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I’ve written extensively about the seriousness of the risks to the economy created by the current financial crisis.  That said, I’ve also tried to show that with diligent management of the dangers, the foreseeable probability of catastrophe can be reduced enormously.

Today’s huge market declines certainly serve to underscore the risks, but I think that it’s also useful to see this in a broader context. Suppose that we fail, and the worst comes. Suppose, in fact, we have a repeat of events on the order of the Great Depression. It would be terrible, but here’s something to keep in mind:

By many measures, the Great Depression is the worst economic crisis that America has ever faced, and it was really just a temporary pause in the ongoing growth of the economy.

At times of obvious economic difficulties, it’s traditional to trot out two kinds of quotes: (1) statements from whoever is in power saying that “the fundamentals of the economy are sound” in order to show foolish lack of awareness, and (2) statements by thoughtful pundits that the characteristic American, or Anglo-Saxon, approach of economic liberty has failed, and more statist economies will now become globally dominant. But at the level of decades, the fundamentals of the American economy have always been sound, and the political institutions, technical capacity and social mores that define the American system have always found a way to prevail.

None of this is cause for complacency. This growth is not some law of nature; it has taken millions of lifetimes of exacting work, risk-taking and careful management to achieve. But we shouldn’t lose our nerve.

I’m reminded of something I saw a stock market trader say on about September 12th or 13th, 2001, with the smoldering skyline of lower Manhattan behind him: “Nobody’s ever made money betting against the United States of America.”



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