Daniel Gross says don’t be depressed. It’s not like 1929 and all those Great Depression analogies are wrong:
The world of 1929-33 was one that lacked shock absorbers such as Social Security and deposit insurance to insulate people from economic disaster. In the 1930s, some of the world’s largest economies—Germany, the Soviet Union, Japan, and Italy—were run by leaders hostile to the very notion of market capitalism. Today, U.S.-style market capitalism is under assault from self-inflicted wounds, and Germany, Italy, and Japan (Russia, not so much) are working with the United States to cope with a common problem. Back then, we were cursed with a feckless Federal Reserve, and a wealthy Treasury secretary, Andrew Mellon, saw the downturn as a force for good. “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate,” he said. “People will work harder, live more moral lives.” By contrast, today’s Federal Reserve chairman, Ben Bernanke, is a student of the Great Depression, and the wealthy Treasury secretary, Henry Paulson, wants to provide liquidity to stocks, farmers, and real estate. A final difference: After the 1929 crash, the nation had to wait more than three years for a president who simply wasn’t up to the job to leave the scene. This time, we’ve got to wait only two more months.
BTW, the other day I was one of the many bloggers and media types to hype Peter Schiff’s Prescient Pessimism. My enthusiasm for him was later doused by this Planet Money interview with Schiff. He’s smart to revel in this moment because he’s gone past right and is headed right back to wrong!
Photo Credit: Wikipedia, A poster for the “War of Wealth” by Charles Turner Dazey, a play that opened February 10, 1896.