Short Essay About The Great Depression

In a desperate bid to raise money, they also tried to call in their loans before people had time to repay them.As banks went bankrupt, it only increased the demand for other savers to withdraw money from banks.

In a desperate bid to raise money, they also tried to call in their loans before people had time to repay them.As banks went bankrupt, it only increased the demand for other savers to withdraw money from banks.

Many agree, that it was this failure of the banking system which was the most powerful cause of economic depression.

As banks went bankrupt, consumer spending and investment fell dramatically.

They say that because the money supply fell so much an ordinary recession turned into a major deflationary depression.

The Austrian school of Economists such as Hayek and Ludwig Von Mises place much of the blame on an unsustainable credit boom in the 1920s.

The Austrian school doesn't accept the Friedman analysis that falling money supply was the main problem.

Short Essay About The Great Depression Gatsby Tragic Hero Essay

They argue it was the loss of confidence in the banking system which caused the most damage.It did cause a decline in wealth and severely affected confidence.However, changes in share prices were a reflection of the underlying boom and bust in the economy.Output fell, unemployment rose causing a negative multiplier effect.In the 1930s, the unemployment received little relief beyond the soup kitchen.In particular, they point to the decision to inflate the US economy to try and help the UK remain on the Gold standard at a rate which was too high.They argue after this unsustainable credit boom a recession became inevitable.Share prices would fall even more in 1932 as the depression deepened.By 1932, The stock market fell 89% from its September 1929 peak.On Tuesday there was another collapse in prices known as 'Black Tuesday'.Although shares recovered a little in 1930, confidence had evaporated and problems spread to the rest of the financial system.