system
Given the following post, respond as if you're commenting on Reddit:
human
What is the likelihood of an economic depression happening in our lifetimes?

It seems that recessions come like clockwork but what about economic depressions like the great depression? What is the likelihood of one occuring in the next 60 years or so and what (if there are any) signs are there that one is approaching?
gpt
Pretty low. The fact is, a depression stems from a recession that lasts. 
For a depression to happen, it basically entails that either the fiscal side or the monetary or both of those side aren't doing what is necessary to fight the recession which leads to a spiral.

A recession becomes a depression when businesses go under, unemployment rise, households are reluctant to spending which leads to even more businesses going under and it then impact the financial system as people and companies aren't able to repay their loans.

Fiscal and monetary can fight that, the fiscal side can compensate for the lack of demand during the recession and support distressed companies, avoiding a widespread wave of bankruptcies. 

Monetary stimulus can help by acting as a lender of last resort providing liquidity to whoever needs it, households don't need to be scared about a bank going under and doing a run on it (bank runs are a pure disaster for an economy). They can also reduce the interest rates making loan to distressed companies more affordable.

If you look at what happened during the Great Recession, the Federal Reserve messed up. Instead of increasing the money supply, it actually steadily decreased during the whole duration of the Great Depression.

In large part because of bank runs : depositors lost money (which meant lower spending from them) but it also meant less lending to an already distressed economy. If the Federal Reserve had acted appropriately by providing liquidity to the banks who needed it, the depression probably wouldn't never have happened. Depositors would have never lost money which means more spending and less bankruptcies, and banks could have kept lending flowing to companies.

This why economists typically say that it's better to provide too much than not providing enough. Overshoot, great you can scale back. Undershoot ? It's going to be painful, by the time you act the damage is already done.