Why Did the World Economic Crisis of 2008-2009 End in the Great Recession? A Critical Comparison of the Great Depression and the Great Recession

Abstract

In this article, I will discuss the reasons why the US economic crisis of 2008-2009 ended in the Great Recession from a Marxist perspective. First, I will discuss a Marxist financial crisis theory. My conclusion is the formation of fictitious capital plays a crucial role in accelerating the economic growth process, creates economic over-sensitiveness and eventually leads to a crisis. Second, I will present a historical process of the Great Depression in the United States from a perspective of financial crisis. In those days, the gold reserves of Federal Reserve Banks should not be less than 40% against note liabilities. However, the government set up the Reconstruction Finance Corporation in 1932 and took an aggressive monetary policy under the gold standard. Therefore the United States was finally compelled to abandon the gold standard in 1933. Third, I will discuss the financial crisis of 2008-2009 and show its difference from the Great Depression in the 1930s. And finally, I will try to critically compare the Great Depression with the Great Recession from a Marxist financial crisis theory.