Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in 1930 and lasted until the late 1930s or middle 1940s. [1] The Great Depression occurred with the fall of the American stock market or we know as Wallstreet. Therefore, the effects occured in almost all over the world.
The Great Depression made the world economic in the 1930s
very chaotic. By 1930, 4 million Americans looking for work could not find it;
that number had risen to 6 million in 1931. Meanwhile, the country's industrial
production had dropped by half.[2] According to experts, this incident caused by
the safety squeeze. Investors and banking did not have a sense of security in
the embedding of its shares. It isn’t that they didn't have money, but because
of the lack of a sense of security after the Wallstreet panic. And two months
after the original crash in October, stockholders had lost more than $ 40 billion
dollars. This event like domino effect, wallstreet collapse- companies,
industries bankrupt- people lose job- they don’t have money to buy anything-
consuming rates low- money transactions are not happening- great depression.
The Great Depression and the policy response also changed the
world economy in crucial ways. Most obviously is the end of the international gold standard.[3]
The Great Depression also played a crucial role in the development
of macroeconomic policies intended to temper economic downturns and upturns.
The central role of reduced spending and monetary contraction in the Depression
led British economist John Maynard Keynes to develop the ideas in his General Theory
of Employment, Interest, and Money (1936). Keynes’s theory suggested that
increases in government spending, tax cuts, and monetary expansion could be
used to counteract depressions. [4]
Slowly, each country
makes its own policy to face the Great Depression. Like example, Japan abandons the gold standard, devalues its
currency in order to boost demand by making its export industries
hyper-competitive and generating an export boom. As private businesses and
households were unwilling to spend as they sought to deleverage, foreign
purchasers of Japanese exports and the Japanese government took up the slack.
Recovery followed.[5]
And from today
perspective, we can see Great Depression as a way to learn more and better about
how far economy can influence our world. Moreover, Great Depression leave us
social security, lot of laws
that protect labor and all working people, banking security, securities
regulations to make investments safer and a lot of infrastructure built.
[1] http://en.wikipedia.org/wiki/Great_Depression
[2] http://www.history.com/topics/great-depression
[3] http://www.britannica.com/EBchecked/topic/243118/Great-Depression/234447/Economic-impact
[4] http://www.britannica.com/EBchecked/topic/243118/Great-Depression/234447/Economic-impact
[5] http://delong.typepad.com/sdj/2013/10/the-great-depression-from-the-perspective-of-today-and-today-from-the-perspective-of-the-great-depression.html
0 comments:
Post a Comment