The Global Financial Crisis and the Return to Economic Growth
Chapter 8: A reprise of the argument
The Global Financial Crisis is the most far-reaching crisis of the young twenty-first century, surpassing 9/11 as a threat to the security and well-being of the United States. The crisis is no mere cyclical business downturn but rather is the equivalent in our generation to what the Great Depression was to the generation of the 1930s. The financial crisis was in fact strong enough to plunge the United States and much of the world into an economic depression every bit as severe as in the 1930s. This disaster was prevented, but only barely, by decisive American and world-wide action. Economists both in and out of government estimate that emergency fiscal and monetary tools prevented a deep depression. Without the vigorous government response, GDP in 2010 would have been about 11.5 percent lower, payroll employment in the United States less by about 8.5 million jobs, and the nation would be experiencing price deflation. Nevertheless, the financial crisis has profoundly affected every American: millions have lost their jobs and are unable to find work or are working part-time; countless others have seen their pay cut; the values of stock portfolios, homes, and other assets have fallen. Virtually every American family has suffered financial losses as well as people around the world, especially in developed countries. The crisis has profoundly affected the American psyche: most Americans are resigned to a new Age of Austerity—thus the title of this book.
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