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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Before you rely on the advice of any popular market forecaster, check up on their track record.
Take a deep breath. The economic news may be grim, but it's not nearly as dire as the 1930s. Here's why we're probably not doomed to relive the Great Depression.
With today's companies heavily burdened by debt, the current crisis may end up looking more like Japan's "lost decade," says noted economist Paul Krugman.
Politicians and economists shun the D-word, and you won't find a clear-cut definition anywhere. Here's why.
Forget bread lines and The Grapes of Wrath. A 21st-century depression would have a decidedly different look.