I know that economic times are tough. But predictions of The Great Depression 2.0 strike me as being entirely wrong headed. We still have a very potent economy and despite the fact that it is going through a bad business cycle, there is no reason to think that it will not come back quite soon and stronger than ever. Indeed, there is every reason to believe that the economy currently is stronger than we give it credit for. The following is an important takeaway note:
It turns out that John McCain, who was widely mocked for saying that “the fundamentals of our economy are strong,” was actually right. We’re in a financial crisis, not an economic crisis. We’re not entering a second Great Depression.
It would be nice if the media would pay attention to the arguments made by people like Professor Casey Mulligan. But “if it bleeds, it leads” and since there is so much emphasis on the bleeding, the hidden strengths of the economy are not liable to receive much attention nowadays. Pity–we are potentially setting ourselves up for bad policymaking fueled by abject panic and the mistaken belief that American capitalism itself is coming to an end.