Two years ago, a student at the University of Michigan asked Berkshire Hathaway (NYSE: BRK-B ) Vice Chairman Charlie Munger to compare the 2008 financial crisis to the Great Depression. Munger, as usual, didn't mince words:
It's nowhere near as bad as it was in the '30s. This is hog heaven compared to the '30s. That was unbelievable. I lived in the 1930s. We didn't have this social safety net. You know what people did in the '30s? They moved into one another's houses. That's what families were for. It was just pain and trouble.
It's been obvious for a while that the past few years weren't as bad as the 1930s, but it struck home when the Treasury published this picture last week, comparing current job losses to the Great Depression and several other severe financial crises:
The Treasury, as you might imagine, chalks up the comparative difference to the government's response -- namely the TARP bank bailout program, the 2009 stimulus package, and the Federal Reserve's unprecedented amounts of quantitative easing (money printing). All of those policies were either ignored, or not done as vigorously, during previous crises. At the late economist Milton Friedman's 2002 birthday party, Fed Chairman Ben Bernanke quipped: "I would like to say to Milton: Regarding the Great Depression. You're right, we [the Fed] did it. We're very sorry. But thanks to you, we won't do it again." As far as many are concerned, Bernanke and the Fed didn't do it again. And it shows in this chart. Read more......