The Great Depression 2009 - It can't happen to us....can it?
Even Milton Friedman did not envisage a negative Bank Rate. The US Bank Rate or Base Borrowing Rate of at 0.0 to 0.25%- so it has the Governor of the US Federal Reserve doesn't have very much to use to stimulate the US Economy and Obama still has to find $750 billion to bail out the financial industry. ( Time Magazine March 30th 2009).The Us Savings rate did go negative for a month in mid 2005 for the 1st time since the Great Depression so anything is possible.
The central mechanism a handout to consumers to stimulate demand has been tried from Roosevelt to Obama ( as a tax rebate) so it should technically be difficult but will be at the expense of increased inflation and the Federal Reserve which is already an issue and out of control. Econometric Models now are available from most leading US Economist but....will it do the trick where everything else has failed. It may just be a better option than finding an exit to the 2nd Great Depression and if that happens their may not be a visible horizon for years as in the 1st Great Depression. Only the 2nd World War inadvertently caused massive increased demand in the US Military Industry with a coupled huge positive balance of payments ( from Allies who imported US Military Hardware-they certainly were not given it free) and this but the end of the 2nd World War had completely reversed the effects of the Depression.
The Marshall Plan (from its enactment, officially the European Recovery Program, ERP) which was the primary plan of Secretary of State George Marshall in Truman's Cabinet was the of the United States solution for rebuilding and creating a stronger foundation for the countries of Western Europe. This financed a huge infrastructure program in Europe, decreased unemployment, increased consumer demand and the rest is history.
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