As you may have heard, the U.S. is currently in recession. The S&P 500 has lost about half its value, property values have fallen for two years solid, one in ten homes is in foreclosure, fraud discoveries are epic, the auto, banking, and insurance industries are in crisis, and the unemployment rate is threatening 10% or more by year's end. It sounds worse than it is.

Some refer to the free market as if it's an independent entity, autonomously flowered from Nature, warranting reverence and analysis that rivals that given say, astrophysics. In reality, and this is particularly apparent lately, economic markets have been and will always be a manmade system subject to reactionary fluctuations and fairly regular rule changes.

Consider for a moment that since its inception, the United States has been subject to no fewer than 19 economic downturns of various making and origin. What we call the Great Depression is most infamous of all, having lingered for a full decade before relenting. However, have you heard of the Panic of 1907, when a run on the Knickerbocker Trust Co., heavily invested in copper speculation and monopoly development, dragged an already beleaguered economy into a downturn that stole away nearly 48% of the Dow Jones valuation before the crisis ended a year later? A mere 14 years before that episode, the U.S. stock market and banking systems both collapsed after the withdraw of European investment in U.S. railroads, and a huge run on gold to boot.

In fact, until its displacement in the 1930s, there was another downturn called the Great Depression — a 23-year global economic slowdown that started in 1873 and dragged through two full decades, displacing millions, destroying fortunes, and only relenting three years after a final, particularly nasty panic in 1893 that permanently extinguished many U.S. silver mining operations and almost one hundred railroad companies. At the time, this was (in the word of Princess Bride's Vizzini) inconceivable.

To summarize, wild land-development speculation in Europe came to a painful end, and cheap American exports threw world markets out of balance. Stateside, U.S. railroad companies failed from bond depreciations and reliance on short-term loans; farmland prices and crop revenues tumbled, banks tightened lending to the point of strangulation, the new middle class defaulted on their home mortgages by the millions, and manufacturing endured upheaval. It culminated in massive market consolidation (by the likes of Rockefeller) and large-scale labor reorganization.

Sound familiar? Despite everything, industrial output during the Long Depression, as it came to be called, actually grew, as detailed by economist Murray Rothbard. Real domestic product also grew at a steady 3% clip, largely due to increased factory automation. Just as today, it must have seemed as though the sky was falling — and just as it did then, the U.S. economy and manufacturing will pull out of this downturn. Adding to the thousands of forecasts for our current situation, and based on past trends, I predict that we'll see this period of decline and increased protectionism continue for a time, followed by a period of recovery and growth spurred by new innovation, another downturn of somewhat unique circumstances, an upswing in markets, and so on.

Just remember, you heard it here first.