The Great Depression of 2008?
Gerald P. Dwyer
Federal Reserve Bank of Atlanta
University of Carlos III, Madrid
Who Is Speaking?
• These views are mine and not necessarily
those of the Federal Reserve Bank of
Atlanta or the Federal Reserve System.
• Are we in a depression?
• Are we at the beginning of a depression?
• Is something like the Great Depression
likely to happen?
A Lot of Overwrought Discussion
• Associated Press report
• “Retail sales fell off a cliff in September
• plunging by the largest amount in three
• How much?
• 1.2 percent
Not only reporters
• Joseph Stiglitz, a Nobel Prize winning
economist, this Summer said the economy
was in the worst recession “since the Great
– “The Great Depression Hoax”, Wall Street Journal, Todd G.
LevelStock Exchange Indexes
January 2, 2007 through October 17, 2008
January 1995 through September 2008
Shaded bar: NBER Business Cycle Contraction
• $488 million cut in $7 billion S.C. state
– Cuts for state universities especially
• Runs on money market funds
Run on Money Market Funds
• Money market funds are similar in some
ways to banks
– Generally give you back a dollar on demand
when you deposit a dollar in them
– Prime Reserve fund failed to do that on
September 17, 2008
– People started taking their funds out of money
• “A repetition of the catastrophe of the Great
Depression today is practically
Gottfried Haberler, Prosperity and Depression,