The Second Great Depression Bogeyman

By Dean Baker - February 1, 2010, 12:50PM

Our political leaders continually assert that we should be thanking them that we are not in a second Great Depression rather than complaining about how bad things are. The second Great Depression theme came up repeatedly in the debate over the reappointment of Federal Reserve Board Chairman Ben Bernanke. It also featured prominently in Treasury Secretary Timothy Geithner's defense of his handling of the AIG bailout.

While we should all be thankful that we are not in a second Great Depression, just as we should be thankful that the world has not been destroyed by nuclear war, the "Great Depression" defense is a tool of fools and liars. Exactly what set of events in the world would have given us a second Great Depression, defined as a decade of double-digit unemployment?