plans to help the economy. Since the government has been getting involved right away, the situation is not being allowed to just get worse from neglect, as it did in 1929. As the article says, the country had to wait more than three years to get a new president. Also, the United States was much more capitalistic back then. That is part of the reason the Great Depression was allowed to get the way it did. As Dan says, we now have ‘shock absorbers’ that are designed as safety nets to prevent another Great Depression. Obama will do his best in office, but I think outside events will shape how effective his policies and plans will be.
I am in agreement with both Dan and Marla. This current recession is no where near as devastating as the Great Depression of 1929. The FOMC has a greater understanding of the current market conditions and how to promote policy to expand GDP far greater than the economists of the early 1920's. Although our economy is currently undergoing a correction and the market sporadically jumps and dives hundreds of points each day, time is the ultimate elixir and will help the economy to restabilize. America must wait for the economic stimulus package to take effect before jumping to any negative conclusions that we are in a "depression." President-elect Obama does have the final call in what direction this country will take in promoting economic growth. Will he continue to inject liquidity within the market in order to maintain stability? Or will he take a different direction in fear that these "bailout plans" are raising inflation while also burdening tax payers.
I agree with everything that was said before me. Yes, we are facing hard economic times, but they are nowhere near what the Great Depression was. I believe that many compare the current recession to the Great Depression simply because the current state of economy is the worst this generation has seen, as was the Great Depression to the generation of that time. It will take a long time to recover because we are not out of the woods yet and the worst may yet be to come, but fact of the matter is, the economy will recover with time. I have faith in the president-elect Barak Obama that he will do enough to get the economy back on its feet.
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