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Therefore, it is relevant to correlate historical experience of 20s with the current processes in the economy. In order to show distinctions and parallels between the Great Depression and the Great Recession, it is required to analyze the reasons of these periods in the American history, draw parallels between them in order to develop lessons for the future practical implementation of successful strategies and avoid mistakes of the previous years.
Another supposed reason for the Great Depression is often found in banks collapse. When investors took away their money from the banks to pay debts, nearly 9,000 banks failed in less than 10 years. Therefore, a credit crisis occurred. Those individuals who had bank accounts lost their savings and businesses did not have an ability to expand. Furthermore, this drastic economic situation was also spoiled by a slow process of recession. People were afraid of spending their money and many companies had to decrease their production levels. As a result, a great number of unemployed people occurred. The American government managed to correct the challenging situation and introduced The Smoot – Hawley Tariff act of 1930. In accordance with this Act, American companies could easily trade with international companies and pay fewer taxes. Still, the government could not resist dust and drought storms, which devastated agricultural sector. As a result, the prices for food were high and poverty rates increased as well. As far as we can see, there are many parallels which can be found between the Great Depression and today’s Great Recession. Let us focus our attention on the reasons that triggered the Great Recession.
In 2008 only 19 banks have experienced bankruptcy. In 1930, 744 banks failed. In 30s, banks were protected by the FDIC (Federal Deposit Insurance Corporation) (Chee-Heong Quah and Crowley, 2009). Still, this system is more beneficial for banks nowadays. In
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It was the longest and most destructive depression ever felt by the industrialized western world. The great depression was rooted in the US but rapidly turned into a global economic slump owing to the special and friendly relationship that had been forged between the US and European economies after World War I.
However the magnitude of its financial impact was nowhere as devastating as that of the ‘Great Depression’ during 1929-1933. This article evaluates both the economic downturns and assesses how the lessons learned during the former downturn helped the Federal policy makers to soothe the economic condition during the latter.
The great depression and the last recession of 2008-2009 are different in terms of their lasting periods, causes, and effects on employment and world trade. Lasting period: The great depression is one great economic disaster that ever happened in history, making it greater than the recession in the modern times.
The measure of trend of these periodic fluctuations is measured in terms of the levels of employment and production. When the measure indicates a down trend, then it is referred to as recession. This downward trend causes a decline in the spending of households.
Although it had its origin in the United States of America, it spread to the other parts of the globe. It began in the month of September 1929 in the US, after a devastating fall in the stock market prices. In the first six months of 1930, government and businesses spent more than they had in the previous six months.
In addition, the former claim that only developing nations suffer from economic crises has proven false in the face of actual events. Therefore, it is integral to realize, that no economic model can so far
According to National Bureau of Economic Research (NBER), the recession went on for many months but it ended officially in June 2009 (Robert 81). Global investment banks were jeopardized by exposure to sub –prime mortgages. This ignited
The lingering ravages of Great Depression are still visible in terms of the economic crises it created to successive generation of families. According to economists, this damaging phenomenon was directly
The breadth and depth of the both crises and in particular the suffering that resulted from the great depression is legendary. The global financial crises that lead to recession in 2007 had been predicted to