The history of the United States economy has its roots in the European colonization of the 16th to 18th century. The independence of the thirteen colonies was established under the frontier, ingenuity and support from France and its allies. Since then, the economy of the United States has gone through a lot, for instance, the birth and evolution of the national debt which has expanded apparently without limits. Also, it is quite fascinating to point out the fact that the America’s economy grew to be the world’s leading economic superpower, in the 20th century, and it assumed the role of the greatest financial capital of the world (Fellows & Mike 39).
However, in the years following the America’s Great Depression, the United States’ trade deficit has continued to escalate, with much of America’s massive debt is now being now controlled by China, and a transfer of power appears to be in progress. Basically, this was a colossal financial deterioration that started in the late 1929 that continued into early 1940s (Rothbard 420).
The Great Depression, and even that’s now known as Black Thursday, was such a catastrophic time, not only in American, but also for most people across the entire world. As matter of fact, it was felt in a great deal of places ranging from North America to South America, and all the way to Europe and Japan. Also, cotton farmers and bankers felt the great impacts the depression. While most economists argue that there were several contributing factors to the Great Depression, it led to the most horrible economic crisis in the history of the economy of America. This paper will be an analysis of the main causes of the Great Depression and reasons as to why it lasted so long.
Analysis of the causes
There are several causes of the Great Depression that are believed to have been the driving forces behind the worst economic situation in the America’s history. The crash of the United States stock market in 1929 was one of most commonly known primary factors that caused the Great Depression. For instance, the US experienced a tremendous surge in stock prices in 1920, but the Federal Reserve could not defend these prices by future earnings. However, in 1928 the Federal Reserve raised interest rates in order to slow rising stock prices. Nearly 2 months after the original crash in October, stockholders had lost over $40 billion dollars (Silverman 71). Although the stock market began to recover from some of its losses, by the end of the following year, it just was not enough and America truly entered what is called the Great Depression. The crash brought on a manifold of debates that are still active in today’s US economy ((Smith 76).
Failure of banks was another cause of the Great depression. As a matter more than 9,000 banks failed in the 1930s because Bank deposits were uninsured, and thus as banks failed people simply lost their savings. Unfortunately, surviving banks stopped being as willing to create new loans because they were...