People forget why they call it the Great Depression. Unemployment went from 3.4% in 1929 to approximately 24.9% in 1933. It was still at 19.7% in 1938, nine years after the crash. 10,000 banks failed between 1930 and 1932. A friend's grandmother told him that FDR by force of personality prevented a revolution in this country. One effectively occurred in Germany.
That is why everyone is so worried. Failure of financial intermediaries causes economic dislocation to spread quickly because paper assets (like bank deposits) which are not actually in the vault cannot be returned (they are secured by long-term loans and the like). We are facing old-fashioned runs on the bank, just of a different form than 80 years ago. Let's hope the Fed is over-reacting, and things really are better than they are.
I need to get pegged.
That is why everyone is so worried. Failure of financial intermediaries causes economic dislocation to spread quickly because paper assets (like bank deposits) which are not actually in the vault cannot be returned (they are secured by long-term loans and the like). We are facing old-fashioned runs on the bank, just of a different form than 80 years ago. Let's hope the Fed is over-reacting, and things really are better than they are.
I need to get pegged.