Great Depression

The Great Depression was a massive global economic recession (or "depression") that ran from 1929 to approximately 1939. It led to numerous bank failures, high unemployment, as well as dramatic drops in Gross Domestic Product (GDP), industrial production, stock market share prices and virtually every other measure of economic growth. It is generally considered to have bottomed out in 1933, but it was not until well after the end of World War II before such indicators as industrial production, share prices and global GDP surpassed their 1929 levels.

Causes of the Great Depression

Main Article: Causes of the Great Depression

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Economists, historians and political scientists have posed several theories for the cause, or causes, of the Great Depression. It remains one of the most studied events of economic history. Today, it is generally accepted that the Great Depression was caused by the government's mis-management of Monetary Policy.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Theories from mainstream capitalist economics focus on the relationship between production, consumption and credit, as embodied in macro-economics and on personal incentives and purchasing decisions as embodied in micro-economics. In these theories attempts are made to order the sequence of events which imploded the industrialized world's monetary system and its trade relationships. Theories from Marxist economics focus on the relationships of the control of production and the concentration of wealth. For Marxists, the Great Depression is the kind of crisis which capitalism is prone to and its occurrence is not surprising.

Related Topics:
Macro-economics - Micro-economics - Marxist

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

Other heterodox theories of the Great Depression have been advanced and from time to time gain favor. These include the theory of long-cycle activity and that the Great Depression was a period at the intersection of several concurrent long cycle troughs.

~ ~ ~ ~ ~ ~ ~ ~ ~ ~

More recently, it has been the prevailing belief among economists that the stock market crash of 1929 was not the primary cause of the Great Depression, pointing to telltale signs of an imminent economic disaster in various statistics leading up to the Depression as well as the downturn in Europe which was already in progress. Today the most widely accepted theory is the one advanced by Peter Temin: that the Great Depression was caused by catastrophically poor monetary policy pursued by the United States Federal Reserve during the years leading to the Great Depression. The policy of contracting the money supply was an attempt to restrain inflation, which exacerbated the actual problem in the economy, which was deflation.

Related Topics:
Europe - Peter Temin - Monetary policy

~ ~ ~ ~ ~ ~ ~ ~ ~ ~