Beginning And End Of The Great Depression
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One of the worst economic disasters ever to hit mankind was the great depression. The depression started in the U.S. and spread accross the world like wildfire. So, what caused the great depression? Here is a short summary of the beginning and end of the depression.
The roaring 20s saw higher stock prices and was a major cause of the depression. In the 20s stocks went higher and higher to even more unrealistic levels. While stock prices continued to head up many people of the era believed that stocks were a safe investment and that they would never go down or crash.
From this false optimism banks started lending people 90% leverage on stock purchases. You could now buy a stock for pennies on the dollar and make or lose a lot of money depending on what the market did.
When the stock market was heading up this system worked out fine and both parties benefited. When the stock market started to turn around however, both investors and lenders lost their shirt. This started what would be known as the great depression
When people lost money they started to panic and needed money now, so they pulled all of their money out of banks. This put added stress on banks and caused others to panic about the likelihood that banks would still be around in the future. So, they pulled their money out causing banks to fail, which in turn lead to more fear. One of the facts about the great depression is that fear had a major impact on the country.
How did it all end? The great depression ended when the government got to work building things like infostructures and creating National Parks in order to create more jobs. These added jobs lead to more confidence in the economy.
As more jobs were added to the economy people began to feel safer again and started investing money into banks again. This brought on even more jobs as someone had to work at those banks.
World war two was the final straws that lead to the end of the depression. When the war occurred new jobs were created and the economy was forced to try to out produce the Germans and Japanese. After the war the U.S. became a major economic powerhouse and it would remain that way for decades to come.
Article Source: Articlelogy.com
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