According to Time magazine online, a recent article noted the similarities of our economy right now to our economy back in 1929, during the Great Depression. The author, Niall Ferguson, showed the various things that led up to our depression back then, and what is going to cause us to repeat this right now.
In the beginning of the article, she talks about the initial rejection of Bush’s $700 Billion Bailout Plan (which has just recently been approved), and how it reminds her of the Smoot-Hawley Tariff Act of 1930, which raised taxes on over 20,000 imported goods. According to Ferguson, many historians blame the Great Depression on the passing of this act. Ferguson goes on to state that in today’s economy, it is going to be near impossible for us to climb out of our economic crisis before a depression hits, even if the bailout plan did get approved. This really made me think, because I have that same feeling. She also states that during our financial crisis, banks are cutting back their credit so that they can survive. This is not going to help consumers because that means that if someone wanted to purchase a car and have it financed, more likely than not, they will not be approved because banks are trying to save all the money they can. If anything, not giving out credit is going to hurt us in the long run and may send us into a depression. Even though the 89% crash in the stock market was a key factor in causing the Great Depression of 1930, Milton Friedman and Anna Jacobson Schwartz argued in their seminal book A Monetary History of the United States: 1867-1960, published in 1963 — the cause was not the stock-market crash but a "great contraction" of credit due to an epidemic of bank failures.
The difference between then and now, Ferguson notes, is that we have ...