The Great Depression and Past Recessions of America’s History in Comparison to Today’s Economic Crisis.

Topics: Great Depression, New Deal, Federal Reserve System Pages: 6 (2277 words) Published: December 16, 2009
Today, we are all quite aware of the recession the world is in right now. You cannot turn on the television without hearing about it. Economic recessions and depressions have occurred all throughout the history of modern economics, some date back as far as the 1700s. The National Bureau of Economic Research defines economic recession as a significant decline in the economic activity spread across the economy, lasting more than a few months. A depression is a severe economic downturn that lasts several years. What exactly can we do to get out of this economic climate? Many presidents have had to serve during such times and each has tried different methods to improve the economy. Which is the most effective solution though? It’s best to analyze three of America’s past economic crises, including the Great Depression, to look for an effective measure to help us turn the markets around. The Great Depression is certainly one of the most infamous periods in American history. The condition in which the country was in is definitely one we do not want to experience again. Unemployment was terribly high, and people were hungry as well as homeless. How did this happen though? In the Early 1920’s the economy was booming; but on October 29, 1929 the stock market suddenly crashed on what we know as “Black Tuesday”. There is much speculation as to why the depression happened. There is the common theory that it was irresponsible investing. There is a second theory that states bank corruption and the establishment of the Federal Reserve Bank System destroyed the economy. In the roaring ‘20s there were many new advances such as the radio, cars, and the rise of jazz culture. Life was changing in the economy, stocks were escalating in prices but productivity was not increasing as fast. Investors were, for the first time in history, borrowing from the margin in order to buy vast sums of stock, which made stock very unstable. On that treacherous Tuesday many lost faith in the stock market and opted to sell all at the same time causing a panic. As stock went down more began to sell. Investors couldn’t pay the interest on their margin accounts causing banks to go out of business. The following theory is not the “official history” of the great depression but is certainly worth noting. The National Monetary Association in 1912 presented a bill called the National Reserve Association bill, commonly referred to as the Aldrich bill after the U.S. senator that helped accomplish the passing of the bill in 1914. The bill was passed under Wilson’s administration. The Federal Reserve act handed the power of debt and money creation to a terrible group of bankers, effectively took us of the gold standard. I do not think that that is what our forefathers would have wanted. To quote the late Congressman Louis McFadden, "Every effort has been made by the Fed to conceal its powers- but the truth is- the Fed has usurped the Government. It controls everything here and it controls all of our foreign relations. It makes and breaks governments at will.” What McFadden was saying is that the crash and depression were brought on by the actions of the Fed, that through its greed it gained control of the central banking authority of the United States government, ran up huge debts to its international banking partners, bankrupted the country and then subsequently forced the American taxpayer, through the income tax system, to repay the debt over the course of decades! Franklin D. Roosevelt was elected in 1932 and brought a wave of change to fix the problems with the economy. He proposed the “New Deal” which would pass many bills and set up many government offices. In just the first 100 days he accomplished much. On March 6, 1933 FDR closed banks until congress came up with legislation to fix the banking crisis. On March 9, 1933 Emergency Banking Relief Act was passed saying banks could no longer deal in stocks. March 22, 1933 Beer and Wine Revenue Act was passed...
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