Can another great depression happen again in the us? explain why or why not

Can Another Great Depression Happen Again in the U .S

All things were as good as it gets in the 1920s . During these times it was tagged as the Roaring Twenties ' because it was the times when the typical American family drove its first car , bought its first radio , and went to the movies for the first time . With factories running at smoothly , virtually anyone who wanted to work readily found a job Suddenly , the Great Depression (1929-1933 ) struck and the lives of the American people had a reversal of fortune . Over one-fourth

of the labor force was unable to find work people slept in the streets , scavenged for food , and sold apples on Wall Street

The Great Depression started on a fateful day on October 24 , 1929 , this date came to be known as Black Thursday because the stock market crashed dramatically . Everything happened so fast that by the end of the year over 40 billion of wealth had vanished in the Great Crash . Rich men became paupers overnight ordinary families lost their savings , their homes , and even their lives (Hall Ferguson 1998 ,

. 64

The question that looms now is that : could this Great Depression happen again ? With the numerous banking reforms and improved understanding of macroeconomic monetary theory , U .S . economic situation is already equipped to thwart any recession that will transform into situations that will bring about the Great Depression . Thus , the standard answer is no , that what converted recession into the Great Depression was a disastrous series of policy errors . Neither the Federal Reserve Board nor the Congress would be so silly to repeat those mistakes . The Fed would not allow the banking system to collapse . It would not permit the money supply to decline by a third . Congress would not raise taxes in a slump . Hence , there is no reason to fear another Great Depression (Eichengreen , 1992

However , Eichengreen (1992 ) predicts that as our times do not depend merely on domestic economic crisis alone , U .S . policymakers are newly constrained by international economic forces brought about by globalization . Alarmingly , the constraint is the same as that which lay at the root of the Great Depression . Then , governments ' failure to coordinate their policies internationally led to the greatest economic disaster of modern times . Thus , Knoop (2004 ,

. 157 ) answered the question : can the Great Depression happen again ' using a broader set of economies throughout the world , the answer is a resounding yes . In fact , it has already happened to cause the East Asian crisis and the Argentinean economic crisis . Unfortunately , history does repeat itself which is why there should be continued research and investigation into the nature and causes of economic crises during these times where globalization and free trade are the new buzzwords ' in the world of business and finance

References

Eichengreen , B (1992 "IT " Can Happen Again . Challenge , 35 (6 , 14

Hall , T .E Ferguson , J .D (1998 . The Great Depression : An International Disaster of Perverse Economic Policies . Ann Arbor : The University of...