Until Glass-Steagall, we had severe depressions and market crashes pretty regularly.
The Wikipedia article is, in my opinion, pretty careful not to step on right-wing toes on this:
Today the term "depression" is most often associated with the Great Depression of the 1930s, but the term had been in use long before then. Indeed, an early major American economic crisis, the Panic of 1819, was described by then-president James Monroe as "a depression",[6] and the economic crisis immediately preceding the 1930s depression, the Depression of 1920–21, was referred to as a "depression" by president Calvin Coolidge.
However, in the 19th and early 20th centuries, financial crises were traditionally referred to as "panics", e.g., the 'major' Panic of 1907, and the 'minor' Panic of 1910–1911, though the 1929 crisis was more commonly called "The Crash", and the term "panic" has since fallen out of use. At the time of the Great Depression (of the 1930s), the phrase "The Great Depression" had already been used to refer to the period 1873–96 (in the United Kingdom), or more narrowly 1873–79 (in the United States), which has since been renamed the Long Depression.
http://en.wikipedia.org/wiki/Depression_%28economics%29
The article I quoted from above gives an overview, but in some ways, I think it was memory of the "panic" of the 1870s that led to the end of the social horrors of the Gilded Age and the reforms under Teddy Roosevelt. Wikipedia more specifically on this:
The Panic of 1873 triggered a severe international economic depression in both Europe and the United States that lasted until 1879, and even longer in some countries. The depression was known as the Great Depression until the 1930s, but is now known as the Long Depression.[1] The panic was caused by the fall in demand for silver internationally, which followed Germany's decision to abandon the silver standard in the wake of the Franco-Prussian war.[2]
In 1871, Otto von Bismarck extracted a large indemnity in gold from France and ceased minting silver thaler coins. The first symptoms of the crisis were financial failures in the Austro-Hungarian capital, Vienna, which spread to most of Europe and North America by 1873. It was one of a series of economic crises in the 19th and early 20th centuries. In Britain, the result was two decades of stagnation known as the "Long Depression", which weakened Britain's economic leadership in the world.[3]
http://en.wikipedia.org/wiki/Panic_of_1873
The role of the Austrian (Empire's) economic meltdown in both the Panic of the 1870s and the Great Depression is interesting.
Check it out.
This triggers the thought in me that forcing the European countries to pay the impossible amounts that our irresponsible banks loaned to them could set off another huge depression, one from which we would not easily recover. This is a great danger.
Neither a borrower nor a lender be. At least keep the borrowing and lending within rational limits. Goes for both the lender and the borrower. (To quote another dead horse: Takes two to tango. In other words, when debts cannot be repaid, lenders are as much at fault as borrowers in my view.)
= new reply since forum marked as read
Made me laugh.
