current recession vs great depression essay

Image Credit: Lydsay B., E. Sandwich, MA On October 29, 1929, America had what is now known as ‘Black Thursday’. Black Thursday was when the stock market crashed. After black Thursday, America’s economy that was already having trouble, started getting worse and worse. People couldn’t pay their loans from banks, people were losing their jobs, losing their homes and many people couldn’t provide for their families. During the beginning of the Great Depression, and during the aftermath of Black Thursday, President Herbert Hoover tried to reassure America that the economy was stable. But the American people didn’t agree. In the 1932 Presidential Election, Herbert Hoover was defeated, and Franklin D. Roosevelt was elected by a landslide. After his election, people felt a new feeling of hope and confidence in the country. Similar to President Obama’s Election. On March 4, 1933, thousands of Americans descended to the Nation’s capital to watch their new President’s inauguration ceremony. After his inauguration speech, people had real confidence that things were going to get better. Shortly after President Roosevelt took office, He developed a new economic plan to end the Depression, The New Deal. Slowly, the New Deal started creating more jobs, and the Economy began to recover. By the end of the 1930’s the United States was out of the Depression. There are many similarities between the Great Depression and the Recession we are in now. At the beginning of this recession, Our Stock Market, the ‘DOW’, began having out of control days. One day it even fell 600 points. It was northing like Black Thursday, but it made Americans become very worried. After that, more Americans began losing their jobs, houses were getting foreclosed and a lot of Americans began having to worry about how to provide for their families. Throughout this, President Bush tried to reassure Americans that.
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David M. Edwards, BA Economics, Yale Post written by David M. Edwards The Great Recession and the Great Depression are the fallout of the exact same economic phenomenon and are only different in a few (minor) respects. Each period is marked by a massive run up in asset prices followed by a tremendous deflationary pressure that has sent both debt and equity markets into turmoil (down). The Great Depression saw the Federal Reserve do little to ‘save’ the economy because their policy actions were limited by a currency backed by precious metal. In the face of deflation, the 1930s Fed knew it needed to expand the money supply by lowering reserve requirements at banks. In fact, the Fed’s board of governors did actually reduce the reserve requirement, but not enough to have a sizable impact. And so, the country was stricken to a decade of deflation, high unemployment, and slow growth. The Great Recession is very similar in origin, but the policy response was different from the Fed. Most modern day central banks have fiat currencies as opposed to currencies backed by precious metals (Gold, silver, animal pelt, etc.). And so, in times of crisis the Fed can ‘create’ money by artificially increasing member banks’ deposits at the Federal Reserve, funds from which those banks can lend to the public. The Fed did .1 trillion worth of money printing in order to save financial intermediaries that were in dire need of assistance and in order to finance fiscal efforts to rejuvenate the economy. I believe the difference in monetary regime is the cause for the difference in ‘perceived’ outcome of the two crises. I still think the two crises are very similar. Here’s why: Lots of folks compare unemployment rates. They say, unemployment was 25% in the Depression and only 10% in the GR. First of all, the definition of employment has changed in the survey literature over time with the 1930s.
When President Barack Obama was inaugurated in January 2009, he inherited a horrendous economy. But was the economy back then really worse than it was during the Great Depression? In a recent interview, Obama indicated that it was. On ABC’s This Week, host George Stephanopoulos noted that it was five years after the failure of the investment bank Lehman Brothers, a pivotal moment in the financial collapse of 2008 that led to the most recent recession. After five years, Stephanopoulos said, two-thirds of the country still thinks we're going in the wrong direction, thinks the economy is no more secure. What do you say to those Americans who think Wall Street is winning but they're not? Obama responded, Well, let's think about where we were five years ago. The economy was on the verge of a great depression. In some ways, actually, the economic data and the collapse of the economy was worse than what happened in the 1930s. And we came in, stabilized the situation. Obama said the economy was worse in some ways -- a standard that strikes us as especially vague, and thus difficult to fact-check. The White House spurned three attempts by PolitiFact to supply data backing up Obama’s claim. But we pored over old economic data and interviewed economists and historians familiar with both periods. We found some evidence both for and against the idea that the economy Obama inherited was worse than the one during the Great Depression. Here, we’ll lay out the evidence and let readers draw their own conclusions. Where Obama has a point For some measurements, and for a limited period of time, the freefall was bigger and faster during the Great Recession than it was during the Great Depression. For instance, the Dow Jones Industrial Average fell from its pre-recession peak of 14,164 in October 2007 to a low of 6,547 in March 2009. That’s a 54 percent decline in just under a year and a.
As the economy began to falter in December 2007 (the official start of today’s recession) and went into a freefall in September 2008, many Americans’ thoughts turned to the Great Depression. Read more about today’s Great Depression: Great Depression 2008 Facts Great Depression 2009 Facts How To Survive The Great Depression Great Depression 2008 and 2009 Job Losses (by month) Great Depression Workers Great Depression Stimulus Packages Great Depression Bank Bailouts Great Depression Stock Market Crash 2008 Comparing the Great Depression to what’s happening today, many similarities and differences can be noted. Similarities Between The Great Depression And Today Some of the eerie similarities between the Great Depression and today’s economic crisis include: Speculation: Speculation on stock led to the historic stock market crash in 1929 that brought on the Great Depression. Speculation on housing prices in 2003-2007 brought on the current recession. As of April 2008, the top 26 cities with the highest foreclosure rates in the country were all located in just four states: California, Arizona, Nevada, and Florida. For years, these states enjoyed double-digit increases in housing prices, leading to a housing bubble that was bound to burst. Buying on margin: With little regulations on stock market purchases, in the months and years leading up to the Great Depression, investors were able to buy stocks on margin, with the only requirement that they put 10% down. In other words, they could buy 0 worth of stock for a investment, and if that stock went up by a mere 10%, they’d doubled their investment. This leveraging led to wild speculation, with people cashing in their life savings to funnel money into the stock market, which led to artificially high prices. Stock market regulations were put in place during the Great Depression to prevent the same catastrophe from.