Did we learn from the Great Depression?
No, we didn’t.
Although a high number of the comments made about the causes of the Financial Crisis suggest that deregulation and a lack of control of the economy by the government led to the current Financial Crisis, it is exactly the other way around. It is the same misconception that was commonly accepted in the 1930s regarding the Great Depression.
The development before the current Financial Crisis was very similar to the years before the Great Depression. Again it was not laissez-faire what happened during that time but a high level of government intervention. Government spending of the United States has been over 40 percent of the national income for several years before the crisis, whose effects were already explained in an earlier chapter. Further evidence that there was no deregulation is the fact that to the Federal Register of regulations were added some ten thousand pages since 1978, now counting more than seventy thousand.
The main cause of the Financial Crisis, however, is the same as the one of the Great Depression: A poorly thought-out monetary policy. That’s not surprising because the Federal Reserve System still exists and works more or less the same way it did 80 years ago. It is not only the System that has certain flaws though; it is also the unwise way it is used.
Although the US economy is based on a market economy and has a lot of capitalist structures, it was not predominantly capitalism that caused the crisis but rather the Government interventions in the market.