What is an 'economic depression'? Are we heading for one? Lessons from history…

The Great Depression started 91 years ago and changed everything. Bruce Whitfield speaks to economic historian Keith Breckenridge.

South Africa is heading for a “deep structural economic depression”, according to Business Unity SA Deputy President Martin Kingston.

An "economic depression" can be described as an extremely deep, long-lasting downturn in economic activity characterised by massive increases in unemployment.

Economic downturns described as depressions are far worse and sustained than recessions, which is defined as any economic contraction lasting at least for two consecutive quarters.

The term “depression” is most commonly associated with the Great Depression of the 1930s.

US GDP shrank by 33% between 1929 and 1933 while the country went from near-full employment to a jobless rate of 25%.

The Money Show’s Bruce Whitfield interviewed Professor Keith Breckenridge, an economic historian at the University of the Witwatersrand.

The South African economy… in the 1930s it was about Governments trying to avoid gold from leaking from their economies… The Depression was about a structural shortage of money… Unlike almost everybody else, we missed the global Depression… We were protected by the fact that we produced gold…

Professor Keith Breckenridge, economic historian - Wits

In some ways, we’re protected from a Depression repeating because the banks are so familiar with what happened in the 1930s…

Professor Keith Breckenridge, economic historian - Wits

I wish people took care to study history when there isn’t a crisis…

Professor Keith Breckenridge, economic historian - Wits

There’s a real sense that the banks have a debt owed to societies [after being bailed out during the Great Recession] …

Professor Keith Breckenridge, economic historian - Wits

I do think Capitalism is going to change… I don’t believe there’s an alternative to Capitalism… Could South Africa move to the Chinese model? …

Professor Keith Breckenridge, economic historian - Wits

For more detail, listen to the interview in the audio below.

This article first appeared on CapeTalk : What is an 'economic depression'? Are we heading for one? Lessons from history…

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