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Jim Rickards: The Coming 25-Year Great Depression

Though the U.S. economy had gone into depression six months earlier, the GreatDepression may be said to have begun with a catastrophic collapse of stock-market priceson the New York Stock Exchange in October 1929. During the next three years stock pricesin the United States continued to fall, until by late 1932 they had dropped to only about20 percent of their value in 1929. Besides ruining many thousands of individual investors,this precipitous decline in the value of assets greatly strained banks and other financialinstitutions, particularly those holding stocks in their portfolios. Many banks wereconsequently forced into insolvency; by 1933, 11,000 of the United States' 25,000 bankshad failed. The failure of so many banks, combined with a general and nationwide loss ofconfidence in the economy, led to much-reduced levels of spending and demand and hence ofproduction, thus aggravating the downward spiral. The result was drastically fallingoutput and drastically rising unemployment; by 1932, U.S. manufacturing output had fallento 54 percent of its 1929 level, and unemployment had risen to between 12 and 15 millionworkers, or 25-30 percent of the work force.

What was the impact of the Great Depression in …

The Great Recession | State of Working America

These were all radical alternatives to both the pre-Depression status quo and to the New Deal order. Most of them—thankfully—never took deep root in American society. Some were incorporated, in watered-down form, into New Deal reforms. All are historically significant because the mere fact that they were taken so seriously reveals the unparalleled depth of the crisis that struck the nation's established order during the Great Depression.

The economic situation in Germany (map2) was made worse by the enormous debtwith which the country had been burdened following the First World War. It hadbeen forced to borrow heavily in order to pay "reparations" to thevictorious European powers, as demanded by the Treat of Versailles (1919), andalso to pay for industrial reconstruction. When the American economy fell intodepression, US banks recalled their loans, causing the German banking system tocollapse.


What was the emotional impact of the Great Depression …

There were fundamental structural weaknesses in the American economic system. Banks operated without guarantees to their customers, creating a climate of panic when times got tough. Few regulations were placed on banks and they lent money to those who speculated recklessly in stocks. Agricultural prices had already been low during the 1920s, leaving farmers unable to spark any sort of recovery. When the Depression spread across the Atlantic, Europeans bought fewer American products, worsening the slide.

Economic nationalism was an effect of the Great Depression

He intentionally broadened his appeal because it was necessary. Nowhe needed to broaden his appeal to the great mass of voting Germans. Hischief assets were his speech making ability and a keen sense of what thepeople wanted to hear.

Historical analysis of Economy in The Great Depression

In the United States Roosevelt became President in 1933 and promised a"New Deal" under which the government would intervene to reduceunemployment by work-creation schemes such as street cleaning and the paintingof post offices. Both agriculture and industry were supported by policies (whichturned out to be mistaken) to restrict output and increase prices. The mostdurable legacy of the New Deal was the great public works projects such as theHoover Dam and the introduction by the Tennessee Valley Authority of floodcontrol, electric power, fertilizer, and even education to a depressedagricultural region in the south.

The Great Depression through the ..

At least in part, the Great Depression was caused by underlying weaknesses andimbalances within the U.S. economy that had been obscured by the boom psychology andspeculative euphoria of the 1920s. The Depression exposed those weaknesses, as it did theinability of the nation's political and financial institutions to cope with the viciousdownward economic cycle that had set in by 1930. Prior to the Great Depression,governments traditionally took little or no action in times of business downturn, relyinginstead on impersonal market forces to achieve the necessary economic correction. Butmarket forces alone proved unable to achieve the desired recovery in the early years ofthe Great Depression, and this painful discovery eventually inspired some fundamentalchanges in the United States' economic structure. After the Great Depression, governmentaction, whether in the form of taxation, industrial regulation, public works, socialinsurance, social-welfare services, or deficit spending, came to assume a principal rolein ensuring economic stability in most industrial nations with market economies.