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The Great Depression: An Illusionist Economy

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An illusionist economy, it is essential to the modern, prosperous economy. This illusion is given through the issuing of credit. Credit is issued through banks in the form of loans, be it for a house, car, or even your groceries. Larger loans usually require a large application, and long time commitment, while the smallest loans are given based off of your reputation. As Americans, we simply call them credit cards or credit lines. Banks make profit by the application of interest to the credit loaned, but where does all this money come from if all the money is being given out? Well, it is something you have probably heard of, and they are commonly referred to as bank accounts. A thousand Americans get together put all their money into a bank, …show more content…

As one who is well versed in the agricultural industry, you would know that farmers only get a harvest once a year, so many farmers would live off a line of credit until harvest. Well, as one might begin to foresee, if the harvest does not render a profit, credit doesn’t get paid, and foreclosures prove imminent. Due to lack of regulation, this lead to a baking collapse as banks closed, and people went into a panic pulling out deposits elsewhere. Franklin Delano Roosevelt and his trusty board of economic advisers researched this very incident, and saw that an entire economy could not be based off of the people’s ignorance and faith alone, it needed regulation, and lack there off is what made it so difficult for the economy to recover. He and his advisors rubbed together their intellectual minds and, along with many other policies in the New Deal, proposed the Federal Deposit Insurance Corporation, or the …show more content…

It proved itself in the Great Depression by adding to recovery. It was so effective it was kept as a permanent institution even as countless other policies fell away. This reform is still in use today and for good reason. As stated above, the FDIC helped the economy recover, and its reformative action helped make an illusionist economy like ours remain more stable by regulating bank actions, insuring deposits, and restricting the people from large withdrawals during times of banking

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The FDIC was created in 1933 in response to the thousands of bank failures that occurred in the 1920s and early 1930s. The FDIC was a provision of the Glass-Steagall Act. During the nine year period from 1921-1929 more than 600 banks failed each year. The failed banks were small banks operating in the rural suburban areas and held the deposits of mostly farmers and blue collar folks. When banks fold and continue to do so, people will start to worry about their money in any bank.

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As America’s economic surge was reaching its peak in the 1920s an impending downfall came about. The financial “bubble” popped and on October 29, 1929 the ever so strong stock market crashed, known now as “Black Tuesday”. This created a domino effect that toppled over many other strongly depended on economic infrastructures resulting in the largest national financial crisis ever. At the time, Republican President Hoover implemented his “laissez faire” governing policies which did some good work but not near good enough to bring the country out of this hole. On the other hand, Democratic President Franklin D. Roosevelt insisted on a more “hands on” approach from the governing body, he claimed that this was a federal dilemma and that federal

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1189 Words | 5 Pages

Big banks would then foreclose on the small farms and the farmer's family would be both homeless and unemployed. The entire nation was broken down in shambles with barely any hope of recovery. In 1933, President Franklin D. Roosevelt was inaugurated and Americans felt relief that he would repair the doomed economy and create jobs once again. As soon as Roosevelt took office, he closed all the banks and only let them reopen once they were stable.

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1069 Words | 5 Pages

When banks failed, people that had money in their account, in the bank would lose their money even if they did not owe any debt to the bank. This caused families to go homeless and even

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The Great Depression by Robert S. McElvaine is pretty straightforward. In the beginning, the book compares the economic crisis of 2008 with the roots of the Great Depression in 1929. He believed that politicians in the twentieth century did not learn their lesson from before. The book also depicts the lives of people during The Roaring Twenties and how the downfall of the economy and overproduction lead to mass unemployment and struggling families. McElvaine’s point of view on the Great Depression was considerably biased.

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The transition between presidents Herbert Hoover and Franklin Roosevelt marked the transformation from a weak, to a strong form of government, which became directly involved in the lives of the people. This was primarily caused by the difference in the executive leaders ideologies, where Hoover was more focused on individual responsibility and capitalism, Roosevelt was more concerned with immediate action based on government intervention. Overall, the New Deal sacrificed the amount of personal responsibility that the people had with their own economic security. The power of the federal government was strengthened, but the long-lasting effects based on the social and economic policies was beneficial for the United States. Herbert Hoover began

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In the documentary In Debt We Trust by, Schechter talks about how the mall has replaced the factory as America’s dominant economic engine. The film shows how big banks and credit cards companies drive Americans to become sheep. Schechter is clear when he says that a bubble could burst, and comparison of the USA today is comparable to Rome before its fall (Schechter 358). Government loans are comparable to “mafia loan” because of their outrageous interest rates. In Debt We Trust shows behind the scenes of what the big banks and credit card companies do to their targets.

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Yes, concerns about major social and political revolution were justified at the time of the Great Depression. After the stock market crashed, banks failed as well as a result of millions of Americans withdrawing their money. Unemployment ensued because of the rapid decrease of consumer spending. These all mostly affected the working class, since they were the ones who went out of work when the Depression hit. Additionally, the big disparity of wealth between the rich and poor encouraged the Depression; 32% of the country’s wealth went to the richest 5% of people, while only 10% when to the poorest 42%.

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Roosevelt’s idea was almost the exact opposite he believed that it should be the government's responsibility to get the people out of this crisis. Today we are still reaping the benefits of Roosevelt's new deal such as social security act, National Youth Administration and many more that helped us get out of the deepest depression this country has ever

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According to Two presidents and the great depression it says, “The FERA (Federal Emergency Relief Administration) was created to funnel money to the states so they could rapidly create jobs for the unemployed.” Roosevelt put together this program in order too help create more jobs, and get money trafficked through states again. Not only this, but according to Two presidents and the great depression, “The AAA (Agricultural Adjustment Act) addressed farm problems by paying farmers to hold part of their land out of production and having the government buy the surplus at a fair price. This law saved millions of farmers from bankruptcy.” This act helped too raise more crops and it helps so that farmers didnt go bankrupt due to the busnisses they sell too are

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Roosevelt was a key component in leading America out of a weak economic era called “The Great Depression”, by creating and passing many Acts during his presidential years. These new policies worked to transform the nation’s state including its economic status. Illustrated by, one such example of a well-know accomplishment promised was the “New Deal” that was set in hopes are dramatically changing the situation. The goal of the program was to improve the lives of those being affected by The Great Depression and set a precedent of the role the government would play in American economics. Nevertheless, the program proved to be effective in bringing about a national recovery in the United States in its’ own time of crisis.

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1101 Words | 5 Pages

In 1933, Franklin D. Roosevelt became the president of the United State after President Herbert Hoover. The Great Depression was also at its height because President Hoover believed that the crash was just the temporary recession that people must pass through, and he refused to drag the federal government in stabilizing prices, controlling business and fixing the currency. Many experts, including Hoover, thought that there was no need for federal government intervention. ("Herbert Hoover on) As a result, when the time came for Roosevelt’s Presidency, the public had already been suffering for a long time.

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502 Words | 3 Pages

The Great Depression The Great Depression was by far one of the worst times of America’s history, and the world’s history. The Depression affected everyone except for the politicians and the wealthy. During the depression a lot of people lost their jobs which caused the unemployment rate to sky rocket to 14% of America’s population was unemployed, and the number would stay their till World War 2, and the depression started in the 1920’s. Middle class workers were hit the hardest in the depression. Most of the middle class citizens lost their jobs.

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655 Words | 3 Pages

The Great Depression was a major turning point for the United States’s economy because it changed the relationship between the government and the economy. Before the Great Depression, the economy was a Laissez-faire style market where the government had no influence on private party transactions and businesses. After the Stock Market Crash of 1929, the people of the United States sought for reliefs from the government. The Government responded by creating tax reforms, benefiting the stock market, wheat prices, employment, and the number of bank suspensions, and providing comfort for the people. As a result of their disparity, the people put their trust in the government in hopes that they would repair the broken economy.

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765 Words | 4 Pages

The Great DepressionTopic: the great depressionQuestion: How did the great depression affect americans?Thesis statement:The great depression affected americans because it destroyed their economy. Millions of families lost theirs savings as many banks collapsed in the 1930’s. The Great Depression was the worst economic drop of all times in the industrial world1. The Great Depression began because of a stock market crash in 1929 and came to end ten years later in 1939, around 15 million americans were unemployed and about half of the American banks failed. It was one of the darkest era in the United States.

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