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Understanding America’s Great Depression

We can’t prevent another Great Depression unless we know what caused the first one.

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The Great Depression is one of the most studied and talked about economic event in the nation’s history. It was a terrible time for the country. But the question is: Will the United States ever see this level of depression again? America has come close to falling into a depression, from the 2008-2009 financial crisis to the 2020 coronavirus-induced collapse. Perhaps understanding how the Great Depression came about and how terrible conditions were could help us understand what needs to happen for another depression to come.

The Great Depression: A Primer

The Great Depression lasted from 1929 to 1939 and had a lot of contributing factors:

  • The economy shrank 50%.
  • The unemployment rate increased to 25%.
  • One-third of the nation’s banks failed, and depositors lost $140 billion.
  • International trade crashed 66%.
  • The Dow Jones Industrial Average dropped 85%.

Federal spending tripled and national debt increased more than ever before. President Franklin D. Roosevelt wanted to fix the Great Depression by spending more money, and his New Deal and Second New Deal cost America so much that Republicans worried the country would become a socialist state.

Conservatives joined together to abandon the so-called alphabet soup of federal agencies, including the Reconstruction Finance Corporation (RFC), the Works Progress Administration (WPA), and the Civilian Conservation Corps (CCC). But they were couldn’t end Social Security. Following the depression and the war, the public debt was finally being paid down and declined steadily until the 1980s.

The national economy also started to level out in the 1940s, although many Americans continued to struggle.

What Caused the Great Depression?

The Wall Street Crash of 1929, also known as Black Tuesday, was the start of the Great Depression.

More than 16.4 million shares were traded in a single day and billions of dollars were wiped out. This led to the many other economic disasters. Even for Americans who kept their jobs and earned a decent living, life was still tough. The motto of the time was: “Use it up, wear it out, make do or do without.”

Can It Happen Again?

The economy and the political fallout of the 1930s have been intensely studied by academia for decades. People disagree on what caused the Great Depression, but presenting different reasons does give us more to think about when trying to figure out how to prevent another depression. Can it happen again? As legendary economist Hans F. Sennholz explained in 1962, economic law says it has to if we repeated the errors that caused the Great Depression.

Economics Correspondent at LibertyNation.com and LNGenZ.com. Andrew has written extensively on economics, business, and political subjects for the last decade. He also writes about economics at Economic Collapse News and commodities at EarnForex.com. He is the author of “The War on Cash.” You can learn more at AndrewMoran.net.

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