The Great Depression

Introduction

The Great Depression remains one of the most studied events in the history of the world economy. Primary theories for great depression includes breaking the stock exchange in 1929, the decision to Winston Churchill in making the UK as the pass again to use the gold standard in 1925, which caused massive deflation throughout the British Empire (Bernanke, 1983, pp. 256-267). The collapse of international trade made the approval of the Act Smoot- Hawley Tariff, which rose taxes about 20 thousand products in the country. According to theories, economy capitalist focused on the relationship between production, consumption and credit, by studying macroeconomics, and incentives and personal decisions, which are studied by microeconomics. These theories are made to order the sequence of events that eventually caused the implosion of the monetary system in the industrialized world and its trade relations. Other theories unorthodox about the Great Depression were created, and gradually these theories began to gain credibility (Bernanke, Ben, and Harold James, 1991, pp. 37-68). These theories include the theory of activity throughout the cycle and that the Great Depression was a period at the intersection of several long crest and competitors' cycles. More recently, one of the most accepted theories among economists is that the Great Depression was not caused primarily by the breakdown of the exchanges in 1929 alleging that various signs in the U.S. economy in the months and even years, that preceded the Great Depression, as indicated that the Depression was already under way in the United States and Europe. Currently, the theory in vogue among economists is Peter Temin (Bernanke, 1983, pp. 256-267). According to Temin, the Great Depression was caused by monetary policy catastrophically poorly planned by the Cash Reserve of the United States, in the years before the Great Depression.

Outcomes of the Great Depression

Overproduction

Another aspect that has been touted as one of the possible causes of the Great Depression in the 1930s is the overproduction caused by large industrial productivity gains obtained with the technological benefits of Taylorism.

Federal Reserve Bank continued to pour oil on the fire that greatly increase the flow of funds through its provision of favorable conditions for loans listed. The effect of the measures and their predecessors was short-term. Towards the middle of 1928 the U.S. economy shrank gradually towards more mild recession, because it was necessary in view of the many injection of funds (Bernanke, 1983, pp. 256-267). Investors turned banknotes agreement that were tempting channel for short - term loans, low interest rates, with the Federal Reserve's commitment.

Widespread Poverty

The Great Depression caused widespread poverty in the United States and in several countries worldwide. The drawbacks of this recession were family unemployment, living in miserable conditions in Elm Grove, California, and all over United States. With the crash of the New York in 1929, banks and investors lost large sums of money (Bernanke, Ben, and Harold James, 1991, pp. 37-68). The situation of the banks was compounded by the fact that many of these banks had lent ...