The Great depression

This essay has a total of 342 words and 2 pages.

The Great depression

The Great Depression is probably one of the most misunderstood events in American history.
It is routinely cited as proof that unregulated capitalism is bad, and that only a massive
welfare state, huge amounts of economic regulation, and other interventions, can save
capitalism from itself. Among the many myths surrounding the Great Depression are that
Herbert Hoover was a laissez faire president and that FDR brought us out of the
depression.

What caused the Great Depression? To get a handle on that, it's necessary to look at
previous depressions and compare. The Great Depression was by no means the first
depression this country ever had, but it was clearly the worst. What made it different
than the rest? At the time of the Great Depression, government intervention in the economy
was higher than it had ever been and a special government agency had been set up
specifically to prevent depressions and their associated problems, such as bank panics.
This agency was the Federal Reserve Board and it was to have been the loaner of last
resorts for banks in order to prevent collapses as had happened during earlier
depressions. But as we'll see, there is good reason to believe that the Fed's actions
explain a lot of the problems that lead up to the Stock market crash and the subsequent
depression.


Although there are many macroeconomics schools of thought, I'll be concentrating on two
Continues for 1 more page >>