1929 of the Great Depression

Miscellaneous makeyomommavexed August 8, 2016 0 0
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The Great Depression was a severe worldwide depression began in 1929 and in many countries lasting until late ?? 30. It has been the most severe depression of the 20th century. Often it is exemplified how far can have a depression consequences for the population. The depression had significant consequences for the income, international and national trade and unemployment. The initial result was a stock market crash on October 29, 1929.

The beginning

During the late 20th it was very easy to buy stocks with borrowed money. This resulted in an equity bubble, which shattered in October 1929. Given the uncertainty in this period there was a 'run on banks, people wanted as quickly as possible to get the money from their account. The banks here were insufficiently prepared, resulting in bankruptcy.

Causes

There are various causes described for the start of the depression. Named to the reduced consumption, the absence of large public spending and minimal checks at banks. The resulting deflation caused people rather kept the money than spend it.
Keynesian approach
This follows the theory of British economist John Maynard Keynes. His idea was that the reduced production of the country was the cause of the decrease in income and the higher than average unemployment. He expected that if the expenditures of the private sector shall be included in these difficult times the government a country can get out of a recession. His advice to the government was to spend more and reduce the load.
Monetarists
The monetarists were a group who felt that the Great Depression was caused by a monetary contraction. These institutions are less inclined to lend money to each other, among other things. This was due to the bankruptcy of the New York Bank of United States. They assume that it is beneficial to keep a failing bank afloat, for example through subsidies from the government.

Current action in depression

At present, governments are more inclined to engage in promoting at an impending or existing depression with means, for example, the economy. Banks facing bankruptcy are often supported. In 1929, people were much more conservative with acting and it was expected that the crisis would resolve itself, because the strong banks would remain intact.

Fisher

Irving Fisher, an American economist, was convinced that the Great Depression was a result of too much debt in combination with deflation. This would result in speculation and so-called bubbles. Just before the crisis, it was possible to borrow $ 9 for every $ 1 in the bank. This led to great speculation. This bank debts were paid minimum. In about 1.5 years, 744 banks failed in the US

Recovery

A large part of the countries in the world rallied around 1933. In the US, it took until 1940 before the GDP in 1929 was achieved. For many countries, the Great Depression was a reason to abandon the gold standard.

Implications for individual countries

Germany
The Weimar Republic was severely hit by the depression. American loans to Germany were put stop and unemployment rose to a high level resulting in extremism. When the unemployment rate was 30%, around 1932, arose including the NSDAP and the KPD
Netherlands
In our country took the depression of 1933-1936, significantly longer than in most other countries. It had a more gradual onset compared to the US Possibly, the prolonged attachment to the gold standard a role in the duration of the crisis. Fascism was then on the rise, resulting in the creation of the NSB. There was some increase in unrest, remained an increase in strikes during the crisis years. In 1938 a change took place, it was time to invest in the army in connection with an increase in hostility from Germany.
Soviet Union
The Soviet Union's Communist state with very little international business experienced stable growth. In the West, this was at the time seen as a successful system.

Comparison 2007-2008 recession

Sometimes the great depression compared to the recession of 2009. However represents the gold standard at that time compared with the current loose monetary policy, a completely different kind of economy. The increase in unemployment and the lack of recovery were worse during the great depression.
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