The Beginning of the Economic Crisis - August 15th 1971

The economic crisis that began in 2008 is by virtually all measures the most serious since the Great Depression. The severity has led many people to the realization that significant change is needed as this economic downturn is not cyclical, but structural. While there is much debate and differing opinion on how to return the economy to prosperity, there are two ideas which dominate the views of both politicians and those in the mainstream media. Firstly, it is believed that the government needs to increase their role in the economy through higher levels of spending, job creation, and regulation. The second main idea, which is complimentary to the first, comes from those in the monetarist camp, and is the belief that an economic downturn can be solved through an appropriate increase in the money supply. Given the prominence of these ideas amongst politicians, central bankers, and other government officials, it is no surprise that the programs which have been implemented thus far, such as the bailouts, stimulus packages, as well as Federal Reserve and Treasury programs, are primarily based on these premises. However, the fact of the matter remains that the economy has shown no real signs of recovery, and this begs the question; do those in power even know what they are doing?