Great Recession of 1981-82, and the recession of 1991-92greenspun.com : LUSENET : Economic History (and Related Observations) : One Thread
Compare and contrast the Great Recession of 1981-82 with the recession of 1991-92. Reasons for Extent, solutions...
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-- Gene Park (firstname.lastname@example.org), July 30, 2002
Hello. For a university project, I am currently studying the Great Depression vs. the economic recession of today. If you have any information on this comparison could you forward it to me? Thanks.
-- Jessica (email@example.com), October 04, 2002.
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-- JT Crotck (firstname.lastname@example.org), March 02, 2004.
Recessions are of two kinds, at least in the modern era of central banking: "deliberate" recessions, and ones that "happen" -- i.e., are unwanted and undirected intentionally at their start.
The 1981-82 Recession was the result of deliberate Federal Reserve policy in the U.S. It's origins are traceable to the appointment about 2 years earlier of Paul Volcker to the job Alan Greenspan now has.
Volcker was given the remit of ridding the American economy of rampant inflation. This he did with a dileberatly restrictive monetary policy, using "open market operations," to restrict the credit the commercial banking system had to lend. At the height of that recession the interest rate on 30 year federal bonds was almost 18 % -- and that was the interest rate, for example, that home mortgages had for awhile. It was rumored in the real estate business here in the Northeast U.S. for awhile that interest rates on mortgages would never again go below 10%.
After the Federal Reserve determined that inflation was no longer a problem, the "money spigot" was turned on again (around August of 1982 -- we know this date because the Wall Street stock market began to take off as savvy investors noticed the relaxing of monetary policy) -- and the U.S. economy began a boom that was only slightly interrupted by the stock crash of 1987.
In contrast the recession of the early 1990s was not wanted. It happened for a variety of reasons (economists never agree on this type of recession; even today there is no agreement on what caused the worst North American downturn of the 20th century, the Great Depression)-- among them: the first Gulf War; George Bush's modest tax increases, and the Savings and Loan collapse that began in 1989.
-- Louis B. Massano (email@example.com), June 19, 2004.