Part of the (not followed) Lessons that I should be posting here is this economic topic about the Great Depression. A phenomenon that started more than 80 years ago, and is still showing it’s presence in the world today, specially in the United States of America.
Before heading to the Great Depression that happened years ago and the present coexisting Great Depression right now in the U.S, let’s define what this Great Depression is all about.
The Great Depression, which started to exist since 1930 said to be the outcome after the “Black Tuesday” event that occurred on the 29th of October 1929. The Great Depression origins from the United States of America, which then turned to be a globally economic downturn for almost all countries at that time.
In General a Economic Depression is a severe economic downfall or downturn of once country, lasting for a couple of years. The Americans can somehow be called lucky, for having not experienced Economic Depression since the globally known one, in 1930.
Some of the factors that lead to Economic Depression are:
- Over Production matched with under consumption
- Structural weakness in banking
- Postwar deflationary pressures
- and a lot more factors.
Of these factors, which appears to be the most striking one is the first listed. According to this view, wages decreased at a rate higher than productivity increases. Most of the benefit of the increased productivity went into profits, which went into the stock market bubble rather than into consumer purchases. Say’s law no longer operated in this model (an idea picked up by Keynes).
Some of the key countries that have been affected by the Great Depression include:
- United States of America
- Soviet Union
- United Kingdom
But it’s not only limited to these, as it has taken effect in the whole world.