Could America experiance a Great Depression like we had in the 1930's? What could cause one?

Answer 1

This is a great question. Almost TOO great (is this for school?) Anyway, some financial experts feel America is just a few credit card-swipes and hurricanes away from another economic depression. Slowing industry, failing credit and strained resources (at home and abroad) put us in danger.
i suggest picking up the following books:
the approaching winter by don braby
the great bu$t ahead by daniel a. arnold
and
x out of wonderland, by david allen cates.(on the lighter side of things, this is a brilliant a satire:)

Answer 2

It's possible, but much less likely than in the 30s. The government now has controls over banking and the stock exchange precisely to make this difficult. There have been some scenarios floated in popular novels. If there were another oil embargo, and it lasted for some time, that would hurt. If it were coupled with, say, China and other countries who hold a lot of America's debt selling it off at a discount, the closing of the Panama canal and something to cause a loss of investor confidence such as the death of a popular president or a major military setback, or another big terrorist attack, that might do it. But it would take a combination of unlikely events.

Answer 3

we definitely could but it would not look like the Great Depression. It would it be very different because our culture is so drastically different. It is hard to say what could cause another one...we are poised on the edge it seems....
the dollar is doing very poorly abroad....
inflation (whoops we don't use that word anymore) is rising as well as gas prices....
the Stock market is bloated at the very best....how the market can be at an all time high with the highest amounts of home foreclosures in history.....
we have switched to a service based as opposed to manufacturing based economy.......limits jobs and salaries
outsourcing will have a crippling effect on our economy over time....
our trade deficit is huge, we send out resources and buy back finished product...

Answer 4

Yes, and even a step further, an "economic collapse", like the Soviet Union in the 80s. But they won't call it a "depression" or a "collapse", but a “disorderly adjustment”.

The IMF released last year the "2006 World Economic Outlook", which warned of a U.S. dollar collapse due to global trade imbalances, spiraling U.S. debt, and the demise of the petrodollar reserve standard. The report stated, “global current account imbalances are likely to remain at elevated levels for longer than would otherwise have been the case, heightening the risk of sudden disorderly adjustment”.

“Disorderly adjustment” is the newest banker euphemism for the hyperinflationary spiral and worldwide economic depression which will accompany a dollar collapse.

Answer 5

While there are institutional safeguards in place to prevent the kind of rampant speculation in the financial markets like there was in the run-up to the markt crash of 1929, it is possible to experience a depression nearing the scale of the Great Depression.

However, the economy now is a global one and our economic security is linked to the economic helth of those countries that buy our government debt and allow the government to spend more than it takes in. Particularly in Asian markets, we are vulnerable to downturns in their markets.

In 2007, this would be also triggered by a domino-effect of failed home mortgage lenders. As interest rates rise (triggered by inflation and government debt), more and more homeowners will be forced into foreclosure. Financial instability will result as these lenders try to absorb the losses. As inflation causes prices to rise, greater percentages of income will be spent on basics and less on discretionary spending. More service-oriented businesses will feel stress and/or fail.

The survival instinct in humans can drive individuals to endure some amazing hardships and come out on top. When it comes right down to it, so long as individuals have food, water, shelter and a relative sense of personal security from physical harm, they can endure the loss of possessions and the inability to acquire and maintain wealth.

Answer 6

In the thirties, stocks were less available and considered riskier. Today, many traders look to a downturn as a buying opportunity and raise the market back up. Also, the US stock market is global, so foreign stocks and investors help to keep the market up when things are tough in the US.

That said, it would take a number of hits to the economy to cause a depression.