There’s some significant differences between now and the 1930s. The Great Depression became what it was because of a massive collapse in the American banking system. The Depression hit hardest in the US because of this.
In order to replay the 1930s we would need one third of American banks to fail, we would need one third of the US money supply to vanish, we would need all of the customers of the failed banks to lose all their money.
None of that is likely to happen because of important changes done in response to the disaster of the 1930s.
We now have FDIC so that customers aren’t ruined if their bank fails. Milton Friedman called that the single most important legislation to come out of the ‘30s.
Today the Fed won’t just sit on the sidelines and let nature take its course which is what they were doing in the 1930s. Today they buy up troubled assets and otherwise provide liquidity to prevent a vicious spiral from getting a head of steam.
That’s what all the TARP and QE junk has been about. Granted they appear to have been done without much oversight, and the very people who helped cause the calamity enriched themselves by stealing from the taxpayers.
FDIC doesn’t have even a quarter of the funds necessary to cover the losses if 1/3 banks go under. It would still be a buve hit.
Today the Fed won’t just sit on the sidelines and let nature take its course which is what they were doing in the 1930s. Today they buy up troubled assets and otherwise provide liquidity to prevent a vicious spiral from getting a head of steam.
That’s what all the TARP and QE junk has been about. Granted they appear to have been done without much oversight, and the very people who helped cause the calamity enriched themselves by stealing from the taxpayers.
I don’t find those two points above to be comforting at all.