The recession is all over the news, and how it is changing how American’s think, act, and spend today. In a recent article in USA Today, the effect of the recent recession and strained economy is reaching everyone, and reshaping lives. The weak economy is restructuring what people have grown accustomed to in past decades. The dismal economy is having a profound effect on life in the United States; from delaying marriages and divorce to reducing car and home ownership, and private school enrollment (Recession reshapes life in USA, 2011). The recent downturn in the economy is wreaking havoc on the American standard of living and forcing more cutbacks into an already frugal lifestyle.
Among both sources, the conditions under which people lived during the Great Depression can be described as “the end of an era for those who had come to believe in ‘money for nothing’” (Harman 469) and “so long-lasting, so severe, and so global that it has become known as the Great Depression” (Bentley-Ziegler 985). It’s true that the world was in turmoil. People of all ages and of all social classes were panicking, some believing the times impossible to bear. For some, this was true. The Stock Market Crash, which coincided with the Great Depression, allowed for further suffering, especially great financial toil.
The Great Depression All economies experience both expansionary and recessionary periods throughout their history. However, until most recently, the one recession that has had a well-known impact around the world is “The Great Depression of 1929”. The Great Depression is a great example of how horribly the world’s economy can collapse. This recessionary period is directly correlated with the United States Stock Market Crash on October 29, 1929 which is also known as “Black Tuesday.” This recession affected industrialized countries worldwide making it become a global recession. The main misconception of The Great Depression is that it was a sudden and consistent collapse in the stock market.
The Great Depression was the most significant downturn the U.S. economy experienced in the history of the United States. One of the most significant factors that caused the Great Depression was the staggeringly unequal distribution of wealth among the rich and the middle class. In the late 1920s, the top .1% of all Americans had a combined income equal to the bottom 42% while today, the top 5% richest Americans have a combined income equal to the bottom 53%. While this unequal distribution of income is not quite equal to that of the 1920s and 30s, it is nearing a dangerous point. Another significant cause of the Great Depression was the extensive stock market speculation that occurred in the late 1920s.
The Great Depression occurred on the morning of October 29, 1929, but there have been many ideas of what actually caused the depression. Money was being unequally shared between the rich and the middle-class, between industry and agriculture, and between the U.S and Europe, which caused an unstable economy(1). Supply and demand was unbalanced so the middle-class couldn’t afford much and the rich didn’t want much. One main conjecture was that the Federal Reserve was the cause of the Great Depression. In 1928 and 1929 the Federal Reserve was worrying about the intensity of the rising level of the stock market.
When the stock market crashed, it immediately affected the economy in the matter of a few hours. At this time President Herbert Hoover was in office, and he was overwhelmed with the tragic situation. During his Presidency, he did his best to fix the economy. However, things did not begin to get better until Franklin D. Roosevelt took office in 1932. Roosevelt immediately began reconstruction on the American economy.
WHY DID THE WALL STREET CRASH HAPPEN IN 1929? The Wall Street crash which happened on 29 October 1929 was one of the most depressing events in the history of America. This happened because people lost their wages b 60%, 14 million people were unemployed by 1933, banks went bust and also US trade slipped from $10 billion to $3 billion. The Wall Street crash happened due to some reasons: one reason was, the Americans were buying consumer goods on credit, especially cars and houses they did this because, they didn’t have enough money, and therefore if they get the money they will be able to pay. Another reason was that speculation was rife, because people believed the stock market was easy so 20 million Americans invested but only 1.5 million people had serious knowledge of the market.
The economic boom cause by World War I exposed weaknesses in the global economy which collapsed, causing the “Great Depression”, allowing more extreme politics to come around, and the stronger countries unable to stop it. On the other hand some would argue that what set the stage for World War II started with the treaty that ended World War I. Germany was forced to pay hefty reparations that crippled her economically. Making it nearly impossible for a country to succeed through peaceful means. With that being said World War One caused Germany to get into a great debt because they were left responsible for the damages made in World War One. In result Hitler began to rise up in his vengeful and expansionist plans for Germany.
The economy plummeted and everyone felt the effects of it .The severe downfall of the American economy in the 1930’s known as the Great Depression was the result of speculation and installment buying, income maldistribution, and overproduction throughout America. After the roaring 20’s, speculation and installment buying drastically increased
In fact the groups within the right such as the Freikorps and consul organisation showed an increasing amount of violence because of their lack of support on democracy, which of course created a tremendous threat to the Weimar Republic. To an extent one could argue that the economy was a major threat to the stability of the Weimar Republic in the period 1919-1923 due to the severe reparation payments. The Treaty of Versailles stipulated that Germany had to pay reparations for the damage which was caused in WW1. The poor leadership and economic problems consequently led to a German defeat. In 1921, the total amount of reparations was set at 269 billion gold marks.