Great Depression

(MoneyWatch) 

Is this the next Great Depression?

Economists disagree — vehemently, at times — about whether our current economic malaise will ultimately rival the dark days of the 1930s.

Pessimists worry that the global economy is headed into a round of "debt deflation" like the one many economists believe caused the Great Depression. That happens when businesses with too much debt sell off assets to pay their creditors. But the large-scale selling can push down asset values faster than companies can get rid of debt, leaving their balance sheets worse than ever. The result: the economy grinds to a halt.

More sanguine economists say that any resemblance to the 1930s is only superficial. They argue that unemployment isn't likely to approach the Great Depression's peak of 25 percent, government responses to the Depression (such as federal deposit insurance) should help prevent a recurrence, and today's policy makers know much more about how to avert a crisis than they did then. View the links below for some of these perspectives.

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