literature 2 pages

Economics

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Origin of a Depression

In 1921 to 1929 the total value of all land increased. The value of estimated oil reserves also increased almost doubled during the period. There was overproduction, and the cause was land speculation Carl O. Nordling 2001. Between 1922 and 1929 the total value of all land dwelling increased from 450,000 to 940,000. The total national wealth grew faster, and the population grew 1.5 per cent per annum at that time. The value of estimated oil reserves almost doubled and grew in about 6.5% annually. Accordingly, when the urban population raised the value of urban land increased by about 40%. In addition the world war was beginning at that period. Land speculation occurred in large scale and developed into buying and selling of binders. The binder was a right to buy a lot later in future when the land was to be subdivided. The land speculation in United States throughout the urban areas was caused by inadequate tax assessing policies and adequate land price information. This led to over-investment in dwellings contributed to the oversupply of houses.

Did the United States Transmit the Great Depression to the Rest of the World?

In 1930, there was the most widespread great depression of the 20th century. According to Getrude M Fremling 2001, she believes that the great depression transmitted from United States. It led to disappearance of globalization at that time. This was caused by increase in liquidity in the economy. Increase in liquidity was as result of rapid growth of exchange reserves of central banks in the emerging countries. This contributed to rapid economic expansion globally. On contrary, there was no inflation. This was attributed to the fact there was pressure caused by decreased prices for manufactured goods. Rising in prices for oil, metals and food products was strong as a result of emerging countries was strong enough to reserve the tendency. The stock market grew at a fairly steady rate until early 1928 where it declined slightly until 1929. This was contributed by restrictive monetary measures taken by Federal Reserve System.

In conclusion, the great depression of 1930s led to the disappearance of globalization at that time. International flow of capital diminished, international trade became very difficult to finance, and countries adopted protectionist measures.

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