Great Depression Vs. The Great Recession

1909 words - 8 pages

The Great Depression versus the Great Recession
Since being founded, America became a capitalist society. Being a capitalist society obtains luxurious benefits and rather harsh consequences if gone bad. In a capitalist society people must buy products and spend money to keep the economy balanced, but once those people stop spending money, the economy goes off balance and the nation enters a recession. Once a recession drastically takes a downturn, the nation enters what is known as a depression. In 2008 America entered a recession and its consequences were severe enough for some people, such as President Barack Obama, to compare the recent crisis to the world’s darkest economic depression in history, the Great Depression. Although the Great Depression and the Great Recession of 2008 hold similarities and differences between the stock market and government spending, political issues, lifestyle changes, and wealth distribution, the Great Depression proved far more detrimental consequences than the Recession.
After World War I America became the world’s center for trade. The economic center of the world moved from London, England to New York City, New York, United States of America, and more specifically Wall Street (Buhle, Mari J, Czitzrom, Armitage 848). Due to women, the 1920’s marked economic and social change in America. Women took over men’s jobs during the war while their husbands were overseas, and once the men came home the women wanted to keep their positions. To show gratitude to these women Congress passed the 19th Amendment on August 18th, 1920 which prohibited any United States citizen from having the right to vote based on sex. This change in women’s social status led to more workers in the factories, which were using Henry Ford’s moving assembly line to produce more efficiently, which led to less hours worked for each person (848). This decline in hours worked led to an increase of leisure time for people, and thus the buying of household appliances, cars, and the surge of the entertainment business exploded. Before the Great Depression the government did not place regulations on the stock market or banks due to widespread wealth being a new concept in America. The banks turned the stock market into the “Bull Market”. Banks allowed people to buy on margin, meaning that the banks would give out loans and only charge the consumer 15% of the actual cost at the point of transaction, and would wait for the consumer to finish paying off his or her debt. This caused stocks, among other items such as houses, to become inflated due to the item being fiercely bought (848). Companies would also hire people to buy large amounts of company stock to make an illusion of the stock being valuable to other buyers, known as the Pump and Dump scheme. These illusions of the valuable stock, whether it be buying on margin or Pump and Dump, led to the over inflation of stocks and once the banks and people realized there was no real value behind the...

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