All empirical evidence from history points to the fact that people in civilized countries have essentially always been able to rebuild their economies after even catastrophic economic failures... Often better than it was before.
Look at Germany today; it's an economic powerhouse. You wouldn't believe that this is the same country that it was after WW2 - Germany did not succeed in spite of the post-WW2 economic crisis, it succeeded because of it. Also, it's not the first time Germany recovered in this way either, just look at post-WW1 economic crisis. Germany went from being penniless to become an economic and military superpower in a very short time. It had accumulated so much surplus wealth that its military could almost afford to wipe out the entire planet in WW2.
Financial crashes are an excellent way to clear out inefficiencies and allow the markets to reform themselves and allow meritocracy to regain significance.
Economic issues after WW1 helped give rise to nationalism and led to WW2. This is why the marshall plan was so important after WW2. Similar countries experienced post-WW2 economic crisis, but few prospered as much as Germany.
To use your reasoning, many countries should be as prosperous as Germany (like, say Argentina - hyperinflation and economic crisis followed by economic restructuring..)
While rebuilding is a very human endeavor, it can take decades or generations. We need to have creative destruction in the economy, we do not need economic depression to do that (other ways to deleverage..)
non-sequitur point. The germany economy was able to be developed to a point where they became a military threat. Nationalism or not, if you just consider economic recovery, it disproves the fact that damage to the economy can ever be permanent. People are going to find ways to live, and in doing so, produce goods and services, and become increasingly efficient.
Look at Germany today; it's an economic powerhouse. You wouldn't believe that this is the same country that it was after WW2 - Germany did not succeed in spite of the post-WW2 economic crisis, it succeeded because of it. Also, it's not the first time Germany recovered in this way either, just look at post-WW1 economic crisis. Germany went from being penniless to become an economic and military superpower in a very short time. It had accumulated so much surplus wealth that its military could almost afford to wipe out the entire planet in WW2.
Financial crashes are an excellent way to clear out inefficiencies and allow the markets to reform themselves and allow meritocracy to regain significance.