What Are The Similarities Between The Great Depression And The Great Recession

Many people believe the Stock Market crash and the Great Depression are one in the same. In the nineteen twenties the Dow Jones went from sixty to four hundred. People became instant millionaires. Trading became America’s favorite pastime and a quick way to get rich. There were Americans mortgaging their home and investing their life savings in stock such as ford. However, there were many fake companies that formed to deceive the inexperience investors. Many investors did not believe that a crash was possible; they all thought the market would always go up.

The panic of 1907 and the Great Recession of 2007-2009 has both been major economic events in the United States economic history. This paper compares and contrasts these two major events and enables us to understand importance of certain financial institutions and regulations during troubled times in the financial sector. In this paper, both panics of 1907 and 2007 are historically analyzed and compared.

The outbreak and spread of the financial crisis of 2007-2008 have caused the most of countries into severe economic difficulties and also created an adverse impact on the global economy. The beginning of the financial crisis is defaults in the subprime mortgage market in the USA. Although the global economy seems to recover since 2009, the impacts of the crisis still affect many countries until now. This essay focuses on the background and impacts of financial crisis, and the learning from the movie The Big Short.

The Great Depression was a severe economic slump down that took place between 1929 and 1939 (Sauert, 2010). Observers reckon that this historical event was the longest, demeaning, and most widespread recession. The resultant widespread economic hardship hit Europe, North America, and other industrialized economies (Olson, 2001). Also, in the 21st century, the international community has experienced yet another crisis, the Global Financial Crisis, which the observers of the global economic fora have similarly compared and contrasted with the Great Depression. The Global Financial Crisis offered itself as a case scenario that epitomes how deep the economy of the world can decline to abysmal levels.

2008 Economics Noble Prize winner and Princeton University professor, Paul Krugman, translates the roots of modern and prior financial crisis economics. In his book, The Return of Depression Economics and The Crisis of 2008, Krugman first educates the reader of historical and foreign financial crises which allows for a deeper understanding of the modern financial system. The context provided from the historical analysis proves to be a crucial prospective in such a way that the rest of Krugman’s narrative about modern finance continually relates back to the historical analysis. From there, Krugman analyzes and updates his prior studies done on the Asian financial crisis. He then applies his knowledge from historical events to the modern day financial struggles and argues his opinion about how and why our financial world operates the way it does. Krugman explains his perspective that the world believed that depression economics was no longer a problem, however the Asian crisis, Japan 's liquidity trap and the Latin American crisis having acted as warning signals to modern market struggles. Thus he says that this subject needs further examination and more resources should be poured into it. For Krugman, Depression Economics is still a relevant problem and should be further studied.

Peter Temin (2010) in his comparison of the Great Depression and the Great Recession, explains that there was a delayed response the Great Depression; "voters had to wait three years after the Great Depression began and a full year after the Fed turned a recession into a depression to vote on public policy" (Temin 2010). However, the complete collapse of the financial system made it possible for President Roosevelt to make drastic reforms to the financial system that led to about half a century without any major financial crisis (Temin 2010). In contrast, the financial meltdown that started the Great Recession happened at the height of the presidential elections in the United States. Because of the timing, Temin argues, voters had a chance

The Great Depression was a harsh global economic depression in the decade prior World War II. The Great Depression, while it happened far before the “Great Recession” of 2008, it can be greatly compared. During the Great Depression, all income, tax revenue, and prices dropped. International trade decreased by more than 50%, and U.S. unemployment climbed to just above 25%. Industrial cities like Detroit and Pittsburgh took the heaviest hits. While the recession of 2008 was not as drastic, it affected the world economy and resulted in a global recession more so than ever before. The percent of U.S. citizens unemployed had reached 10% as of 2009. Along with the challenges unemployment presented, consumer

The Great Depression was a heart aching event for many people who were involved in the time era. Then in 2007- 2009 the Great Recession strike and there were many citizens out of business and out of work. It was a hard time to deal with. The Great Recession was similar to the Great Depression in different ways but then they were opposite. The Great Recession is almost the closets thing we got to The Great Depression.

The Great Depression and Recession The Great depression happened in two different time period which impact the nation as a whole. The great depression happened began 1929-1939 and the great recession 2007-2009. Between them they have similarities and differences.

The aggressive response from the Federal Reserve and government proved to be more effective, which can be clearly seen through the sheer differences between the two financial crises. While the Great Depression lasted for about 43 long months, the Great Recession lasted for merely 20 months. Along with the duration, unemployment numbers also strongly contrasted the crises. The percentage of unemployment during the Great Depression was catastrophic, with nearly 25% of the American population unemployed. One in every four people in the United States was unemployed, leaving general moral low and showing the magnitude of the crisis. In contrast, unemployment reached nowhere close to that number, with the peak unemployment percentage being 9.5% during the Great Recession. Another distinct characteristic of the Great Depression is the incredibly large number of banks that failed. 9,000 banks failed during the decade of the

History helped to recognize the parallels between these eras and learn from them. The crisis of 2008 was not nearly as bad as the Great Depression, but like the Depression consumers lost trust in the market and were afraid to invest in the economy. The Housing Crash catastrophe, like the Great Depression contributed to the failure of banking institutions and led to high unemployment rates. Unlike the Great Depression, the crisis of 2008 was supported by more than a dozen economic stimulus packages provided by the federal government to jumpstart the economy. The federal government stepped in to bailout the banking institutions to avoid another Great Depression. It is important to look back on the history of these two national devastations and learn from their mistakes so we can be better prepared for future economic downfalls in the

Recession cycles are thought to be a normal part of living in a world of inexact balances between supply and demand. What turns a usually mild and short recession or "ordinary" business cycle into an actual depression is a subject of debate and concern. Scholars have not agreed on the exact causes and their relative importance. The search for causes is closely connected to the question of how to avoid a future depression, and so the political and policy viewpoints of scholars are mixed into the analysis of historic events eight decades ago. The even larger question is whether it was largely a failure on the part of free markets or largely a failure on the part of government efforts to regulate interest rates, curtail widespread bank failures, and control the money supply. Those who believe in a large role for the state in the economy believe it was mostly a failure of the free markets and those who believe in free markets believe it was mostly a failure of government that compounded the problem.

Graubard further continues to argue that Hoover’s domestic policies were limited and gave little satisfaction towards a society surrounded by mass unemployment, huge losses of income as well as savings. In addition to this, the increase in unemployment resulted in the government being faced with highly increased expenditure on welfares. In 1931, it raised income tax and cut unemployment pay by 10 per cent and introduced the means test. These measures reduced the amount of money people had to spend and therefore in this regard the government can be argued to have played a significant role in causing the Great Depression. As a result, Hoover is often criticised from both sides with regards for doing too little too late, however he is also criticised for doing too much.

The end of the great depression was brought about by changes in the tax regime. The changes in tax regime were aimed at reducing the taxes and, therefore, encouraging entrepreneurs

In America there have been great economic struggles and triumphs. The many great leaders of this country have foraged, failed, and overcome some very difficult times. Comparing the Great Depression of 1929 and the Great Recession of 2008 has revealed similarities that by learning from our mistakes in 1929 could have prevented the latest recession. I will discuss the causes of the Great Depression and the Great Recession, and what policies were implemented to reverse the economic downfalls.