A Comparative Analysis On The Great Depression And 2008 Financial Crisis

Since the formation of the financial markets, the risk of financial crisis has come out simultaneously, as the "ghost" accompanied by economic development process. Every financial crisis aroused economists'endless thoughts. The U.S. sub-prime crisis began in 2007, whose symbol is Lehman Brothers bankruptcy, continued to spread to the world. No one can exactly predict how the crisis will develop, but the general consensus is:This is the most serious financial crisis since "the Great Depression". Will the financial crisis result in the Great Depression? And what differences and similarities are between this financial crisis and the Great Depression? In order to answer these questions, this paper tries to make a comparative analysis of the Great Depression of the thirties of the world economy and the financial crisis in 2008.The study of the Great Depression has always been so fascinated subject for an economist. For decades, theorists have studied the Great Depression from different perspectives, and obtained a large number of research results. To sum up, the main can be divided into two categories, a view stressed that currency factors are the important reasons causing "great depression"; the other view is that the non-monetary factors are the culprit of "the Great Depression". In my opinion, the "Great Depression" should be divided into two stages:the initial decline and continued depression. And the monetary and non-monetary factors which played an important role at different stages led to a serious, wide, long "Century Great Depression." From this sub-prime mortgage crisis to the 2008 financial crisis, theoretical circles in many ways carried out positive and in-depth studies and made some interim research results. In the early 2007 to 2008, more analysis of the sub-prime crisis is the cause or mechanism of the formation, however, with the deepening of the sub-prime crisis, when the sub-prime crisis gradually developed into a global financial crisis, economists again from different perspectives develop and amend the original understanding of the sub-prime crisis. Based on the results of these studies this paper attempts, combined with the professional features of economic history of the discipline, to choose the perspective of the comparison between the Great Depression and the 2008 financial crisis in history to do historical analysis,in order to explore the similarities and differences between them, resulting in understanding of the nature of things through the appearance, and achieve "History for this" objective.To sum up, this paper reached the following conclusions:First, from the occurrence of the root causes and development of the logical point of view, the Great Depression and the 2008 financial crisis have great similarity, that is, the polarization of wealth and insufficient consumption——preconsumption and speculative boom——asset bubbles burst——deflation,credit crunch,debt crisis, payment crisis——more serious inadequate consumption——crisis began to spread. However, due to different historic backgrounds, particularly in recent decades, computer technology, modern communications technology and the rapid development of network technology and the high global economy integration, make this financial crisis'occurrence become much more rapid and sudden, so the spread velocity is more rapid and more extensive.Second, from the follow-up development perspective, the 2008 financial crisis should be able to avoid human tragedy of "Great Depression". The main reason is that:on the one hand, compared to the Great Depression many countries have abandoned the gold standard, making the international monetary system collapsed, by the contract, although this financial crisis made a serious impact on the present international monetary system——the U.S.dollar standard,it still does not make it collapse; on the other hand, countries learned from the profound lessons of the Great Depression, the major economies around the world started the joint rescue package, which is much better than the "beggar thy neighbor"during the Great Depression.Third, imbalance is the main common cause of the two crisises. High concentration of wealth, the industrial structure of the situation, a serious deviation between the virtual economy and the real economy and the incompatibility of international financial system and the world economic pattern possess common attribute:imbalance. The Great Depression and the financial crisis is the very self-repair, or adjustment mechanism of the serious imbalance.Fouth, From the sequence of events in the development of view, the two crises have a significant thing in common:the market and the Government as the actors around the efficiency and equity values, are making the choice of history to affect the course of history.Finally, through looking back and summing up the Great Depression, the historical facts of China's economic development, I hold the point that the crisis will not only bring us a challenge, but also contain a huge opportunity. Along this line of thinking, combined with China's domestic problems in economic development and the international economic status and trends in international economic development this paper puts forward the following policy recommendations in response to the financial crisis:First, through in-depth study of the current financial crisis, we should develop the socialist market economic theory; second, speeding up economic structural adjustment efforts; and third, apply scientific and technological innovation to promote economic growth; Fourth, strive for more "voice" in international affairs.