How the Great Depression still affects America Today? I intend to analyze how the issue The Great Depression of 1929 devastates the United States economy.
The topic of great depression helps us to understand the face of the United States in the significant turmoil following the economic collapse in the country. The Great Depression is the greatest catastrophe in the United States, and it is crucial in understanding how several factors in a nation can blend into economic misery.
Background
The Great Depression was caused by the stock market crash of 1929 due to a drop in the Dow James industrial average by eleven percent (Elder, 2018). As a result, the investors panicked, and they began selling their shares in large volumes, making Dow decline. Besides, there was another panic in the New York Stock Exchange, which made the investors sell their shares in unpreceded numbers (Adams, 2017). Indeed, the market fell by another twelve percent since more than sixteen million shares were traded on that particular day. Many people in the United States choose to buy gold rather than putting their money in socks since the American economy was shattered and people lost their confidence in the banks and Wall Street.
The Issue at Hand
The current issue at hand is the impacts of the Great Depression in the United States today. One of the effects of the Great Depression in the United States presently is income inequality. For instance, many Americans in the top one percent of the income in 2012 have held the same income position since 1928 (Veblen, 2017). Since the Great Depression occurred, the employment increased significantly with the rapid increase in the industries, but the salaries of the workers failed to rise. As a result, the spending decreased, which caused a decline in the stock price since people could no longer afford most of the products. Additionally, there was a market crash which affected the belief in the United States financial system. Indeed, many banks were greatly affected as Americans began pulling their money from these banks, which made many backs across the country to close.
Policy Recommendations
Several policies can be embrace to assist the economy when stuck in any recessions. Moreover, the government should improve the overall functioning of the country’s economy if the markets fail to allocate adequate resources. One of the policy remedies is the government’s monetary policy. Along with the monetary policy is the fiscal policy and the stabilization policy. Indeed, these remedies can help in increasing the overall aggregate spending in a nation and increase the GDP as well.
Conclusion
People can embrace several policies in the future to avoid such catastrophe from retaking the place. The Federal Reserve failed to provide the necessary aid to many banks across the country during the Great Depression, making them collapse. Thus, the Federal Reserve should be more aggressive and active in creating cash and financing banks. Increasing the money supply to banks can aid in reducing income inequality and shortages in case people choose to withdraw large sums of money. Additionally, the government can increase its expenditure by building more infrastructure and employing more people. Decreasing the tax cuts as well can assist in stimulating the economy, which indeed increases the deficit.
Bibliography
Adams, J. T., (2017). The epic of America. Routledge.
Elder, G. H., (2018). Children of the great depression. Routledge.
Veblen, T., (2017). Absentee Ownership: Business Enterprise in Recent Times-The Case of America. Routledge.
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