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 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.
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.
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.