Hey all, I have a question about the Gilded Age and the Long Depression, both of which took place roughly from the 1870s to 1890s. The Guilded Age was a period of economic growth, right? So how could it have taken place at the same time as the Long Depression?
The Long Depression was not an actual economic recession. Recessions have an economic definition in terms of GDP. Rather it was later economists who basically assume there must have been one because of the mild deflation experienced during that period. They believed basically that there must have been one because otherwise there wouldn't be deflation. I believe this was part of the reaction to the Great Depression, where deflation seen as the boogie man. To answer this with more detail one would have to look at the History of Economic Thought in some more detail.
This however is a wrong believe, the period 1870 to 1890 was period of overall growth, it did include smaller recessions however. Modern economic data shows that this period was one of growth and productivity improvements.
Deflation can reflect actual productivity improvements in a monetary system that does not expand the money supply continually. Think about it like with computers, they will get cheaper over time, but nobody thinks that is bad. If you have monetary system, like the classical gold standard if your overall productivity improves you would assume the a measured overall deflation.
If you design a system to do this same monetary policy artificially its called a 'Productive Norm'. There are books about that and why some economists think it an improvement. Its an alternative to what we have now (in the US and most of the West), that is called an inflation target where you attempt to have a consistent low inflation no matter the productivity changes.
Of course in the late 1800s this was not because smart central bankers picked this, rather that the classical gold standard combined with the banking system of that time, just happened to produce this outcome.