Differences and similarities between the Great Depression of 1929 and the Global Financial Crisis of 2008

This thesis examines the differences and similarities between the Great Depression of 1929 and the Global Financial Crisis of 2008, the two most severe financial crises in modern history. Drawing on theoretical frameworks by Fisher, Minsky, Bernanke, Gertler and Gilchrist, the work shows that both crises shared a common structural logic: a prolonged credit-fuelled boom, a Kindleberger-Minsky cycle running to completion and a self-reinforcing collapse amplified by debt-deflation and the financial accelerator mechanism. Despite these parallels, the two episodes diverged sharply in their outcomes. In 2008, coordinated monetary intervention, quantitative easing, emergency lending facilities and bank recapitalisation, broke the debt-deflation chain at an early stage, containing the crisis to the banking variety and preventing the decade-long depression that followed 1929, when the Federal Reserve raised interest rates and stuck to the gold standard. The comparison also highlights how financial structures evolved: the 1929 crisis was concentrated in domestic equity markets, while 2008 was transmitted globally through a shadow banking system built on mortgage-backed securities and repo markets. A concluding early warning exercise in R illustrates how simple macro-financial indicators could have signalled the build-up of systemic risk ahead of both crises. The central finding is that the lessons of 1929 were partially learned but never permanently institutionalised, as the repeal of Glass-Steagall in 1999 removed the key safeguard built after the Depression and helped recreate the conditions for 2008.