The great deformatin - Book Report/Review Example

The new deal was a show of political might and a period of enhanced economic policies. The deal shuttered a foundation of incomes and initiated a regime that fuelled state power with capitalism which is bound to it. However, this did bring a halt neither to the great depression nor save the crash arising from capitalism. FDR together with brain trust did not understand that the United States had purged into a depression due to the collapse of its export markets. US had to take immediate action to save its foreign customers but its potentials to do so were null.

Washington was also in need of cancelling debt wars of France and England. This would not deter France from its unconstructive campaigns of extracting reparations from Germany’s crushing economy. Roosevelt had received little assistance from his immediate predecessor Herbert Hoover (Stockman 138). Despite this, Roosevelt had to grow strong. In a week’s time, the banking crisis had been solved. About $2 billion of the currency that had been lost found its way back to the banks. But this was not the solution at all.

In contrast, the said crisis had its roots in the de facto shutdown of the world trade. Another possible root cause was the crisis in foreign exchange markets and the monetary system.FDR struck the London conference held in July 1993. Roosevelt successfully stopped convertibility in the trade of world gold. By doing this, he nationalized money. Despite all this progress, various factors jeopardized his plans. England abandoned the gold exchange standard in September 1931. This proved futile (Stockman 139).

Legendary Virginia, the senator who was once the secretary of the treasury, was a Democratic Party’s leader on issues concerning banking and money. Her role served a lot in reviving back to the norm. After Moleys’ arrival in London, deals on monetary stabilization were reached. This was after long vigorous negotiations.The new deal was shaped by world trade and the blow to international monetary stability by FDR. Herbert Hoover suggestions were correct. United States depression was due to collapse of the world trade.

This was in contrast to what many thought as being to the flaw of capitalism. Upon reaching its apex in September 1922, the great stock market had its writings on the wall.Consequently, after the short deep fall (1920-19921), America resurged back to its role as the sole giant in exporting and crediting. In contrast to that, the rest of the world struggled in restarting domestic economies. Other countries struggled in regaining monetary and financial normalcy. Upon the stop of street music in 1929, the house of cards collapsed.

By the end the year 1933, exports in the United States had dropped by about 70%. Its GDP dropped to $56 billion by 1933. This was way down compared to $103 billion in 1929. Liquidation was evident by mid- 1932. This was because inventories were long gone and durable productions could not be lowered. Capital goods were also highly valued. In the year’s 1920 to1933, it approximated that about 12000 banks had failed. 10000 of these banks were located in remote areas with a population density less than 2,500 (Stockman 151).

This was the incident of bank runs. The situation further aggravated when the Caldwell banking system was closed. Herbert Hoover introduced a banking cure. He enacted the Reconstruction Finance Corporation in 1932. This was aimed at reducing or better stopping insolvency. It was not meant neither to provide emergency funding nor replace hoarded deposits. At that very time, the curing effect in money restraints became evident in an attempt to return to price stability. In the year 1959, increases in consumer prices reduced to 1one percent level.

The situation remained that way till 1963.Works CitedStockman, David Alan. The great deformation: the corruption of capitalism in America. New York: Perseus Books Group, 2013. Print.