Source: NBC News 4-17-2020
The Great Depression was a severe worldwide economic depression that took place mostly during the 1930’s, beginning in the United States. The timing of the Great Depression varied across the world; in most countries, it started in 1929 and lasted until the late 1930’s. Wikipedia
Some hallmarks of the current economic catastrophe bear an uncomfortable resemblance to those of nearly a century ago, while the sheer velocity of the economic collapse has rattled investors.
“It took three and a half years, from August of 1929 to March of 1933, to go from robust full employment to the depths of the Great Depression,” Lawrence White said, an economics professor at New York University.
“It looks like we’re going to get there in less than three and a half months. The speed of the descent is unprecedented.”
Many of today’s monetary policies were created in response to events that exacerbated the Depression: Unemployment insurance, for instance, sustains at least some of the demand that vanishes when joblessness spikes and people have no income to spend.
“We’ve entered this crisis with a set of policy tools that came out of the crisis of the 30s and 40s,” said Mason B. Williams, a political science professor at Williams College.
“The idea of stimulus, of macroeconomic management, more sophisticated monetary policy — all those are legacies of the Depression that will be very useful to us in the current crisis.”
This is not to say a recovery necessarily will be quick.
In a prolonged downturn, the relationships between worker and employer, creditor and borrower, and landlord and tenant all break down, and reestablishing those commercial relationships takes time.
“All of those things need to be rebuilt, and it doesn’t happen overnight,” White said.
“I don’t think it’s going to take six or seven years,” he said, but he added that a rebound could take more than a couple of quarters to emerge. Read more.