Is the great depression going to happen again?

• The great depression happened because: Banks failed Farms withered in the Midwest Now in my opinion i think America is going to go down the tiolet not once again! Our banks are shutting down. Our goverment is taking over the biggest banks of America. I surely do agree the great depresion is going to happen our stock markets are going down as we speak!!

• Answer:

  The Great Depression will never happen again because: The FDIC (Your money is being insured for $100,000 through the Federal Government within the banking system) which was founded in the "New Deal" that took effect in 1934 after the worst part of the Depression where America had 25% unemployment and FDR had just been elected. The FED - The monetarist's perception is that the FED failed to back the banks during the depression and they felt that the banks should have failed due to poor management and to increase efficiency in the system. The FED was created in 1913 as a "Lender at Last Resort" so that we'll never face another "Panic of 1907" in which people will rush to the bank and take all their money thus leaving the banks w/no reserves allowing them to fall. Freddy Mac, Fannie Mae, and Bear Stearns were backed up because the FED actually DID THEIR JOB this time. If the FED didn't back up the banks, then CONSUMER CONFIDENCE goes down thus making the stock market collapse as people will pull their stocks to get liquid assets on hand. Remember, the stock market is based on "consumer confidence" that tomorrow will be a better day and we will get returns on our investments. If our outlook is bleak or pessimistic, then consumers pull out of the stock market. Our banks are America's "water fountain" that help secure consumer confidence. Technically, we AREN'T in a recession even though it feels like it and personally, I think we are, but analysts are saying "no" at this moment. We have to see how deep the rabbit hole goes. The Great Depression will never happen again because remember, the series of events that occured during that time were almost like "the perfect storm" The agricultural arena was suffering after WW1 and there was lack of construction in residential/commercial building. The stock market was a "giant bubble" and the FED didn't back up the banks at the time. The FED knows now on when to react. Hope this helps bud! -Jerry, Economics Major, University of South Florida