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The subject of this thread came up in another one, where it doesn't really belong. This is my attempt to open the discussion in where it belongs.
So, what were the causes of the Great Depression? Were they similar to the recession we are (or are not, according to your perspective) coming out of currently? what ended it? Was the New Deal a positive or negative? Was it the war that really ended it? If so, does a healthy economy depend on being at war? Is war peace, as Orwell said?
Anyone want to go back to the early 1930s?
It was a loss of faith in the banking system caused by too much debt. The Markets would have rebounded if the depositors hadn't removed their savings.
and the FDIC was started, so there wasn't a run on the banks this time around.
No, this was a complete collapse of funding with massive calls on debt that wasn't backed up. That's why the gov bail outs.
at least of some of the larger entities that had invested heavily in bad mortgages, yes.
Now, had John Q. Public had tried to get all of their money out of the banks at the same time, as happened back at the beginning of the great depression, the likely result would have been, what?
Wouldn't happen because the FEDs would shut them down till people cooled off. You can't even make withdrawals over what a bank says they have on hand. I had to wait 3 days once to get $5K in cash. You can get certified checks or bank drafts but not large sums of cash. And you can't wire over $50K overseas without filling out some forms.
It didn't happen, wasn't an issue, because people understand that the bank deposits are insured by FDIC.
They're only insured for $250K per bank. And if the banks had started to fail people would've started to pull what money they did have in them. Even the FDIC can't back all that cash or would take months to get.
Right, so people who don't have more than a quarter million in the bank didn't all go and try to withdraw all their money in cash right away, which would have had the same result as the run on the banks at the beginning of the great depression.
No one in their right mind would leave a quarter million in a savings account where it gathers less interest than the rate of inflation anyway.
The subject of this thread came up in another one, where it doesn't really belong. This is my attempt to open the discussion in where it belongs.
So, what were the causes of the Great Depression? Were they similar to the recession we are (or are not, according to your perspective) coming out of currently? what ended it? Was the New Deal a positive or negative? Was it the war that really ended it? If so, does a healthy economy depend on being at war? Is war peace, as Orwell said?
Anyone want to go back to the early 1930s?
well, there's this :
View attachment 67157302
as for what ended it, the alphabet programs helped some, but it was really the war that ended it permanently.
Can we go back further? The cause of the depression was the US not having enough gold to even honor its war bond debt that was payable in gold. With the dollar unhinged from gold, the markets went crazy. Why did it end? I would argue it was the post World War II economic boom.
And the boom was directly correlated to the war as we were the only country that hadn't had its info structure and workforce decimated.
Pretty sure Canada came through it pretty unscathed.
Easy credit was a big problem and because for both people getting thing's that they cant afford for both the depression and recession. Housing going down both the recession and depression . Stocks both recession and depression . Farming just depression . industries barley making a profit( steel automobiles construction consumer goods ) both. Banks failing both . They have a lot of similarities except it did not turn out so awful since we now have several safety nets in place so America does not practically become a third world country like it did during the great depression . Ironic we are going over this in class this quarter .
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