PVCC Puma Press

Economy crisis 'not another Great Depression'
By John J. Dill II, May 2009
Blog Editor

John Steele Gordon, political and economic historian, appeared before the PVCC Honor's Forum, Wednesday, April 15, to discuss with students and faculty the current national financial crisis and its contrast to the Great Depression.

Gordon was billed by the Maricopa County Community College District as one of America's foremost authors and experts in the history of American politics and economics.

“When you have a crash, you want to shovel money into Wall Street,” says Gordon. “That is what we did in 1987 when we had a huge stock market crash, 21 percent in a single day..., but a year and half later, we were back to where we had been and nobody remembers. We will remember the crash of 2008..., but it will not turn into a great depression. We (the government) are not making the same mistakes (that were made during the depression of the1930s).”

During the Great Depression the government made three big mistakes. First, the U.S. government raised tariffs, as did all the other countries, thereby reducing world commerce by 90 percent.

Second, “The democratic Congress raised taxes to balance the budget and pushed the economy over the cliff,” says Gordon. Raising taxes reduces liquidity.

Third, the government tightened the money supply. At one point interest rates on treasury notes went negative. In other words, “you had to pay the government 1 percent interest, too, so they would take your money.”

Unlike in the Great Depression, “Today (the government) is pumping money in to increase economic velocity, keeping interest down and getting people spending again,” says Gordon. “There are signs that things are picking up. Credit has eased up. Businesses can borrow money again. The stock market has recovered 20 percent. Things are looking better than they were looking last October.”

Gordon was born in New York City in 1944 into a family long associated with the financial community. He was educated in history at Millbrook School and Vanderbilt University. He worked for Harper & Row as a production editor and served on the staff of two Congressmen. For the past 20 years, he has been a full-time writer.

Four of his books stand out as relevant reading on today's financial crisis. “Hamilton's Blessing: The Extraordinary Life and Times of Our National Debt” was published by Penguin in 1997. “The Great Game: The Emergence of Wall Street as a World Power: 1653-2000” was published by Scribner in 1999. “The Business of America” published by Walker in 2001. And Gordon's most recent book, “Empire of Wealth: The Epic History of American Economic Power,” published by HarperCollins in 2005.

The Honors Forum Lecture Series is a program provided by MCCCD, which draws renowned academics to the college campuses for discussions with students and faculty.