The Great Depression And Today Essay

1021 words - 4 pages

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Chris Hardy & Alex KhomyakovStewart History 8th CPFebruary 8, 2009The Great Depression and TodayThe economic downturn and the subsequent recession had many on Main Street wondering what happened. America was glued to the news as we watched our stock's become worthless and our government panic; we then looked out our windows and realized it was all too real. We saw our neighbor's homes foreclosed on, and the pain that caused. The recession brought an end to the era of overspending that we all were accustomed to. However, if history is any indication, this period of fiscal responsibility is not to last. The emotions stirred up were all too familiar and brought forth a feeling of déjà vu. Young men and women asked how we could have let this happen, and elders asked how we could have let this happen again. The great depression and great recession are similar in many ways including social aspects, financial climate, and the government's reaction to the disaster.As with any disaster directly caused by humans, the social climate of the period leading up to and during the disaster is an important aspect. In late 2007 it was evident that consumer faith in the economy was down. This loss of faith was attributed to the massive increase in CPI in the previous year, making unnecessary spending harder for the American family. Decreased spending in the market place translated into decreased demand which put pressure on firms who depended on consumer spending and even caused many firms to fail. This cascading effect continued until there was a complete crash on Wall Street. This CPI increase was a result of the friendly climate for the American investor during 2005 and 2006 during which there was a 10% increase in GDP (BLS). The climate was similar before the great depression. Although accurate indictors of economic health like GDP are not available for 1928 and 1929 conclusions can be drawn from looking at the DOW, which was up to an all-time high of 381 by September 3, 1929 (Book). Just as today, investors were riding what they thought was a never ending wave of prosperity. This assumption that things would always go well led to speculation which pushed the markets artificially high. So an unexpected drop in the DOW frightened investors, who then, began selling as a fever pitch. By October 29, a record 16.4 million shares were sold in one day. The stock market had crashed. Shirking any confidence Wall Street had in the economy. While not exactly the same to the situation of today, stark comparisons can be drawn. Comparisons can also be drawn to the financial climate leading into and during both disasters.The financial climate is obviously the major factor in both disasters and what is interesting is how similar they are. The crash was not the only cause of the great depression or even the recession, however, it was the event that set the rest in motion. As a result of the crash there was no longer any money...

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