In five pages this text is examined as it discusses how the current economic climate could result in a scenario similar to The Great Depression with the author's theories compared with those of Barry Eichengreen and Karl Polyani. Four sources are cited in the bibliography.
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economies - consisting of problems that have characterized much of the world economy since the 1930s - still exists, and has made a comeback.
Paul Krugman is true in his assessments - particularly in his assessment that one reason for the Great Depression could be laid at the feet of an
unequal distribution of wealth. In this paper, we will support Krugmans assertion, with help from authors and economists Karl Polanyi and Barry Eichengreen.
Overall, the theory behind Krugmans book is that while the world is technically not in a recession or even depression, "depression economics," in other words, the kind of economics
that helped spark the Great Depression of the 1930s, is still active - and could mean trouble for the worlds economies (Krugman, 1999). The factors that led to the 1930s
depression included overall emphasis in an inflated stock market, Focusing a great deal of emphasis on the Asian crisis of the late 1990s, Krugman notes that, while many believe that
the age of economic anxiety is past, ". . . then came the latest crisis" (Krugman, 1999), that crisis being the collapse of the supposedly strong Asian economy.
Krugman focuses on the cause of the collapse, noting that defeating inflation (i.e., using more dollars to buy products) is one reason why we
are currently in a state of "depression economics" (Krugman, 1999). Managed inflation, he notes, allow countries to enjoy negative real interest rates to encourage investment during a recession (Krugman, 1999).
The key here, of course, is "managed" inflation - out-of-control inflation means, of course, that fewer people will be out buying fewer goods, meaning that less will be produced and