Okay, I take it back. I know that I said that talk of a Great Depression was a ridiculous scare tactic by President Bush to get his bailout through Congress. But, I was wrong.
It is not that anything about the current economic situation can plausibly lead to ten years of double-digit unemployment. However, we are seeing views expressed by otherwise serious people that could in fact give us the sort of prolonged stagnation that we saw in the Great Depression.
Advocating spending cuts and/or tax increases in the wake of the downturn that we are now seeing make about as much sense for the economy as nuking Silicon Valley. If the advocates of such nuttiness get their way, then a Great Depression type downturn may be on the agenda.
I have always said that we do not have to worry about another Great Depression because we know how to get out of one now. (it's simple -- spend money.) The problem is that "we" may not be the ones deciding policy.
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