The Great Recession vs. the Great Depression: Lessons learned? Lessons lost?

The magnitude and duration of the current economic turmoil, the 'Great Recession', has its closest analogy in the Great Depression of the 1930s. Current political and economic debate most often uses post-WWII recessions as analogies to offer prognosis for the unfolding situation, but rarely examines the Great Depression as a source of understanding. The lack of a definition for economic depression contributes to this inaccurate analogy selection, and is discussed as a weakness in economic theory. The literature on Kondratieff or 'Long Waves' offers some insight for today. Mensch proposed that cycles in basic innovations drove Long Wave business cycles, and Marchetii produced accurate, 20 year-forecasts of energy prices using this framework. Our economic system continues to evolve and today it has substantially different composition than in the 1930s. Deposit insurance, Social Security, and having the world's second largest economy growing at 9% throughout the early years of the Great Recession are all significant differences from the 1930s. The insights that could be drawn from distant historic events is therefore limited, this paper attempts to articulate implications of such differences.