Many economists warn of tough economic times, but former Clinton Labor Secretary Robert Reich doesn’t just warn of a “recession,” he warns of a “depression.”

“I think there’s a 20 percent chance of a depression,” Reich said to the Business & Media Institute on March 14.

Reich, a professor at the University of California at Berkeley and author of a recently released book, “Supercapitalism: The Transformation of Business, Democracy, and Everyday Life,” wrote on his blog the similarities of our current economic climate and “what led to the Great Depression are so stark.”

Reich’s comments came as more turmoil has surfaced in the financial sector. On March 14, it was reported J.P. Morgan Chase & Co. (NYSE:JPM) and the Federal Reserve Bank of New York had to step in with emergency funds to keep the troubled investment bank Bear Stearns (NYSE:BSC) afloat.

Reich referenced Marriner S. Eccles’ memoirs, “Beckoning Frontiers.” Eccles served as President Franklin D. Roosevelt’s chairman of the Federal Reserve from November 1934 to February 1948. In his memoirs, Eccles gave his view of what caused the Great Depression. According to Eccles, the dry up of credit, expansion of debt and a downward spiraling deflationary cycle of unemployment causing decreased consumption, downward pressure on prices and a lowering earning caused the Great Depression.

The technical definition of a depression is “a severe and prolonged recession characterized by inefficient economic productivity, high unemployment and falling price levels.” Technical or not, it’s a word that references nearly 25 percent unemployment at its peak and conjures up images of soup lines and people losing everything.

Reich doesn’t think they’re higher than 20 percent because he has some confidence in monetary policy to prevent it.

“[U]nlike then, our monetary authorities know how and when to pump more money into the economy; our Congress and White House know how and when to stimulate with fiscal policy; and the US economy is more integrated with the rest of the world (which is riding out the storm better than we are) than then,” Reich wrote.

President George W. Bush wasn’t quite as downbeat about the economy in a speech he gave on March 14 at The Economic Club of New York. Bush admitted tough times in the housing and financial markets, but pointed out the positives.

Full article here.