Keynesian economic school of thought and the great depression In this paper we will emphasize how the great depression started, how the Keynesian theory reflects on the economy, and we highlight the main causes of this great depression, some are: - THE STOCK MARKET CRASH OF 1929 Summer of 1929, is the time when America’s economy was witnessing another normal recession, in which production was slowing down as a result of less consumer spending and an increase in the number of unsold merchandise, as well as the continuous rise of stock prices. On October 24, 1929, also know as “Black Thursday”, a 12.9 million record share was traded and that finally lead to explosion of the growing stock market bubble. Days later, another 16 million shares …show more content…
For the individuals who were sufficiently fortunate to stay employed, wages fell and purchasing power diminished. The adherence to the highest level, which joined nations around the world in a fixed currency exchange, helped spread the Depression from the United States all through the world, particularly in Europe. Moreover, the stock market crash that happened on Black Tuesday, October 29, 1929 is of the major causes that prompted the Great Depression. Two months after the crash in October, stockholders had lost more than $40 billion dollars. Despite the fact that the stock Market started to recover some of its losses, before the end of 1930, it simply was insufficient and America really entered what is known as the Great Depression September the 3rd, 1929, the Dow Jones was at a high of 381 points, and on October 29, 1929, it dropped to 41 points after a week of panic …show more content…
More than a million sections of land of farmland were rendered useless because of extreme drought and years of over farming, and countless farmers joined the positions of the unemployed. “While not a direct cause of the Great Depression, the drought that occurred in the Mississippi Valley in 1930 was of such proportions that many could not even pay their taxes or other debts and had to sell their farms for no profit to themselves. The area was nicknamed "The Dust Bowl." This was the topic of John Steinbeck's The Grapes of Wrath.” - American Economic Policy with Europe, Global Crisis While America thrived amid the 1920s, the greater part of Europe, as yet reeling from the destruction of World War I, fell into economical decline. America soon turned into the world's banker, and as Europe began defaulting on loans and purchasing less American items, the Great Depression spread. As organizations started falling flat, the government made the Smoot-Hawley Tariff in 1930 to help ensure American companies. This charged a high tax for imports subsequently leading to less exchange in the middle of America and foreign countries alongside some economic