If I read another news story referring to the current financial mess as the next Great Depression I am seriously going to throw something -- perhaps my copy of David Kennedy's Freedom from Fear. Just this morning I read "A Lesson Rooted in the Great Depression" in the International Herald Tribune, which starts out with the line - "Will future historians write about the Great Depression of the 2000s as they did about the one in the 1930s?" In the last hour 36 news stories referencing the Great Depression have been posted online.
If all these news analysts are suggesting that the current market crisis could lead us into another Great Depression it must be true, right?
Maybe... 1. if the Great Depression was only about the 1929 Stock Market Crash and 2. if a little something know as the 'New Deal' hadn't occurred.
However, the Great Depression was much more than the collapse of the stock market and the banking crisis that followed it. It also was a time of fundamental weakness in the agriculture sector and the loss of job and pay/hours cut-backs in the manufacturing sector. Moreover, since there was no 'safety net' provided for the American government to protect Americans who fell on hard economic times, people began to lose their homes and go hungry.
While the current financial situation might lead to a general meltdown of the economy, there won't be the same social disruption for families that Americans faced in the 1930s because the New Deal put some protections in place for U.S. citizens. Protections like government insurance of saving deposits, unemployment insurance, the welfare system, and farm subsidies all prevent the American people from fall as far as they did in the 1930s.
So no matter how bad the U.S. economy becomes, at least we can take comfort in the fact that it will not turn into another Great Depression.