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Parker begins by describing the economic history of depression. In this period, there was high rate of economic growth, and increased consumer spending and purchasing power. He claims that economic growth was only disrupted minimally by the three recessions that took place in 1923, 1924, and 1926 (Parker, 2010, Web). Parker also claims that the policy adopted by the federal government were key in economic growth. For example in the 1920’s, the Federal Reserve used monetary policies to stabilize business cycle fluctuations (Parker, 2010, Web). Moreover, there were also high demands of America goods, as World War 1 did not affect it like other European countries. In addition, the Gold Standards were not much entrenched during this period (Parker, 2010, Web).
Secondly, Parker describes the beginning of the economic anguish. He talks of the federal government failures to notice dangers leading to the great depression. He says that deflation failed to operate, as it was case in the beginning of 1920. Moreover, the European economies had recovered and Gold Standards became a mode of transaction. He also focuses on failures of the economy, and factors that might have led to this failure. He describes failures in the bank claiming that there was no deposit insurance and this led to panic. He also cites various forms of contemporary explanation on the great Depression. For this reason, various theories are highlighted such as liquidationist theory. He also describes the modern explanation based on monetary hypothesis of Friedman and Schwartz together with the nonmonetary/financial hypotheses of Bernanke and Fisher (Parker, 2010, Web). Parker claims that based on his own understanding, the non-monetary theories cannot support the theories mentioned to account the state of the economy during ...Download file to see next pagesRead More