Money and Banking Essay

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The stock market collapse of the 1929s was the greatest financial crisis the United States had ever experienced and was the start of the “Great Depression.” The depression was disastrous for many American families, and the suffering they went through was world renown. Thus when the financial disaster hit in 2007 and the housing bubble burst, a lot of people proclaimed it the coming of the next “Great Depression.” In this article, we will compare and contrast the characteristics of the financial crisis in 1929s and the late 2000s. To accomplish this, we will first look at the circumstances that caused the 1929s economic collapse. Secondly, we will look at how the economy reacted to the economic collapse and what actions were taken as a result of. Thirdly, we will explore what specifically caused the 2007 economic recession allowing us to compare and contrast pre-recession periods. Fourthly, we will analyze lessons that were learned by the Federal Government during the Great Depression that resulted in monetary or fiscal policies during the current economic crisis. Finally, we will conclude with a conversation about the main points of both economic downturn and look at the long run toward recovery.
Capitalism “is an economic and political system in which a county’s trade and industry are controlled by private owners for profit, rather than by the state (Marriam-Webster Dictionary).” Many other economic downturns have transpired both prior to and after the 1929 stock market collapse; however, the duration and severity of the Great Depression made it the measuring stick for every other economic downturn since. But what caused the Great Depression has been a great debate. While many analysts will point to the stock market collapse in 1929, the root causes of the economic collapse are more complex. As the “Road to Rock Bottom” detailed, the Great Depression was one of America’s darkest times where the economy had hit rock bottom, the military was called in to defend the capital, and law abiding citizens were protecting criminals the government was after. Conversely, America wasn’t the only country affected, it might have led the way, but this the Great Depression was an international problem. So, any kind of examination into the causes of the Great Depression must look at the whole picture of what was happening in the USA and around the world.
The 1920s is referred to as the roaring twenties in the United States because of “unprecedented industrial growth, accelerated consumer demand and aspirations, and significant changes in lifestyle and culture(Roaring Twenties).” Following the end of the first-world-war, the US economy entered a period of industrial growth due to its supply of natural resources. Additionally consumers for the first time ever were able to buy goods on a system of hire-purchase and credit. This allowed consumers to purchases goods and then pay for it on a monthly basis. Nonetheless, inequality within America was...

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