Another Great Depression never happened

Just a quick little entry. A couple weeks ago I did a blog post claiming that we would NOT have another great depression in the United states. Now it is very obvious that the economy will NOT fall into a great depression. The economy is turning up in several leading indicators. The housing market is picking up, and the stock market is going up almost daily.

Will another great depression happen in the future? Sure it is possible, but I truly believe that we learned from the first one. The government is better prepared to fight off a possible depression, and after this major recession they will be even more prepared. You have to understand that during the Great Depression, there was no federal reserve monetary policy available. They could not simple cut interest rates to encourage lending by banks.

A great depression in the future is possible, though not likely. We came pretty close this year, but the efforts by the federal reserve and government (through fiscal policy) fought it off. Perhaps if this was 1920, we would have fallen into a deep depression, but the tools we have now prevented that.