As I'm given to understand it, The GD was largely to to economic constriction of funds because the fed reserve hit their limit of credit due to people making runs and tapping the gold reserves.
While the root causes of the financial situation were similar (unchecked idiotic business practices, rampant consumer spending and debt creation, sudden devaluation of market values, causing people to owe more than their leveraged assets were worth, etc) there are several differences.
1. we are not on the gold standard. The fed can "create" as much money as it wants, thus avoiding the constriction of funds to banks that contributed to the GD
2. Not ALL banks are facing the same problem, as was the case in the GD. In this current scenario, there are SOME financial instituions that chose not to join the mortgage orgy, and are still financially solvent.
3. The world is not following us into collapse this time - the US was more isolationist back then, and tried to shore up the economy with tariffs (didn't work). Europe really depended on us as a market, and when we stopped buying, they started collapsing also. In today's global market, we aren't the economic powerhouse we used to be, and our woes are unlikely to hurt all of Europe, let alone trigger Germany into a mad grab for world domination.
Similar causes, different outcomes. Letting these idiots fail will hurt, but will not cripple us anything like the GD.
no subject
While the root causes of the financial situation were similar (unchecked idiotic business practices, rampant consumer spending and debt creation, sudden devaluation of market values, causing people to owe more than their leveraged assets were worth, etc) there are several differences.
1. we are not on the gold standard. The fed can "create" as much money as it wants, thus avoiding the constriction of funds to banks that contributed to the GD
2. Not ALL banks are facing the same problem, as was the case in the GD. In this current scenario, there are SOME financial instituions that chose not to join the mortgage orgy, and are still financially solvent.
3. The world is not following us into collapse this time - the US was more isolationist back then, and tried to shore up the economy with tariffs (didn't work). Europe really depended on us as a market, and when we stopped buying, they started collapsing also. In today's global market, we aren't the economic powerhouse we used to be, and our woes are unlikely to hurt all of Europe, let alone trigger Germany into a mad grab for world domination.
Similar causes, different outcomes. Letting these idiots fail will hurt, but will not cripple us anything like the GD.