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Difference Between Deflation And Depression

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Deflation Deflation is a term defining an economy’s reduction in the general levels of price. It has been a challenge even to the most brilliant of minds everywhere in the world including federal reserves, Wall Street’s smartest traders, as well as millions of investors, whose strategies are shaken due to this. And until now, all those that are involved in the most important and life changing decisions, none has an experience when it comes to the deep inflation’s lengthy period that happened in the 1930’s in America. No charts, books, or even numbers have managed to describe the times as they truly were. As such, people have mistaken beliefs about the great deflation that took place in America during the 1930’s. Some of these beliefs include: …show more content…

However, they at times go hand in hand and at other times, they do not. Deflation is actually good for gold as opposed to people’s belief that it is bad. Owning gold during the time of deflation in America was like “hitting the jackpot”, as people often say. The value of gold appreciated, and anyone who went to sell or trade in theirs was sure to get double or more the amount they had bought or traded it for. Since most people used the gold bars to buy shares, their dividends would of double, redouble, and double again. America’s deflation did not start in the year 1929 due to a crash in the stock market as many people have been led to believe. Actually, it started in the early 1920’s and went on for the most part of the decade. Similarly, the 1920’s first fortune bursting crush did not happen in the Dow, neither was it in New York. It happened in Florida in the year 1925-1926 and was known as the Florida real estate crash. The popular “roaring twenties” was not everyone’s roar. Though industrial elites and Wall Street were making a lot of money, families in the rural areas were sinking into …show more content…

However, there were huge, deep, and lengthy deflations that took place throughout the 14th century in the 1860’s, 70’s, 1910’s, 20’s, and the 30’s. The deflations that took place during these years were not as a result of distinctive geo-political events or serious mistakes in the policy. They were as a result of natural economic occurrences that took place in different times, under political conditions that were quite different, and triggered by different causes. Some major examples include: • The 14th Century deflation: In the years that followed the 1315-1357, Great Famine, the United Kingdom suffered a serious deflation that resulted to the output crush in the English mint. • The 1658-1669 Deflation: Political crisis was a major cause of this deflation. • The Late 19th Century Deflation: This deflation was as a result of two main causes. Firstly, an abnormal rise in productivity, and secondly, monetary and fiscal disciplines as numerous key countries came together to join the gold

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The charge about the old days of the American economy—the nineteenth century, the “Gilded Age,” the era of the “robber barons”—was that it was always beset by a cycle of boom and bust. Whatever nice runs of expansion and opportunity that did come, they always seemed to be coupled with a pretty cataclysmic depression right around the corner. Boom and bust, boom and bust—this was the necessary pattern of the American economy in its primitive state. In the US, in the modern era, all this was smoothed out.

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The income was declining in this time period, which led to inflation. Moreover, kings asked lords and peasants to pay taxes; peasants had to pay dues as well to their landlords. Labor shortages also led to inflation. While nobles started to bribe and cheat peasants, peasants began to attack monasteries (Document 4). Monasteries were probably attacked because they were fancy, and priests and monks had everything in there.

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During the Roaring Twenties many people had, as William H. Leuchtenberg said, ‘“get-rich-quick”’, [Doc 2]. And man people did get rich quick. Everybody wanted a piece o the pie that was economic prosperity, but that pie has to run out eventually. With this idea in the heads of millions of Americans extreme overexpansion of many aspects of society led to the “adversity soon demonstrated,” [Doc 1]. John D. Hicks cites just some of the factors that “account for the plunge from prosperity to adversity”.

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The great depression in the US, which began in 1929, and ended in 1938 was caused by many different things all happening at the same time in the economy. The wall street crash in October 1929 was one of the main causes, when the stock markets crashed. This was caused by many things, but the main reason for it was a deflation (which is an event where the general level of prices in an economy are reduced) On October 24th (black Thursday), share prices dropped by 14 billion dollars in a day, and more than 30 billion in a week. This forced many of the banks to close, due to them investing their client’s savings in the stock market.

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What are the great resolution and the great depression really? The great depression was in 1929, but the great revolution was in 1688. The great depression did not just affect the U.SA.(Szostak 22). The great depression and the great revolution where both big problems for the U.S.A., but they were both the same different time periods.

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Since the money was tied to gold reserve, and the amount of this metal was limited, there occurred a shortage of money, and hence the shortage of effective demand for goods and services. Further, in the chain reaction: a sharp drop in prices for goods (deflation), bankruptcy of enterprises, unemployment, protective duties on imported goods, fall of consumer demand, and a sharp drop in living standards. before the beginning of the Great Depression the rate of the U.S. gold reserve growth was slower than the development of economy. This led to the emergence of hidden inflation, as the government printed new money for the rapid growth of the economy. Thus, as Edsforth states the dollar’s gold supply was undermined, the budget deficit grew, and the Federal Reserve System lowered the discount rate.

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In the late 1800s deflation

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The 1920s, also known as the “Roaring Twenties”, was an exhilarating time full of significant social, economic, and political change. For most Americans, it was full of the prosperity and peace that followed World War I. Middle-class life was full of leisure and class. For others, this time period was filled with hardships and challenges. Many immigrants and African-Americans faced discrimination and segregation from the rest of the United States. One notable, positive aspect of the 1920s was its booming economy.

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Imagine it's October 28, 1929, living a lavish lifestyle, owning a mansion, sailing on a 100 foot yacht every weekend, and having what seems like unlimited money that can be spent on anything at anytime. Then, all of a sudden, October 29, 1929 comes. The stock market crashes, banks are closing everywhere, and personal possessions are being foreclosed upon. The greatest economic downfall in the history of the United States has just began. This would become known as the Great Depression, which suited the time period between 1929 and 1941 perfectly.

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Before the Stock Market crash of 1929, America went through a decade of prosperity and social change known as the Roaring Twenties. New fads and numerous inventions emerged throughout our country. Many people bought on credit and as a result, our economy flourished. However, many Americans failed to realize this would be one of the underlying causes leading to the Great Depression. For instance, “Most people bought, but many couldn’t afford to pay the full price all at once.

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From 1450 to 1700 the economy of Europe began to majorly change. Mercantilism was on the uprise which meant Europe began to focus more on their trade and commerce. This lead to many individuals to having a hard time gaining wealth because the government was doing everthing on a large scale. Many Europeans were just barely getting by. Then the poor would have to go to the extremes and beg and steal to make money for themselves.

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The Good & the Bad of the 1920s “It was in the 1920s, when nobody had time to reflect, that I saw a still-life painting with a flower that was perfectly exquisite, but so small you really could not appreciate it” (Georgia O’Keeffe). The 1920’s was a decade that was associated with outrageousness. Where America changed as they recovered from World War I, they had to come up with new ways of thinking and behaving. The 1920’s were full of ups and downs.

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In 1929, the U.S. was hit with the worst economic crisis in the history of the country, the Great Depression. The Great Depression left millions of people unemployed and cost millions their life's savings. The Depression lasted for ten long years for the American people. Since the Great Depression ended, people have studied it, trying to figure out what happened that started it all. The problem was, in fact, the poor economic habits of the people at the time, such as speculation, income maldistribution, and overproduction.

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Many people started to transition to new urban lifestyles instead of their old lives of living on a farm. A lot of people were loving this transition and enjoying life better than ever. For most people though, this new way of life brought more conflict than celebration (“The Roaring Twenties”). People started to not enjoy living in big cities and wished they were still on their farm where they had more privacy but they could not go back now.

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The Great Depression was the worst economic downturn in the history, which lasted from 1929 to 1939. It began after the stock market crash of October 1929, which sent Wall Street into a panic and wiped out millions of investors. Spending began to drop, and it caused declines in employment and some companies began to lay off workers. By 1933, the Great Depression reached its lowest point and millions of Americans were unemployed. The 1920s consisted of dramatic social and political change.

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