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Causes Of The Great Depression

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Global Crisis of 2008 in Comparison to the Great Depression of the 1930s Introduction Causes In America, the Great Depression is one of the defining moments in U.S history. The cause of the Great Depression is complex and due to many unfortunate factors, the most notable cause being the stock market crash of 1929. The crash was caused mainly due to too many consumers borrowing irresponsibly because of the mentality that the stock market will continue to rise and rise, forever (http://www.history.com/topics/1929-stock-market-crash). The extreme volatility of stock prices led consumers to stop spending, which caused production to collapse and the collapse in stock prices. The banks had the same thought as consumers and would speculate in the …show more content…

It all begin when the federal reserve began lowering interest rates from 6.5% in 2000 to 1% in 2004. These low interest rates encourage consumers to buy houses and builders to build houses, however the low interest rate was not an accurate reflection of the true demand for houses in the market. The government amended the community reinvestment act to encourage banks to offer mortgages to offer low income families who would ordinarily not qualify for a loan, known as sub-prime mortgages. As the federal reserve began to raise interest rates again, housing prices began to drop and homeowners noticed their mortgages were more than their house was worth. This led to foreclosures and defaults, further depressing housing prices and shrinking the capital of financial …show more content…

Whereas, the Global Crisis being caused by too many banks’ lending irresponsibly without proper background checks as it allowed them to make more and more mortgage-backed securities. Between the two crises’ it is clear that, the people and banks had a false belief that the stocks and bonds would continue to grow without any repercussion. The government also had an interesting role in the matter by creating an amendment that helped stop the Great Depression, to then repeal it and help cause the Global

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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.

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Investors poured money into equities, convinced that the market would climb endlessly, “...most of America waited for supply to create its own demand, waited for the business cycle to run its natural course, waited for the stock market to get back on its upward course”

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The Great Depression was a catastrophic event beginning in 1929; America, and its effects lasting long into the 1930’s, in countries all over the world. The “biggest stock market since records began”9, was caused

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"Great depression?" they gasped. Consumer confidence plummeted, as did consumer spending (which accounts for a stunning 2/3 of US GDP). Corporations, in a mass panic, swiftly switched into a mode of panicked layoffs and cost cutting. The banks, already spooked, continued to tighten their lending not just to consumers but to corporations and other banks as well. And ditto for the rest of the world.

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On the flip side of that, some people were investing too much and over speculating in the stock market, which was a short-term economic cause of the Great Depression. People speculated, or gambled, in the stock market to make a quick profit. Basically, investors would buy stock they thought would rise and later sell for a profit. The problem was, however, was speculating was only good in theory, and if the stock price didn’t rise, investors could lose a lot of money and find themselves in a lot of debt. Both of these things weakened the US economy, which in return weakened the world economy.

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It is no secret that the Great Depression radically impacted the lives of those who lived in the United States in the 1930’s. The depression began in 1929, and continued to worsen until 1933 where the employment rate was over 20% (Hubard and O’brien). By the 2000’s economists believed it to be very unlikely that the U.S Economy would ever plummet in the same way that it did during the Great Depression but in 2008 the United States experienced its greatest economic crisis since the 1930’s. The subprime mortgage lending and the bursting of the housing bubble brought on the 2008 financial crisis. This resulted in long-lasting effects that have shaped the economic world we see today (White).

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The Great Depression and its Causes Some of the biggest causes for The Great Depression were The Stock Market Crash of ’29, Roosevelt’s New Deal, and lastly how bank problems and ‘self-induced’ panic furthered the problem. While these are big causes of The Great Depression, they are not all of them. When researching The Great Depression, one must look beyond the smokescreen of lies. Looking into the first and possibly single biggest cause of The Great Depression, and that is the Stock Market Crash of 1929. On October 28th and 29th of 1929, over 16 million shares were exchanged, and over these two days the Dow Jones lost a total of 381 points (“Stock Market Crash Of 1929”).

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The Great Depression of 1929 to 1933 was widely considered to be the worst economic recession in the history of the U.S. Some people may ask, what caused this terrible economic plummet? In response to this question, people usually point fingers at the Stock Market Crash that occurred during this time period. However, this particular stock market crash was not the sole cause of the Depression but merely a ploy for people to poke blame at the big banks and question the general health of our nation’s economy. The main cause of this Depression was there was no main cause but numerous causes that I will talk about and explain.

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The Great Depression started in 1929, after years of a strong U.S. economy. After the first World War, Americans began to invest and use credit. The government also spent money on aiding other countries, like Germany and Austria, to get back on their feet after the war. With such a strong economy and more money flowing through it, Americans put more trust into investing. Investors dared to be more perilous with their money and invest in bigger funds, in turn, speculation became more apparent among them.

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The Great Depression was a calamitous, devastating time period. Stock prices dropped, banks were strained, unemployment rates rose, and confidence was lost. This time period is where many people struggled and families suffered all due to the crash in stock-market prices in 1929. Those with stocks, such as banks or other financial institutions, were affected severely. As a result of bank failure and nationwide loss confidence came reduced levels of spending, this exasperated the downward spiral even more.

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The great depression was at time that for many people still summons up images of American people who believed that hope was lost. The great depression was a period of unprecedented decline in economic activity, which led to major causes. This is known as The Great Depression. It occurred between 1929 and 1939. Although part of the economy had begun to recover by 1936, high unemployment rate persisted until the Second World War.

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The Great Depression “The remedy (for the Great Depression) is to give workers access to the means of production, and let them produce for themselves, not for others,… the American way said by Upton Sinclair. The wage gap between rich and poor has taken people to fly and suffer to get and earn the money they deserve. The world's bank was in America which meant once we feel the rest of the world failed if they were relying on us. Economic failure hit the United States hard once the stock market failed and the rich became part of the poor. The wage gap, the world economy, and the stock market crash of 1929 created everyone’s lives to be a miserable place of hardship during the Great Depression.

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“No one can possibly have lived through the Great Depression without being scarred by it. No amount of experience since the depression can convince someone who has lived through it that the world is safe economically” (Isaac Asimov). One thing that historians can agree on is that before the depression the economy was most definitely unstable. In fact, as Asimov said, many never recovered from the pain the the depression had caused, so they were forever suspicious of the economy. Unfortunately, in the time leading up to the Great Depression (mainly the 1920’s), there were a great many problems that emerged and were unaddressed, that ultimately caused the terrible depression that affected the entire nation’s lives in the 1930’s.

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Many believe that two of the main causes was the Stock market crash, and the people living above their income level. In October of 1929, the market began to fall, the people did not really notice anything because this was all

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The Great Depression was an economic slump in industrialized areas. The Great Depression took place from 1929-1939. The Great Depression is the name for the time when the stock market crashed on October 27, 1929, and it is the longest and most severe depression ever experienced by the Western world. Stock prices plummeted with no chance of recovery, and panic started. Many people tried to sell their stock, but no one was buying.

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