Block's Economic Crisis Analysis

Reed’s book, Great Myths of the Great Depression, attempts to argue that the stock market crash of 1929 was merely a normal economic occurrence. Instead, it was government policies enacted in response that exacerbated and prolonged the economic effects of the crash. In effect, Reed’s thesis flips the conventional view on its head: instead of being the cause, free-market capitalism would have naturally solved the issues that led to the Great Depression. Conversely, government intervention was a cause of, rather than a solution to, the economic hardships that resulted.

The year was 1929. America goes through the biggest national crisis since the American Civil War. They called it the Great Depression. The Stock Market was going down, unemployment was going up, and money was becoming scarce. The United States had to look up to the one person who could lead the country out of this national catastrophe, The President. At this time the man who had that title was none other than Herbert Hoover. Hoover, A republican, hoped that this was all a nightmare, he hoped that the Depression was a small fluke that would fix itself after a short period of time. After seeing that the Depression was getting worse had to

As a political personality, Robert Reich writes a book that closely relates the deteriorating status of the U.S. economy with the greed of other politicians and the government as a whole. To some extent, Robert Reich pulls out the sense in economy deterioration with the help of pinning the major government policies. Robert Reich 's argument comes out clearly, directly, and at some point presented willfully. From the heading of the topic of the book, what went wrong with our economy and our democracy, and how to fix it, a reader can clearly picture the content of the book that is politics and the financial mess that the United States of America is in today. The book provides a clear, simple, and easy to understand information on how the author, Robert Reich relates the cause a bad financial status for the country and how the government and other wealthy people living in America contribute to causing the financial crisis.

The eight years between the end of World War I and the beginning of the Great Depression were generally booming ones economically. The economy’s total output increased by 50%. However, during these times there were three visible flaws during this time period. First and foremost, during these years income was dispersed inequally. This is proven through the fact that, despite output per worker rising, wages and prices were secure, which led to increased incomes for the wealthy. Secondly, the United States was no longer the world’s largest debtor, but became the world’s largest creditor. This means that a creditor must import more than what is exported. Where an exporter must export more

When the panic of the stock market crash and Great Depression of 1929 set in, fear and speculation were everywhere. How would the problem of the American people be solved? Who could solve it? When would the solution come? Many wanted to find an answer; many needed to. In the life-or-death situation, two major political figures rose from the chaos with their own answers: Herbert Hoover, the president at the time, and FDR. Their ideas differed greatly, however, focusing on the people and the government, respectively. FDR’s plan and political presence came out on top in the end.

After the big crash of the stock market President hoover believed that government intervention wouldn’t help and that having the government involved would make things worse. President hoover had a strong opinion that the banks and business would hold strong he held tightly to this opinion, but things continually got worse. Before the great depression got worse President hoover tried to Deal with it by creating something called voluntarism. Voluntarism “was basically collaboration between private sectors and public sectors of the economy. For example, a business might partner with local government or agency to provide relief. Hoover believed Americans should basically volunteer to help one another.” (credit: https://study.com/academy/lesson/hebert-hoover-failures-criticisms.html)

In Frontline’s The Meltdown, the causes of the stock market crash of 2008 came into discussion. The topics regarding Bear Stearns, the Lehman Brothers’ and their collapse, and the huge bailout made in results to the market crash. There were great points being made on the mistakes Henry Paulson and Ben Bernanke did not view from their perspective, which in turns were the problems that made up the crash.

People had no care for saving or cautious behavior with money. But when the stock market crashed consumers and businesses had little trust. Although the stock market crash has not been directly connected with the start of the Great Depression it did scare so many people that they ran to banks to withdraw what money they had left only to have banks soon fail. Banks had a major crisis at hand because they money they loaned out went into buying stocks. This crash had caused the banks to fail when people couldn’t keep up with their payments. Hoover had tried to help cushion the blow. He had tried to get business leaders to hold wages at a certain prices. He had also got the Federal Reserve involved by making open market purchases. He even tried to help those who were unemployed by stimulating construction work. This was the best he could do with the help he had. But obviously business leaders were more concerned with profit than wages because they were quick to cut wages down. Unemployment were reaching levels that were hard to match with work that the president was creating out of

During Herbert Hoover’s time in the White House, is when disaster struck. Many people, at the time, believed that President Hoover was the ideal person to have in office due to his background, and knowledge of economics. President Hoover’s understanding of economics is what initially allowed him to predict that a crash in the nation’s market was inevitable; yet, did not take any actions about it because he worried that when the market went down, he would receive the blame. Nevertheless, when the market bust occurred, President Hoover did take many incentives to attempt to fix the economy. Primarily President Hoover “called on people to engage in voluntary

the Great Depression brought upon the United States. He used the failure of Hoover as a way to

According to Alan Reynolds, government policy could be the only possible cause to destabilize the economy. This can be seen in the Smoot- Hawley Tariff Act of 1930; the five point plan summarily stated the following: raise the cost of living, stop all help to the farm sector, urge foreign countries to pay higher trade tariffs, and hinder foreign debtors from paying U.S. foreign investors (Phalan). On another note, the stocks collapsed on October 28, 1929, or Black Thursday, when multiple members of the senate switched to the approving side of a calcium carbide tariff. Then, another tariff was forced upon Hoover, and the next day was Black Tuesday. Finally, on November 14, the senate postponed action on the Smoot-Hawley Tariff, which caused a rise in stocks. Yet, the stocks downturned in anticipation of Hoover’s veto on the act even though he ratified it. To clarify, each passing of tariffs caused a downward force on stock value (Reynolds). Moreover, overspeculation, purchasing high-risk stock, flourished as interest rates were artificially lowered (Etheredge). As aforementioned, this caused a false sense of security within the market. The market’s peak in August of 1929 caused by this over speculation ended in October, and the massive loss of monetary value wiped out bank deposits (“Stock Market Crash of 1929”). In expansion, banks had utilized deposits to invest in the market and create interest, yet the money was not secured by an agency such as the FDIC, or Federal Deposit Insurance Company. Therefore, bank runs occurred as citizens rushed to withdraw from their accounts. The cause of such an event spurred the ratification of the Glass-Steagall Act, or Banking Act of 1933, which created the FDIC (Pusey 1). In all, over speculation caused economic chaos, and actions on the Smoot-Hawley Tariff caused a downturn in stock.

History has shown us again, and again that when power is left unchecked it becomes corrupt and out of control, that is the iron law of oligarchy. In the US we saw this happen recently in the 2008 economic meltdown. The banks and corporations should never have been aloud to become "to big to fail," and once they did grow to a point when they were there should have been more government oversight to make sure things did not get out of hand. After the great depression laws were put in place to try to prevent something like that from ever happening again, but we undid those restrictions and ended up in a place eerily similar to somewhere we had been before. In this paper I will cover a brief history of the great depression, and show how the situation in 2008 was all too similar. I will also discuss and analyze the factors that brought us to the tipping point in our most recent economic scare. And finally I will explain why the actions taken by the FED were necessary and kept us from an even more

In 1929, the stock market crashed. The values of production gone down, work force lost their jobs, millions of families lost their homes as well as millions of saving accounts were lost because banks closed for good. Those events resulted in the Great Depression. As a result, the world was plunged into economic turmoil. However, two prominent economists emerged with competing claims and sharply contrasting approaches on how a capitalist economy works and how to revive it when depressed. John Maynard Keynes an English economist believed that government has responsibility to intervene in an economical crisis whereas, Friedrich Hayek an Austrian-born economist and philosopher believed that the government intervention is worthless and

The most prominent and possibly the most notable market crash is the ‘Global Financial Crisis’ which was a direct repercussion of the neo-liberal policies which were implemented at the time and for which many of today’s global economic problems has stem from. These policies predominately include the replacement of government functions and services with profit-seeking entities, or more commonly known as privatisation and most importantly the deregulation of the economic market (Beder, 2006). Due to the deregulation, financial institutions and other economic players were able to invest in more complex financial markets which were beyond their understanding and a result a market crash occurred and the detrimental effects were widespread. If regulation had been put in place to monitor investment activity then it has been argued that the Global Financial Crisis would not have occurred and the associated global economic problems we are experiencing today would not have eventuated (Dag Einar Thorsen, 2013). As neoliberal policies where implemented around the world casing the global financial crisis the world disparities in wealth and income increased as well as poverty, contradicting neoliberal theories that by increasing the wealth at the top everyone becomes better off.

It was 1929, and in the United States things could not be better for those smart enough, or for that matter, brave enough, to gamble on the Stock Market. All of the big stocks were paying off handsomely, the little ones too. However, as much as analysis tried to tell the people that this period of great wealth would last, no one could imagine what would come of the United States economy in the next decade. The reasons for this catastrophic event in American 20th century history are numerous, and in his book, The Great Crash, John Kenneth Galbraith covers the period and events which lead up to the downward spiral in the fall of 1929 and the people behind the scenes on Wall Street who helped this fire spread.