Charles Geisst: 1929 Crash and Today: It's the Consumer

Roundup: Historians' Take

[Charles Geisst is a professor of finance at Manhattan College. Geisst is the author of Wall Street: A History his most recent book is Collateral Damaged: The Marketing of Consumer Debt to America.]

The Crash of 1929 and the credit market crisis have one inescapable fact in common. Both originated with a decline in consumer-related spending that precipitated a larger crisis leading to depression-like conditions. When the economy is driven by two thirds to 75% consumption, it would be wise to prevent consumer-led bubbles in the future. In 1929, the phenomenon was new and not understood. In 2007, it was forgotten, until now. Since the problem is intertwined with other parts of the economy, the contagion spread quickly in 2007; less quickly in 1930 although the end results are similar.

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