Connect with us

Business

What depression can teach us about economic crises

 


We were starting to see devastating economic indicators linked to the global pandemic. More than 3 million people applied for unemployment the first week in March. Find out how many people applied for unemployment in the fourth week on Thursday and Friday get the first monthly unemployment report since much of the economy started closing.

One of the big questions you are probably asking yourself is: How will things get worse? This is why we asked some historians to tell us about the economic crises of the past and in particular the Great Depression and what we should watch for today.

It is important to distinguish between the October 1929 stock market crash that everyone knows about and the stock market itself, said Eric Hilt, an economic historian who teaches at Wellesley College. The economy probably started to contract in the summer of 1929. But it became a great depression rather than a severe recession, probably starting in 1930 when a wave of bankruptcy began to occur, he said. he says.

The Fed has not acted as lender of last resort to many banks, said Kathleen Day, professor of finance at Johns Hopkins University and author of a book on the history of the financial crises in the United States. Ten thousand banks went bankrupt, which of course caused a further credit crunch and contributed greatly to the magnitude and depth of the depression, she said.

So, what we’ve learned from this is that you need to be able to inject cash in times of crisis, said Carola Frydman, professor of finance at Northwestern University. You have to be able to bail out the banks so that the banks can continue to lend and restore confidence.

If bailing out banks to keep the economy sounding familiar is because that’s what former Fed President Ben Bernanke convinced Congress to do in 2008.

One of my very first articles as a young academic argued that one of the reasons why the depression was so deep and so long was because the financial system collapsed, Bernanke Kai Ryssdal told “Marketplaces” in an interview in 2018I think it was essential to put capital back into the banking system and get it working again, to make it viable so that it could provide credit.

Today’s financial turmoil is not the Great Depression, nor the Great Recession. But there is no doubt that there is economic rough water ahead, said Day.

If I was concerned about something like a recurring Great Depression, I might think of different warning signs that we could watch out for, and one of them is that policymakers choose not to respond to the crisis, said Hilt.

President Jay Powell and the Federal Reserve took aggressive actions in response to the COVID-19 crisis, including cutting interest rates to zero, buying billions of dollars in bonds to inject more money into the financial system, and lowering the rates it forces banks to borrow money.

So this warning sign does not go out. The historic model does not seem to repeat itself in this context, said Hilt.

As for what to watch to help us understand what kind of crisis it is, Hilt, Day and Frydman have all said that it is important to watch unemployment.

Changes in unemployment during the Great Recession were relatively short-lived, said Frydman. In the Great Depression, by contrast, unemployment rates remained very high for about a decade. So I think it’s something [to watch] as I look forward to trying to figure out if some of the shocks we are seeing now are going to be temporary or, or much longer lasting, she said.

Hilt, Frydman and Day said other indicators to watch include bankruptcies, inflation and signs of distress in the credit markets.

If you are a member of your local public radio station, we thank you because your support helps these stations to broadcast programs like Marketplace. But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.

Your donation as little as $ 5 helps us create more content that matters to you and your community, and to reach more people wherever they are, be it radio, podcasts or online.

When you contribute directly to Marketplace, you become a partner in this mission: someone who understands that when we all become smarter, everyone wins.

What Are The Main Benefits Of Comparing Car Insurance Quotes Online

LOS ANGELES, CA / ACCESSWIRE / June 24, 2020, / Compare-autoinsurance.Org has launched a new blog post that presents the main benefits of comparing multiple car insurance quotes. For more info and free online quotes, please visit https://compare-autoinsurance.Org/the-advantages-of-comparing-prices-with-car-insurance-quotes-online/ The modern society has numerous technological advantages. One important advantage is the speed at which information is sent and received. With the help of the internet, the shopping habits of many persons have drastically changed. The car insurance industry hasn't remained untouched by these changes. On the internet, drivers can compare insurance prices and find out which sellers have the best offers. View photos The advantages of comparing online car insurance quotes are the following: Online quotes can be obtained from anywhere and at any time. Unlike physical insurance agencies, websites don't have a specific schedule and they are available at any time. Drivers that have busy working schedules, can compare quotes from anywhere and at any time, even at midnight. Multiple choices. Almost all insurance providers, no matter if they are well-known brands or just local insurers, have an online presence. Online quotes will allow policyholders the chance to discover multiple insurance companies and check their prices. Drivers are no longer required to get quotes from just a few known insurance companies. Also, local and regional insurers can provide lower insurance rates for the same services. Accurate insurance estimates. Online quotes can only be accurate if the customers provide accurate and real info about their car models and driving history. Lying about past driving incidents can make the price estimates to be lower, but when dealing with an insurance company lying to them is useless. Usually, insurance companies will do research about a potential customer before granting him coverage. Online quotes can be sorted easily. Although drivers are recommended to not choose a policy just based on its price, drivers can easily sort quotes by insurance price. Using brokerage websites will allow drivers to get quotes from multiple insurers, thus making the comparison faster and easier. For additional info, money-saving tips, and free car insurance quotes, visit https://compare-autoinsurance.Org/ Compare-autoinsurance.Org is an online provider of life, home, health, and auto insurance quotes. This website is unique because it does not simply stick to one kind of insurance provider, but brings the clients the best deals from many different online insurance carriers. In this way, clients have access to offers from multiple carriers all in one place: this website. On this site, customers have access to quotes for insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc. "Online quotes can easily help drivers obtain better car insurance deals. All they have to do is to complete an online form with accurate and real info, then compare prices", said Russell Rabichev, Marketing Director of Internet Marketing Company. CONTACT: Company Name: Internet Marketing CompanyPerson for contact Name: Gurgu CPhone Number: (818) 359-3898Email: [email protected]: https://compare-autoinsurance.Org/ SOURCE: Compare-autoinsurance.Org View source version on accesswire.Com:https://www.Accesswire.Com/595055/What-Are-The-Main-Benefits-Of-Comparing-Car-Insurance-Quotes-Online View photos



picture credit

ExBUlletin

to request, modification Contact us at Here or [email protected]

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *