The shock wave that sent the global financial markets into a tailspin in September has sparked a number of comparisons to the Great Depression.

The shock wave that sent the global financial markets into a tailspin in September has sparked a number of comparisons to the Great Depression.

And the good news, experts say, is that a modern version is highly unlikely.

Still, the parallels between the October 1929 stock crash and last month’s sell-off — including missed warning signs before the crash and faltering investor confidence in the aftermath — are enough to give casual observers and learned economists pause.

“It is eerily familiar,” said Stephen Hicks, philosophy professor and executive director of the Center for Ethics and Entrepreneurship at Rockford College. “It does seem like, in many cases, the same conditions that led to a bubble bursting in the late 1920s.”

But the response of the federal government to the ’29 crash reads like a blueprint of what not to do during a similar debacle, experts say.

Among the missteps: The government shrank available credit by raising interest rates, raised import tariffs in a botched attempt to protect American industry and hiked income taxes in the 1930s to balance the budget.

But we’ve learned many lessons since the 1930s.

“You don’t want to exhibit hubris and think we’ve got it all figured out,” said Jeffrey Brown, a finance professor and the director of the Center on Business and Public Policy at the University of Illinois. “But we’re not going to make the same mistakes. It’s not going to be easy going forward, but I think the talk about another Great Depression is certainly not likely.”

We know how the economy works. Better, at least, than we did in 1929.

“We have a heck of a better understanding of how the economy works than we did 75 years ago, especially the global economy. Most of the great economists of the 20th century hadn’t yet done most of the research that made them great,” Brown said.

“We’ve spent seven decades studying the Depression. So we should have a pretty good idea of how to avoid another one,” Hicks said. “If we’re going to get the solution right, we have to analyze the problem correctly. The Depression is our best historical example of a system, a complete economy, collapsing. We can see many of the same causes that are operative now that were operative then.”

Your money is safe. One generally accepted cause of the Great Depression was the widespread failure of banks, which turned Americans penniless overnight— literally.

Now, deposits are backed by the Federal Deposit Insurance Corp. The maximum coverage per individual account was recently upped to $250,000; it’s set to revert to $100,000 on Jan. 1, 2010.

The crisis, so far, is limited to certain segments of the economy. Mortgages and the stock market are teetering, and the auto industry is in a decline, but more dominoes still have to fall.

“When you start using terms like ‘depression’ and ‘recession,’ you have to actually look at the sectorwide economic numbers as they come out,” Hicks said. “We don’t know how bad the problem is. It’s right now confined to some sectors ... but basically all the other banking sectors are healthy. We don’t know if we have a systematic problem or it’s just a big bubble that’s burst.”

Money supply is loosening. In the 1930s, policy decisions made in Washington allowed the country’s money supply to contract by as much as a third.

“Not only the Federal Reserve, but central banks are coordinating to loosen the money supply,” Brown said. “We’re taking fairly aggressive efforts to get credit and money flowing again. They’re certainly the right steps to be taking.”

Sean F. Driscoll can be reached at (815) 987-1346 or sdriscoll@rrstar.com.