Cause Of The Great Depression

To add to the stock market crashing and unemployment rate soaring, the United States suffered severe drought. The drought impacted agriculture greatly, and was seen to cause the failure of many farms. The United States fell into a food shortage soon after. Food became rationed to a very scarce level, people were hungry and poor. People became fed up with Herbert C. Hoover, because he seemed to not do anything about the depression.

The Great Recession was a period of general economic decline observed by world markets beginning around the end of the first decade of the 21st century. The recession was a result of a financial crisis in 2007 which effected the years to come . The primary source of this problem was that banks were creating too much money. In addition, banks had doubled the amount of money and debt in the economy. Resulting in a financial crisis as the government and banks had failed to constrain the financial system’s creation of private credit and money.

The 2008 recession was a major worldwide economic downturn that began in 2008 in America and continued into 2010 and beyond. The 2008 Recession was caused by the Financial Crisis of 2008; The 2008 crisis was due to a collapse of Lehman Brothers. Lehman Brothers a sprawling global bank, in September 2008 almost brought down the world’s financial system. The 2008 recession was by far the worst recession since the Great Depression of the 1930s. The worldwide recession hit bottom in December 2009; however after five years there were few signs that the American economy started moving upward again.

Since the money was tied to gold reserve, and the amount of this metal was limited, there occurred a shortage of money, and hence the shortage of effective demand for goods and services. Further, in the chain reaction: a sharp drop in prices for goods (deflation), bankruptcy of enterprises, unemployment, protective duties on imported goods, fall of consumer demand, and a sharp drop in living standards. before the beginning of the Great Depression the rate of the U.S. gold reserve growth was slower than the development of economy. This led to the emergence of hidden inflation, as the government printed new money for the rapid growth of the economy. Thus, as Edsforth states the dollar’s gold supply was undermined, the budget deficit grew, and the Federal Reserve System lowered the discount rate.

Lowering tax rates was another economic change that people said lead to the recovery. Unemployment went from 10.8 percent in December of 1982 to 7.4 percent in December of 1984. Inflation fell from 10.3 percent in 1981to 3.2 percent in 1983. Industries that were hit the hardest during the recession made dramatic improvements; these industries were paper and forest products, rubber, airlines, the auto industry, construction and manufacturing, and the savings and loans industry.

There was inflation on U.S. Dollars. 2. People lost their jobs. 3. Many unfortunate events occurred.

Banks Failed (Over 9,000 in the US and over 100,000 around the world) 3. There was a reduction in purchases and investments board which led to reduction in production and loss of jobs 4. American Economic Policy (Smoot-Haley Tariff set up for imports which resulted in less trade as countries retaliated) 5. Drought Conditions

People started to sell their debts but since everyone was selling at once nothing was being sold. The Great Crash wiped out all stock gains from previous years, so most investors would wait their entire adult years to see their investors break even. American proposition on international trade and international debt structure was another main cause. Europe puts a tariff on the United States’ response, so we put a tariff on them because of the international trade was already hurting. The United States refuses to forgive any any debts, so instead the U.S banks lends money to Europe to pay back.

This time period was painful. The collapse in the monetary base controlled by the Federal government during the recession was the largest in United States history (Murphy). People were forced out of their jobs all across the face of the nation. Companies fell apart because they could no longer support their workers and the items they were producing. Thousands of farms and companies disappeared.

But in 1929, that bubble had burst and stocks just went downhill from there. In 1932 and 1933, they hit rock bottom, stocks decreased about 80% from their highs in the late 1920s. This had pinpoint effects on the economy. Demand for goods declined because people felt poor because of their losses in the stock market. The wall street stock brokers invested a lot in stocks which seemed promising but later came to bite them back.

This led to a recession that lasted several years. The recession caused many Americans to be homeless and jobless. For almost 8 years, America has not seen another collapse in the economy until early 2013 when stocks began to decline and bonds were losing value. The article “Is The U.S. Economy Going to Crash This Year?” by Ky Trang Ho gives insight from financial experts that are predicting a major financial down fall in 2016. “They contended the economic recovery since 2009 has been fabricated by massive government debt and money printing, also known as quantitative easing.

When the businesses started to lose their money, they had to start letting their workers go. This resulted in the unemployment rate rising immensely. The closing of the Ford Plant is an example of the spike in the unemployment rate. People without work were unable to make an income which meant they had to change the way

This left stock prices looking higher than they actually were. Wages by that time were also unbearably low. Consumer debt was on the rise, agricultural was struggling and food prices were too low for farmers to make a decent profit. Banks had large amount of big loans that they could not liquidate.

Small farmers could not compete with the new economic climate and were driven out of business. Advances in technology increased production but also caused overproduction of food;however, food demand did not rise with the increased production. With this all adding up, increased food production and farmers without jobs, it only added to the unemployment of the time. (Wall Street Crash of

The Great Recession started for the United States in December of 2007 and lasted until June of 2009. This was the worst recession in U.S. History since World War II. During this time, there was a 6.1 % loss in jobs, due the job shortages about 27 million people we either unemployed or underemployed. This affect the age household many people household income dropped increasing the poverty in America. In economics, a recession is a decline in economic activity affecting Gross Domestic Product or GDP for at least two consecutive quarters causing negative economic growth (Downes and Goodman).