The great depression and great recession
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The Great Depression and Great Recession. October 3, 2011 Jim Butkiewicz University of Delaware. The recent Great Recession has resulted in significant economic losses and personal suffering Still, the Great Depression was far worse. Comparisons. Treasury’s expansionary monetary policy.

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The Great Depression and Great Recession

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The great depression and great recession

The Great Depression and Great Recession

October 3, 2011

Jim Butkiewicz

University of Delaware


Comparisons

  • The recent Great Recession has resulted in significant economic losses and personal suffering

  • Still, the Great Depression was far worse

Comparisons


Recovery from the depression

  • Treasury’s expansionary monetary policy

Recovery from the Depression


Recovery from the depression1

  • Treasury’s expansionary monetary policy

  • Fiscal policy not expansionary

  • Bank lending stagnant $20 - $22 billion

  • Federal lending by new agencies

    • Home Owner’s Loan Corporation

    • Federal Farm Mortgage Corporation

    • Reconstruction Finance Corporation

    • Commodity Credit Corporation

    • U.S. Housing Authority and Federal Housing Administration

Recovery from the Depression


The great recession

  • The downturn was due to a real shock – the bursting of the housing bubble

  • Initially expansionary monetary response became contractionary, but has since reversed

  • Impact of fiscal stimulus questionable

    • State and local governments constrained and have significant unfunded liabilities

  • Fiscal policy now constrained unlike depression

  • Bank lending a constraint

The Great Recession


You are known by the company you keep

You are known by the company you keep


Remaining hurdles

  • Administration’s anti-business attitude and policies (Obama similar to FDR)

    • Uncertainty regarding health care policy

    • Uncertainty about regulation

    • NLRB – Boeing decision

  • Continuing housing deflation

Remaining Hurdles


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