How are we still being affected by the Great Depression brought on by the stock market crash of 1929?
Answer:
YES! And I'm surprised the other people answering this question didn't make the connection.
Short answer:
The FED pumped too many unbacked dollars into the economy to pay for the WW1 war effort. At this time the dollar was supposed to be convertable into gold at a $20 = 1 ounce of Gold ratio.
By 1929 investors suddenly realized there were more dollars in circulation than there was Gold backing them, they sold stocks en-masse causing the crash.
The FED realizing that too many dollars had been put into circulation tightened the money supply, this caused a run on the banks which put some small banks out of business.
Roosevelt, elected in 1932, immediately upon taking office in 1933, confiscated 'ALL' the American peoples Gold to make the dollar still convertable into Gold to international banking firms.
Now, once the dollar was no longer backed by Gold,,,As Mandated in the U. S. Constitution, it began to depreciate in value, and has been depreciating at a much more rapid pace since 1971 when Nixon completely severed the relationship between the dollar & Gold.
The U. S. is now hope-lessly in debt by 9 trillion dollars, and each new dollar that is put into circulation lowers the value a little more of the already existing dollars....Hence run-away high prices, called inflation.
The U. S. had 'NO' inflation for about 130 years onder the Gold standard!
Ron Paul is an EXPERT economist & would really like to go back to sound money again in America, if he can get elected president.
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The only effect that I can think of is that some folks are still skittish about saving -- putting money in banks, stocks, and bonds. There is probably some residual fear of losing it all, which still exists for those 70 years old and above.
The prices went up and they didn't stop going up. They are still going.
The greatest effect was from the from the social institutions put into place during the Depression. The Securities and Exchange Commission and the Federal Deposit Insurance Corporation both work to safeguard investors. On the other hand, Social Security somewhat diminishes the impulse to save, at least for those old enough to expect it to still be solvent when they retire. In general, the scope of the government continues to remain larger than prior to the Depression. (IMO This is not strictly a bad thing, despite the inefficiencies of government. We are simply at a different place on the trade-off curve between efficiency and equality).
In terms of theory, the Depression caused a re-analysis of macro-economics, bringing monetary policy and the Federal Reserve Board into light as very important in stabilizing financial markets.
I'm just 16, so I'm gonna just take a whack at it.
I believe that the Great Depression has definately affected our economy of today, but in a good way. I'm not speaking for everyone when I say this, but, I think we have learned that if you hold on to an investment long enough, you will make money. People just freaked out during the depression... If they just would have held on to their money and said, it will get better soon, there wouldn't have barely been a depression. But, I can't blame them, because nothing like that had ever happened before in America. We know understand that patience is the key, weather you buy low- sell high, or buy high- sell higher. That can only happen with patience and gut feeling.
I agree with livecultures2, except I would say social security and various anti-poverty programs are generally good.
Another institution from the Great Depression was by and large free trade, which whose absence was thought to help cause the Great Depression.
In 1936, the federal government published an informational pamphlet on Social Security. It stated:
"…and finally, beginning in 1949, 12 years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay."
http://www.ssa.gov/history/ssn/ssb36.htm...
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How about a multi-trillion dollar government lie called Social Security?
That' how we are still be affected.
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