JoeSpareBedroom wrote:
Depends on what you or your friend mean by "tanks".


Tim wrote:
In general wheen we were talking about the economy "tanking" was in
reference to a reply of the market crash of 1929.

That kind of "tanking"


The market crash of 1987 was actually worse, so that kind of
"tanking" can't really be so bad eh?

What happened in 1929 was not only the loss of capital when
the stock market crashed, but a subsequent & very long
lasting slackening in what's called aggregate demand... the
amount of overall stuff people buy... resulting in every
business' profits drying up. This was followed by the gov't
reducing expenditures to balance the budget because they
were suffering loss of tax revenue... and it was also
worsened by the failure of many many banks.

In fact the bank failure may have been one of the biggest
causes of the ongoing Depression, and one of the things that
could not happen again today, due to the changes in the
structure of the U.S. gov't's finances and national banking
(the Federal Reserve among other things, the F.D.I.C. for
another).

We will have recessions from time to time, followed by
periods of inflation... it's built into the way our economy
is structured and it is part of what prevents another
Depression (at least, that's what economic theorists say now).

If you really want to learn about it, I strongly recommend
Galbraith's book "The Great Crash of '29" which is about the
most entertaining & readable economics book I have ever
seen. But don't let any neo-conservatives see you with it,
they have branded Galbraith a liberal traitor weeny...
probably because he was friends with Wm. F. Buckley...

dang another long post... but at least there's no
politics... well, not much...

DSK