7 ms·
The comparison with the Great Depression in connections with bank runs is not a good one. Yes, there may have been one or the other bank run bank in those days,
by nhaehnle 15y ago
The comparison with the Great Depression in connections with bank runs is not a good one. Yes, there may have been one or the other bank run bank in those days, but the main feature of the Great Depression was rampant unemployment - more or less exactly what Greece is already experiencing.
Greece must exit the Euro to avoid prolonged Great Depression-style unemployment.
So this becomes a short vs. medium term tradeoff. Introducing a new currency will most likely be chaotic, but in the medium term it allows Greece the flexibility to restart the internal economy. Without introducing a new currency, the short term chaos can be avoided at the cost of a very prolonged downturn that is destructive for the country's prospects and may lead to political chaos in the medium-to-long term.
- quanticle 15y agoThe massive unemployment was a result of the bank runs, not a cause. The bank failures caused the economy to seize up and people to hoard money, leading to a massive wave of foreclosures and business closings, leading to massive unemployment. It wasn't until FDR declared a bank holiday and brought the FDIC up that people were confident enough in their savings to put money back into banks.