Quote:
Originally posted by gov135
The fact that we can't get hit as bad as the Great Depression doesn't mean we should tolerate any kind of unrest in our markets, however.
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Way off base here. We can be hit even harder than the Great Depression as there are infinitely more people involved in the stock market now than in the 20's. Through 401ks, pensions, and direct investing a large share of people's wealth is in the stock market. Big turmoil in the markets aren't as likely as the era of the Great Depression due to market rules that are in place now but there is no telling just how much of a drop in the market and/or for how long it would need to last before a panic starts or even before consumers stop spending as they feel they need to save more rather than spend.
As far as the economy doing worse than the time of the depression, absolutely not. What we've seen is a minor slowdown. A recession (two consecutive quarters where the GDP does not grow) would feel FAR worse than what we've experienced. Especially if it lasted longer than the two quarters.
Even during the Great Depression we were an international economy. The world economy has not mitigated our slowdown very much (if at all) since most countries are doing far worse than us economically. A few things have protected us from major economic turmoil. Low interest rates have allowed people to decrease their monthly costs (refinancings and lower credit card rates), productivity increases have allowed companies to earn profits without drastically raising prices (low inflation), and the greater participation in the stock market and higher home prices have given many consumers a feeling of wealth that they haven't had in the past. All this has equalled consistent consumer spending which has been driving our economy.