Is the oil crisis going to cause a depression??

Question

Is the oil crisis going to cause a depression??

Answer 1

Perhaps not directly.  But indirectly it can lead to a depression.

The last depression of 1930's resulted from people loosing trust in their money and their economic system.  And the same can happen again.

If inflation of prices caused by high oil prices and other commodities continues at a high level.  While the US government continues to hold the interest rates far below the inflation rate.  Then people who have money will loose faith in the US dollar and try to get out of it by changing their money into foreign currencies and perhaps buying gold and other precious metals.

In such a case, money that could be put to good use will be hidden and squirreled away in various places.  And the economy will suffer a lot as a result.