No time for a proper blog today, but Tyler is a sucker for long-term charts. So we must just pass on a chart from the IMF's latest World Economic Outlook. It shows the growth of world GDP since 1870, plotted against the ten major financial crises that cropped up over the period.
Some obvious points jump out:
- Despite serious setbacks that seemed terminal at the time, we have always pulled through in the end: against the long-term upward trend - largely driven by technological advance - even the biggest crises now look like mere ripples.
- The Great Depression was very painful, but the world economy actually recovered long before WW2 and all that enforced government spending
- The three decades following WW2 really were a golden age
- The crises seem to be getting more frequent, yet their impact on world GDP seems to be less
So what should we conclude?
First, we will come through our current difficulties. Inventiveness and enterprise will ultimately drive us forward once again.
Second, financial crises are part and parcel of the way we progress. They don't mean the market system is bust, and they don't mean the end of capitalism.