''Since it is obvious that banks seized by the FDIC do not make new loans, we can expect the pace of credit contraction to increase in keeping with the number of failed banks. If failed deposits of 1.84 percent correspond with a 6.2 percent decline in commercial bank loans, then a 5 percent rate would tend to indicate a 16.8 percent reduction. This level of credit contraction would be completely unprecedented in the post-war period; one presumes it would also be catastrophic in terms of its consequences for the national economy.''
While the Great Depression is considered to have begun with the great stock market crash of 1929, the first mention of the words "great depression" was in a speech given by Herbert Hoover in late 1931. The first specific and titular reference did not occur until 1934, when British economist Lionel Robbins published a book titled "The Great Depression." This would neither be the first nor the last time economists influenced by the Austrian School would be the first to identify a major economic downturn in the making or to point out that the policies of the fiscal and monetary authorities were guaranteed to exacerbate it.
What then, are the prospects of enduring recovery? It is clear that they are not bright. It is quite probable, if there is no immediate outbreak of war on a large scale, that the next few months may see a substantial revival of business. If the exchanges are stabilised and the competition in depreciation ceases, there is a strong probability that the upward movement, which began in the summer of 1932, will continue. If the stabilisation were made permanent and some progress were made with the removal of the grosser obstacles to trade, it is not out of the question that a boom would develop. There are many things which might upset this development. The basis of recovery in the United States is gravely jeopardised by the policy of the Government.
– Lionel Robbins, "The Great Depression," Page 195
At the end of 2009, conventional economists are claiming that the economic contraction which began in 2008 is over. Most government published statistics show growth and the stock markets have recovered half of their previous losses. While some of the wiser economists are hedging their bets by stating that they expect growth to be "sluggish" with "downside risks," there are no more expectations of market crashes, financial collapse or widespread economic contraction than there were at the beginning of 2008. The question is not one of growth versus contraction, but rather how much the economy will grow. However, the conventional economists are just as wrong to think the contraction is over as they were to believe that it was not on the horizon before. http://www.wnd.com/index.php?fa=PAGE.view&pageId=120228