1929 Vs. 2009: Will We Relive The Great Depression?

As the economy becomes worse and worse, many predict that unemployment will continue to rise, stocks will continue to fall, and more and more people will lose their homes. Even President Obama has made this comparison stating, "We are going through the worst economic crisis since the Great Depression." When someone with as much power as Obama puts concepts such as that into our heads, we are going to worry and expect the worst.
Although we are seeing similarities in today's economy and the Great Depression, which started in 1929, several say we will not come close to a life as harsh as those endured almost eighty years ago. As consumers are spending less, companies are reacting by laying off employees as they deem necessary. As our nation's unemployment rate has increased, we have managed to at least stay in the single digits. During the Great Depression the rate rose to 25% and stayed above 20% for four years. This would take several years to occur again, and in that time we will most likely be seeing a better economy. Obama's $787 billion economic stimulus plan is intended to help this situation and create millions of jobs. This alone should decrease the unemployment rate in the upcoming months.
Banks are in a much greater standing than they were back in the 1930's. Thousands of banks shut down during the Great Depression whereas only a handful have shut their doors this year. Depositor's assets have much more protection these days as well. The FDIC has increased the amount of insurance it places on each depositor at each institution from $100, 000 to $250, 000. Although this is a temporary change, it will cause people to have more confidence in their banks because if for some reason banks collapse, their money is still safe. The government in this era will step in and offer help to banks on the verge of failing. In October, Congress approved $700 billion to bail out our nation's banks. During the Great Depression, if your bank collapsed your savings were completely gone. This has tremendously changed for the better.
2008 was one of the worst years for stocks as the S&P 500 fell more than 40%. Stocks are down and it is a very high risk for some to be investing money they will soon need to survive. The Federal Reserve has cut interest rates and not too long ago moved the federal funds rate to the lowest in history- between 0 and .25%.
During the Great Depression, government officials were not as proactive as they are in today's world. President Herbert Hoover didn't consider the stock market crash of 1929 to be dangerous and believed the problem would correct itself. Today, government officials are ready to become more involved in issues such as these in hopes to improve the economy.
In conclusion, I hardly foresee bread lines or soup kitchens in our society today. During the Great Depression people could not even afford to feed their families and would have no choice but to wait in long lines for food. These were not just lower class citizens but middle and some upper class citizens as well. Almost everyone was going through hard times. Even though current food prices have gone up, this hasn't stopped everyone from buying food and even luxury items.
Our country, the citizens and the government, is exceptionally knowledgeable compared to eighty years ago. We have been through several recessions that have taught us what needs to be done in these types of situations. We know what works and what doesn't. Government officials have become more aware of being hands on and trying to solve economic issues as soon as they arise. Newly elected President Barack Obama has also promised to get our country out of this economic crisis which has put many at ease. In order to prove critics wrong who claim we are headed into another Great Depression, we need to act fast and create more jobs in addition to improving consumer spending. With a new year beginning as well as a new president, the future of the economy should start taking a turn for the better.

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