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  • The Great Depression

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    MONTOYA VERA Gonzalo Andres
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    The Great Depression was a major economic crisis that began with the stock market crash in the United States in 1929 and spread worldwide. It was characterized by widespread unemployment, poverty, and deflation as prices and wages fell. The causes were complex but included overproduction, underconsumption, declining investment, and shrinking money supply. It led to bank failures, falling business and consumer spending, high unemployment, and drops in production, trade, and prices. Politically, liberal democracies were challenged by totalitarian regimes as people sought solutions to end the crisis, while governments increasingly intervened in economies. Socially, unemployment and poverty increased sharply, inequality grew, and living standards declined for many.

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    The Great Depression was a major economic crisis that began with the stock market crash in the United States in 1929 and spread worldwide. It was characterized by widespread unemployment, poverty, and deflation as prices and wages fell. The causes were complex but included overproduction, underconsumption, declining investment, and shrinking money supply. It led to bank failures, falling business and consumer spending, high unemployment, and drops in production, trade, and prices. Politically, liberal democracies were challenged by totalitarian regimes as people sought solutions to end the crisis, while governments increasingly intervened in economies. Socially, unemployment and poverty increased sharply, inequality grew, and living standards declined for many.

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    © All Rights Reserved
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    6 views2 pages

    The Great Depression

    Uploaded by

    MONTOYA VERA Gonzalo Andres
    The Great Depression was a major economic crisis that began with the stock market crash in the United States in 1929 and spread worldwide. It was characterized by widespread unemployment, poverty, and deflation as prices and wages fell. The causes were complex but included overproduction, underconsumption, declining investment, and shrinking money supply. It led to bank failures, falling business and consumer spending, high unemployment, and drops in production, trade, and prices. Politically, liberal democracies were challenged by totalitarian regimes as people sought solutions to end the crisis, while governments increasingly intervened in economies. Socially, unemployment and poverty increased sharply, inequality grew, and living standards declined for many.

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    © All Rights Reserved
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    The Great Depression

    The Great Depression was one of the most important crises in the history. This event started at
    1929 in the “Black Tuesday”, in United States, and later in Europe. The US stock market fell to
    values never seen before. The causes has been studied by various specialists and they had
    different perspective about this situation. The Keynesian perspective tells that the 1929 crisis
    was linked to a combination of underconsumption and overinvestment. This made an
    economic bubble grow in a fictitious way. At a certain moment, there was a loss of confidence
    that favored a significant reduction in consumption and investment spending. Another
    perspective. The explanation of the monetarists was that the role of the monetary authorities
    aggravated the situation. As a result of monetary policy, especially from the Federal Reserve,
    the money supply fell, which did not favor the economy. In parallel, some specialists have
    pointed out that there was a deflation that increased the real value of the debt. What,
    ultimately, meant that those who had obtained a loan or credit, owed, in real terms, more
    than what they received.

    Economic consequences
    Numerous banks went bankrupt as a result of the non-payment of many people who
    subscribed credits. In addition, consumption fell, which meant a fall in prices and monetary
    circulation. Many companies, from different sectors, were forced to close. Governments,
    hoping to solve the internal situation, began to adopt protectionist measures. All of this,
    together, led to a slowdown in economic activity. As a result, the national income and wealth
    of many countries was diminished.

    Social consequences
    Unemployment rose alarmingly and across the board. In addition, workers who managed to
    keep their jobs saw their wages drastically reduced. With this, inequality increased and
    affected social cohesion and the stability of the system. The level of well-being reached during
    the 1920s in many Western countries was cut short. However, not only the working class was
    affected. The middle classes became poorer, which caused great social polarization.

    Political fallout
    Liberal democracies began to be questioned from different political and ideological currents. In
    some countries, totalitarianism, of a fascist nature, with Germany and Italy as the main
    examples, seduced many people, who longed for a way out of the difficult situation in which
    they lived. On the other hand, other sectors began to see Soviet socialism as a possible
    alternative. Despite the many differences, the economic intervention of the State, although
    with many nuances, was a common element. State interventions seemed suitable to alleviate
    the effects of the crisis.
    López F. (2020). Crisis de 1929 – La Gran Depresión. Retrieved the 07/03/23 of:
    https://economipedia.com/definiciones/gran-depresion.html

    Retrieved the 07/03/23 of: https://www.elconfidencial.com/sociedad/2009-10-24/por-que-la-


    economia-esquivara-otra-gran-depresion_245873/

    Retrieved the 07/03/23 of: https://es.wikipedia.org/wiki/Gran_Depresi%C3%B3n

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