Why cant we not fall into a another Great Depression?

Answer 1

Ummmm.... not wishing to be a prophet of doom, but,..... I have seen rosier economic outlooks in my time that what we currently have. And from what I can see it does appear to be affecting the US & Europe as much as anywhere. Don't gret me wrong, the shops are full & people generally have jobs & there is affluence & stability: but you don't need to be a genius to understand that living on credit, borrowing money to be repaid later, does mean that the need is for people to repay their debts. If for whatever reasons those debts are not repayable then the banks lose money, be it, as it is, their own fault, they will still recoup those losses by penalising all of their customers in one way or another. 'Buddy, can you spare a dime' it is not. But the loss of confidence is palpable at the moment in economic headlines, just dont tell the Chinese.......

Answer 2

First, you have not provided a definition of what is a depression, but certainly it is a more extreme downturn in the economy, much worse than a recession. Second, the great depression was a worldwide depression. Third, the great depression lasted a long time - nearly a decade. So, may I restate your question, as can we have another extreme downturn in the economy lasting for many years, which is felt worldwide. The answer is unfortunately, yes. At least it can not be completely ruled out. I would refer you to this link: http://en.wikipedia.org/wiki/Great_Depression A future economic depression would be not similar to the prior one, as (a) US Government regulatory agencies, banks, investment centers have changed, (b) The world monetary structure has also changed dramatically. Since you ask if we could "fall" into a depression, you should review the above link, as the country took numerous steps in the 30's to end the downward spiral. Some of these actions, in hindsight, only made economic conditions worse. The downward spiral of economic activity and employment is well described in the above link. Franklin Roosevelt is credited with pulling us out of depression by "liquifying" the economy.