March 21, 2008

Is a great depression looming?

It is a frightening prospect that there have been many comparisons made between the world economy of today and that of seventy five years ago, when it was then known as the great depression.

There has been a boom in mass production, along with a boom in mass consumption. These two things actually mean suggest a thriving economy with people having loads of spare cash to spend on products and services. But in order for this cycle to function properly there is a need for them to borrow some cash every now and then.

But what happens where the cash dries up? There whole cycle begins to collapse as people cannot afford to buy goods and services; these businesses cannot pay their employees and so on. Well this is how it all falls down, any comparisons with today?

Source [Robert Reich]