Sunday, October 26, 2008

Surely we are not in for another great depression?

History may not repeat, but it sometimes rhymes.

We might not be able to escape one, writes Professor Greg Mankiw in the weekend NYT:

"When Olivier Blanchard, the I.M.F.’s chief economist, was asked about the possibility of the world sinking into another Great Depression, he reassuringly replied that the chance was “nearly nil.” He added, “We’ve learned a few things in 80 years.”

Yes, we have. But have we learned what caused the Depression of the 1930s? Most important, have we learned enough to avoid doing the same thing again?"

Read the lot.

And also the NYT's cheat sheet: Credit Crisis — The Essentials


Michael S said...

It is strange that most analysis about what caused the Depression is conducted via looking at what happened after the 1929 crash.

Why is there no consideration for what led up to the 1929 crash? Was it loose monetary policy like we saw this decade?

I suspect it was. But that seems to go unquestioned in the mainstream.

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