IMO for my entire (almost 53 year) lifetime, history (all types) and economics (macro, micro, and personal) have been subjects that are not emphasized enough in public schools. Thus many folks, and especially those that did not bother to take classes in either discipline during their higher educatation or develop a professional or personal interest are pretty ignorant on the subjects.
I am confident that I have a far better than average knowlege about American history but claim no special knowlege of economics though I took 100 level courses in macro and micro economics at IU. However I have been trying to learn more about the subject. So with that in mind here is my opinion on our economy.
One thing I constantly see correspondents and thus many others do in their writtings as the compare the current economic conditions to the great depression is an over emphasis on the stock markets, housing markets, and unemplyment. They also always seem to paint the great depression as a nearly instant crash starting with "Black Thrusday and ending with "Black Tuesday". So I just want to point some things out.
The simple fact is that though the crash of the stock market percipitated the depression it was NOT what sustained it.
http://www.signaltrend.com/Stock-Market-Great-Depression.html
Bank failures and total capitulation by those with money are what sustained the depression. The bank failures were of course in part connected to the banks speculations in the stock market and exacerbated by defaults on loans/mortgages and failed investments in farmers and industries devastated by the "dust bowl". During the 1930's 9,000 banks failed with depositers losing 140 Billion dollars. To give you and idea just how much wealth 140 Billion dollars was at that time , the GNP (Gross National Product) of the United States for 1929 was 101.9 Billion dollars.
The real point I am trying to make is that the descent into depression and the sustained decline in economic activity was NOT a percipitious drop but a decline over a period of YEARS as events unfolded and that the single greatest factor in sustaining the decline and forecasting the continued decline and then the actual recover were bank failures and startups and not the stock market or anything else.
With that in mind read this article and notice that so far this year there have been 72 bank failures .
http://apnews.myway.com/article/20090808/D99UFA180.html
Here is the history of United States bank failures since the establishment of the FDIC
http://www.davemanuel.com/history-of-bank-failures-in-the-united-states.php
Now of course with the establishment of the FDIC and with regulatory measures of that industry put in place as a result of the great depression the relatively simple ecnomic history of the depression my not seem to apply but it really does.
The simple fact is that ultimatly the value of our dollar and thus the vast majority of the wealth most of us Americans possess is based on nothing more than the confidence of those that buy Treasury bills/bonds that their investment will pay off and that confidence of buyers (both forgien and domestic) of that government debt is fading and the government is having trouble selling their debt instruments at current interest rates.
http://seekingalpha.com/article/112105-t-bills-bubble-bubble-toil-and-trouble
IOW what I am saying is that either the Government finds a way to curb spending and increase tax revenues or we are facing MASSIVE inflation that will percipitate a real depression with more bank failures, more econmic disasters, of an unknown magnitude which the government will not be able to head off because essentially we they have used up all the equity of confidence that they had.
So, I don't buy into the positive and massive spin on economic news that the media is spewing. It is all based on a supposed decline in the rate of unemployment and the stock market and nothing else and those are NOT by any means the best indicators of economic health in the long term. During the great depression there were several upturns in the market and in employment but the fact is that the economy did not hit rock bottom and even begin a little sustained growth until 1937.
De Oppresso Liber
