Comments on: Worse than the Great Depression

By: Edward Harrison

Edward Harrison — Wed, 01 Oct 2008 15:31:00 +0000

hbl, I think you make a fair point and you could be right that we do see a relative loss greater than the Great Depression. So, in that sense this crisis could become worse than the depression.

That said, my motive is to remind people of the progress we have made in this country and around the world. My hope is that understanding this will help sustain people through what will undoubtedly be tough times.

By: hbl

hbl — Wed, 01 Oct 2008 15:11:00 +0000

I think your point is a good one — with the huge increases in productivity since the 1930s we are very unlikely to experience similar levels of material adversity.

However, “worse than the Great Depression” can be used in a variety of contexts. Our starting imbalances are by many measures far worse — the most important being an unsustainable credit-to-GDP ratio of 350% in the US compared to well under 180% at the onset of the Great Depression (the ratio peaked at 180% part way through). There are mitigating factors as well (e.g., we have deposit insurance set up already), but unfortunately there are plenty of other things that are worse on the negative side also. So it could be said that we risk a relative loss of asset values, growth, etc that is worse than the great depression.

By: Edward Harrison

Edward Harrison — Wed, 01 Oct 2008 15:05:00 +0000

Ah yes, I should have caught that. That is a very good book and the best account of them all. It was missing from my bookshelf so I must have overlooked it.

I now have it in my Bookstore:

America's Great Depression

Cheers

By: pej

pej — Wed, 01 Oct 2008 13:43:00 +0000

I would also recommend one of the Autrian economists books on the subject, as the other are keynesians and are hence failed economists:

Rothbard - America's Great Depression