I will be focusing on just a few key areas that have been struck due to the recession for President Obama and the Great Depression for President Roosevelt and how each man either fixed the problem or is attempting to. Here is just a short list of issues: unemployment rate, financial institutions and the stock market. Just like President Roosevelt, President Obama hit the ground running with his uncanny ability to act upon the economic crisis that was yet again effecting the American people. Obama scored major points with the people since within his first hundred days in office he was able to get congress a much needed stimulus package for their approval that would take care of the financial crisis the American people were facing with major businesses and financial institutions declining at a very fast pace. However, Roosevelt was facing a much worse scenario with an unemployment rate of nearly 25% after the stock market crash of 1929.
The Great Depression lasted in America for at least ten years, but it took twenty-seven years to get the economy back above depression levels. To this day, the reasons that lead to the Great Depression are still being debated; although there are a few reasons that historians and ecoomics have agreed on. Such as, the stock market crash that occurred on October 29th of 1929. This happened when a few investors began selling their stocks, because they thought the bull market was going to end soon. The bull market was when prices were rising due to automobiles; steel was selling at a record high but was going down very fast.
The government then imposed an austerity program and began negotiations with the IMF for a rescheduling of the staggering foreign debt. The plan followed by an autumn international support operation led by the IMF. The Cruzado Plan, which created a new currency (the cruzado), eliminated monetary correction, and froze wages and prices. While inflation plunged to near-zero initially, by mid-1987, it had surged beyond 100%, fueled by increased customer spending due to the price freeze. The careful timing helped avoid impediments to President Cardoso's electoral victory in October over Lula, his left-wing challenger.
It did not only affect Americans, but also the whole world. The Great Depression was caused by the crash of the stock market or the lack of real investment opportunities in the 1920’s, product innovation that caused less labor, President Roosevelt believed that it was caused by the structural problems and doubted simulative spending will solve the problem, and some argued it was caused by the shift toward modern employment relation that was made by the Great War. A Depression in the economy can start by raising taxes and dismissing government’s employees and both of these actions can start a depression and both of these were done by the government in 1929. Once this is done, it will have a chain reaction where it will get to the point where the economy will fall and cause its people to live in poverty. The prices of the products will either increase or stay the same but the wages of the people will always decrease.
Herbert Hoover, unlucky in entering The White House only eight months before the stock market crash, had struggled tirelessly, but ineffectively, to set the wheels of industry in motion again. His Democratic opponent, Franklin D. Roosevelt, already popular as the governor of New York during the developing crisis, argued that the Depression stemmed from the U.S. economy's underlying flaws, which had been aggravated by Republican policies during the 1920s. President Hoover replied that the economy was fundamentally sound, but had been shaken by the repercussions of a worldwide depression -- whose causes could be traced back to the war. Behind this argument lay a clear implication: Hoover had to depend largely on natural processes of recovery, while Roosevelt was prepared to use the federal government's authority for bold experimental
ABSTRACT “Welfare policy successfully weathered an economic hurricane in the mid 1970’s and an ideological blizzard in the 1980’s” (Le Grand, 1990, p350). A statement suggesting that the welfare state in Great Britain had survived a crisis period in history. In the early 20th century it was highlighted in regards to the amount of poverty that men were suffering. Reforms after WWII were implemented and with Keynesian Economics there was an effort to improve the living conditions of the British people as well as the economy. This policy found itself in trouble on a few occasions but during the 1970’s there was a worldwide crisis and Britain asked the IMF for a large loan.
Finally, a list of comprehensive solutions will be given to solve America’s high unemployment rate. History Of Unemployment In the United States unemployment is usually stimulated by the collapse of certain industries that halt economic growth. During the latter part of the 1800’s, Americans became familiar with the term unemployment and its effects. The Panic of 1893 marked America’s first economic decline which was marked by the collapse of railroad development and bank failures. (cite) According to David Whitten a Professor at Auburn University, the unemployment rate in 1893 exceeded ten percent.
In the months between the US elections, the economic state was at a low. Banks failed dramatically with 4,004 failing in the first couple of months in 1933. Roosevelt’s first priority was therefore restoring confidence in the banking system. Roosevelt closed all the banks in the US on the 5th of March 1933 because this was one of his ways of restoring trust and confidence on the banks. A short time after, Roosevelt opened the strongest banks and the weakest ones were still closed and helped with government loaning.
Franklin D. Roosevelt and the Success of His New Deal The American economy started weakening by the middle of the1920s. However, over investment and speculating in stocks inflated their prices that contributed to the delusion of a robust economy. Since stocks were the hottest commodity to invest in, people borrowed money and used their stocks as collateral to the banks.The Great Depression was considered started on Black Thursday October 24th, 1929 when the New York Stock Exchange collapsed in the greatest market crash with the Dow closed at 316.38, and the plunge continued until the Dow reached its low of 41.22 in 1932. When the stocks values dropped, people were not able to pay for their debts while the banks just held worthless collaterals. Many banks declared bankruptcies because they could not get back their money from stock investors.
This caused a ‘Recessionary gap’ where a fall in aggregate demand took an economy from above its potential output to below its potential output. From post-World War2 Keynesians Economics became widely accepted where it became the standard economic model for USA between the 1940s-1970s and was seen to be globally effective. However, the 1970s saw the demise of the Keynesian model where we saw wide spread inflation and oil prices started to rise. The idea of the Phillips curve relationship then seemed to break down as a result. It broke down due to the relationship work beyond the short run.