any thoughts on a second great depression occuring?

Answer 1

There are several scenarios that might lead to one. The housing bubble might lead to one. As people deside they no longer are going to pay their mortgages for overvalued houses and they are returned to the finance companies (banks) causing a national banking collapse. That could do it.

About 20 to 30 years from now when oil becomes nothing more than a fond memory and people are forced to ride their bicycles to work, that will assuredly do it. Of course we will no longer have to worry about an obese population.

I do not know at this point whether I will be glad I did not live to see it or not. It should be interesting to a casual observer. It will not be so interesting to the poplulation that has to adjust. The Amish might get a kick out of it.

Answer 2

Depressions (and recessions) are determined by the size of the decline in Gross Domestic Product. A depression is an economic downturn where the GDP falls by more than 10%.

In the Great Depression from 1929 to 1933, the GDP fell by almost 33%. I believe we are smarter today, and I doubt if that will happen again. Maybe a 1 in 10 chance of it happening in the next 10 years. Or 1 in 8 if we keep on running up the federal deficit like we've been doing.

There was a less severe depression in 1937-1938 when the GDP fell 18%. There is probably a 1 in 6 chance of this happening again in the next 10 years.

During the Recession of 1973-1974, the GDP fell by almost 5%. My guess is that there is a 3 in 5 chance of that happening again in the next 10 years.

Aren't you glad you asked?

Answer 3

Of course anything can happen but we learned a lot from the first one. We learned how monetary policy can stimulate or slow an economy. We learned how changing the fed fund rate (interest rates) encourages or discourages growth and how to control inflation. We learned how to avoid run on banks and to stop taking automatic sell orders on the stock market when it tanks. Tax policy can also drive the economy.

Long answer short, who knows? But we're far better prepared today than in the 20s to react quicker.

Answer 4

Too easy credit, too many people buy new products with it. The same things was going on in the 1920s, until the Stock Market crashed in 1929.

Answer 5

highly unlikely...as long as growth and inflation remain in check we should be fine...

depression occured partly because of structural problems within the american capital system (no federal reserve and lax securities laws)

Answer 6

May be but with less magnitude &

small global impact