Reply #16: I agree with other reply that older books may be more truthful.-

[DianaForRussFeingold]

:pals: this is the best I could find tonight;'What Caused the Great Depression of the 1930's?'-
What the unemployment figures
don't show is also how "under-employed" many people who were not on the list were likely to be.


"The Great Depression of the 1930s was the economic event of the 20th century. The history of the depression is fascinating because it is a reference point for economic misery and fear. When people make financial planning decisions and politicians set policy the depression experience is, or maybe should be, in the back of everyone's mind as a worst case scenario.

The depression is also interesting because, in hindsight, the downturn could have been much shallower had policy makers not made certain mistakes. Some of these mistakes have been very well researched by economists over the years and are highlighted here. There are also lessons to be had from the depression on human behavior and society in general. Lessons such as how blind and greedy we become when swept away by delusions of grandeur, only to flagellate ourselves when our dreams don't work out. And how our initial reaction to fear is to create barriers between others and ourselves resulting in added misery for everyone.

If this was an article about how we recovered from the Great Depression there would also be inspiring stories of leadership and daring generosity among all kinds of people. How facing extreme difficulties put people in touch with a wealth that was beyond their empty bank accounts. In this article though we'll focus on the economics of the downside."



"The Great Depression began in 1929 when the entire world suffered an enormous drop in output and an unprecedented rise in unemployment. World economic output continued to decline until 1932 when it clinked bottom at 50% of its 1929 level. Unemployment soared, in the United States it peaked at 24.9% in 1933. It remained above 20% for two more years, reluctantly declining to 14.3% by 1937. It then leapt back to 19% before its long-term decline. Since most households had only one income earner the equivalent modern unemployment rates would likely be much higher. Real economic output (real GDP) fell by 29% from 1929 to 1933 and the US stock market lost 89.5% of its value.

Another unusual aspect of the Great Depression was deflation. Prices fell 25%, 30%, 30%, and 40% in the UK, Germany, the US, and France respectively from 1929 to 1933. These were the four largest economies in the world at that time.

To put the severity of the depression in modern perspective, consider the following. Real US GDP went down 4.4% in the five years that it declined since 1959, all added together! Unemployment has never exceeded 9.7% and we have not had one year of deflation. Maybe you're thinking, "what's wrong with a little price deflation?" Depending on how much and how unexpected, deflation can be a devastating economic event. Imagine wages falling by 30% and the value of debts simultaneously increasing by that much.

In the great depression it would have been nice if the suffering had been so evenly distributed. Instead the deflation caused bankruptcies, which in turn led to, more bankruptcies! Millions of people and companies were wiped out completely. The lack of adequate social programs left people of all social strata depending on relatives and friends for charity. Spending became paralyzed with fear as the downturn was so unexpected, so severe, and the bad news just kept coming for years.

Many did not realize how severe the downturn was until 1932 or 1933 when the economy had technically hit bottom and even begun to chug forward. People's resources were depleted by then and so were many of their friends'. So the human misery caused by the Depression really started in the mid-1930s.

The political backlash to the miserable economic situation is often blamed for toppling democracies, bringing fascist governments to power in Germany, Italy, and Japan, and ultimately provoking the Second World War. "Hitler's rise to power can be directly linked to the profound economic crisis in Germany at that time". The German economic crisis was compounded by the huge war reparations imposed upon the Germans following World War I (an interesting comment on the efficacy of economic sanctions!)." more..... http://www.shambhala.org/business/goldocean/causdep.html :yourock:
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"There were many other factors which made the human experience much worse than it had to be such as the lack of adequate social safety nets like Unemployment Insurance, Social Security, Medicare, and Welfare programs. These programs were mostly implemented in response to the Great Depression and have well served the function of automatic economic stabilizers since. It is morbidly amusing to witness policy debate over such programs by politicians these days who have forgotten the depression. When times are good, those in need are seen as anomalous social groups and social programs become ill funded and pejorative. Perhaps it takes a Great Depression once in a while to remind us that we are all cut from the same cloth. It is just a matter of time." Layth Matthews