October 15, 2008 10:36AM # The Biggest Economic Nonsense Since the Great Depression By [Alan Reynolds](https://www.cato.org/people/alan-reynolds) --- SHARE An otherwise interesting [*Washington Post* front-pager](http://www.washingtonpost.com/wp-dyn/content/article/2008/10/14/AR2008101403343.html?hpid=topnews) on “What Went Wrong” claims the current situation “has erupted into the biggest *economic* crisis since the Great Depression.” On the contrary, that honor surely goes to *1980–82*, with 1973–75 as a close runner-up. This may indeed be the biggest postwar *financial* crisis, but that is a very different thing. The biggest postwar *financial* crisis so far was the S&L collapse of the late 1980s, when nearly 3000 financial institutions were closed. But the impact of the S&L debacle on the real economy was minor at best (the economy grew by 2.9% a year during that “crisis”). The stock market crash of 1987 inspired many hysterical predictions but no recession at all. An *economic* crisis implies *a deep and prolonged drop in real output and employment*, not just another routine recession. To describe current conditions as a worse *economic* crisis than 1980–82 is fanciful nonsense. ##### Related Tags [Defense and Foreign Policy](https://www.cato.org/defense-foreign-policy), [General](https://www.cato.org/general) [![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).