Many investors have been quick to compare the current credit crisis to the Great Depression. Many of these same investors have praised Ben Bernanke for his swift actions in staving off a second Great Depression. Unfortunately for those in both camps this was never even close to becoming a second Great Depression as I repeatedly stated last Fall. The following data from the SF Fed shows just how different the two periods are and why the comparisons are just plain silly. Of course, this doesn’t mean we aren’t in the worst economic crisis since WW2 (which we certainly are), but comparing the current downturn to the Great Depression is like comparing apples and oranges:
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.