The Great Depression And The Current Depression

The Great Depression was a worldwide economic downturn that had devastating effects in virtually every country, rich or poor. It is by far the worst ever global economic crisis. It started in Oct 1929, and for many countries, it ended earliest as 5 years later, but for some as late as 10+ years later. So what exactly is The Great Depression? And what were its impacts? What are the similarities of what we are facing today?

So what happened that resulted this economic downturn in 1929?

“The causes of the Great Depression are still a matter of active debate among economists till today. The specific economic events that took place during the Great Depression have been studied thoroughly:
i) a deflation in asset and commodity prices,
ii) dramatic drops in demand and credit,
iii) disruption of trade
ultimately resulting in widespread poverty and unemployment.”

“Most economists believe that deflation is a problem in a modern economy because of the danger of a deflationary spiral. Deflation is also linked with recessions and with the Great Depression. Additionally, deflation also prevents monetary policy from stabilizing the economy because of a mechanism called the liquidity trap.”

So deflation if not controlled properly, will continue to worsen within its own vicious cycle.

One of the theory that stated what could have been the cause of the Great Depression is the
Austrian School ExplanationS it reads:

… the Great Depression was the inevitable outcome of the easy credit policies of the Federal Reserve during the 1920s. Since its enactment in 1913, the Federal Reserve had served as the central bank of the United States. The Federal reserve effectively regulated the amount of credit private banks could issue by providing overnight loans and strict reserve requirements.

Do you see some familiar happening?

Extra Reads:
Effects of Deflation

I ask for forgiveness if this post is a bit gloomy and pessimistic, but I do feel that it is always good to be reminded, so here it is. And please do not take my personal opinion too lightly or too seriously. Be your own judge.