The Great Depression, often referred to as the Crash of 1929 was the period lasting from October 29th to November 13th. In this time, the stock market dropped violently. It lost much of its value and contributed to the start of the Great Depression.
But what really caused The Great Depression? The Great Depression was caused by many factors. The banking systems in the United States and Europe were very weak. There was also a very high rise of protectionism (tariffs on EUR goods). Another factor was the drop in farm prices, and the final factor was the decline in purchasing power.
The factors of our Great Recession are in ways very similar, but also different to those of The Great Depression. Many recessions are caused by the actions taken to control the money supply in the economy. Many people believe that the Federal Reserve is a reason that we go into a recession. There are really no set factors for a recession.
The question everyone is curious about is will this turn into another Great Depression. Many economists feel like it will not. They feel another depression could be avoided because it will take more than just a dramatic decline in consumer spending and household wealth to cause a depression. Though this is a very broad definition of why this recession will not turn into a depression, the ideas are the same.
Currently there are major statistics that put The Great Depression against The Great Recession in comparison. The Unemployment rate was in 1923 was 25%. The unemployment rate right now is about 8.5%. There were about 50% bank failures in 1923. Today there is about 0.6% of bank failures. These are important comparisons.
There are many differences between our Great Recession and the 1923 Great Depression. The downfall of the stock market is always on thought. The government has made new policies to try and prevent another depression. Though this is the worst recession we have ever had, many believe we will not face another depression such as the one in 1923.
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