Closing in on another Great Depression

By John Paul Rossi, The Centre Daily Times

The United States is in the midst of the worst financial crisis since the Great Depression. The real question is, how close are we to another Great Depression?

The answer is very close. Here’s why.

The Great Depression was the result of the combination of the 1929 financial crisis and serious structural problems in the American economy, which included widespread poverty.

After the 1929 stock market collapse, these factors combined to deeply cut business investment and personal consumption.

This caused a downward depressionary spiral that created the worst economic collapse in American history.

Today’s economy is hurtling downward on a similar path to depression. The mortgage and financial crises have constricted credit and largely cut off business investment. Stagnant wages and overborrowing have curtailed consumer spending.

The collapse of a stock market bubble in 1929 triggered the chain of events that led to depression. When stock prices began to fall in October 1929, investors, financial institutions and banks were caught overextended. Read more….