What Is the Great Depression

It was the period of 1930 when the world economic downfall occurred just before World War II. Though different parts of the world started getting affected with it in different periods, but 1929 is considered as the main year and time when most of the gigantic economies were struck through the Great Depression. It is basically the worst an economy can reach and is considered black age. It is considered as the worst period of economy as far as 20th century was concerned. 4th September, 1929 in United States was the date, when share market crashed and immediately spread like forest fire throughout the world. Famously called as Black Tuesday, the Great Depression certainly cannot be forgotten. Most of the countries were struck through never before happened event.

Outcomes of the Great Depression

As far as outcomes are concerned, there is no match in the negative influence that it created over numerous economies. From most advanced to third world countries, each one experienced the most terrible economic period of their history. Tax, the prime source of income for most of the governments along with revenues and rates were all in the lower side. Unemployment level crossed over 25% in United States, which was the worst condition ever. But it was not the worst, since in some of the nations it crossed 33% mark. All those countries, where economy heavily relied on larger industries were affected badly. The Great Depression did not stop here and construction process was almost stopped in whole world, making the sudden stop in any sorts of development. Since the prices were falling rapidly even farmers were up to extreme losses. Lowest cost of production and raising crops failed to make any revenues, since crops price went down by 60%.

Causes of the Great Depression

When it comes to major reasons of the Great Depression during 1929, biggest mistakes made during creation of structural policies. Some of the biggest and worst events that caused the Great Depression were few most renowned banks and stock market crashing suddenly. Some of the leading economies as that of Great Britain and United State are believed to be the reason why this economic phenomenon occurred. Though economist still do not agree over a single reason of the Great Depression, as several factors altogether turns a normal recession into dangerous situations like that.

Recovery

The actual recovery process started among few countries by mid 1935. The effects were almost over once World War II started. Though World War II is believed to be the most destructive war happened ever, but one of the most positive results of this war was overcoming the Great Depression by world economy. Millions spent over war throughout the world by governments is also considered as one of the prime reason of quick recovery.

What Were the Effects of the Great Depression

You can’t say that all the effects of great depression were negative. In fact, many positive effects are there also. However, most of the media houses and eminent people are discussing about the negatives of the great depression. However, we would try to make the positives out of the great depression.

More Efficient Systems

Most of the corporate systems are complacent about their performance before the havoc in 2008. Everything was going hunky dory. Companies were showing robust bottom line; so they were thinking that everything is going in the right direction. The great depressions alarmed that there are many flaws in the systems. After the financial disaster, the head honchos of each and every company sat together to find out the lope holes in the system; so that they could mend. In fact, most of the companies able to make their systems a lot more efficient to come back to the growth trajectory, once again. This made the companies future proof. Most of the prestigious financial organizations have predicted that the world economy will contract for few years after the great depression. But the results came out after the great depression was rather encouraging. Developed economies managed to stay in green. Developing economies like India and China show robust resilience. India managed an GDP of more than 5% in 2009 and China managed to grew its GDP by 8% in the same period of time.

Reduced Consumer Spending

According to most of the financial pundits the reduced consumer spending, aftermath the great depression would kick the world further into the black hole of financial misery. Most of the people believed in this fact at that time. But this expectation proved wrong. People are now spending more prudently. They are buying but they are buying cautiously. The power with they are buying now will never reduce in future. So, there will be no case of case of reduced consumer spending. It is true that some of the companies are still feeling the pinch of reduced sales but most of them are get acquainted with it. The companies, which are yet to digest the reduced growth will do that, sooner rather than later. After that, there would be no more worries. The euphoria can’t be continued for a too long period and people have to realize this fact. The condition prevailing now is really good for the world economy, on a long run.

People are Saving More

The main reason of the great depression is the very low saving rate. People of most of the developed countries were spending almost all of their income. They didn’t believe that they would ever face any kind of financial crunch. However, the great depression taught that anyone can face any kind of situation; so, all should be ready for the future. If developing countries like India and China managed to weather out the effect of the great depression, that was because of the high saving rate of their citizens. People now believe in saving some part of their income round the globe. In fact, they have started to save. This changed habit of people will help the world economy to face any kind of financial disaster in future. Americans, who are spending almost 100% of their income before the havoc, now after 3 years are saving more than 10% of their income. At the same time, the saving rate figure for the Indians, which is below 50% before the depression is now over the magic 50% mark.

It was the period of 1930 when the world economic downfall occurred just before World War II.  Though different parts of the world started getting affected with it in different periods, but 1929 is considered as the main year and time when most of the gigantic economies were struck through the Great Depression. It is basically the worst an economy can reach and is considered black age. It is considered as the worst period of economy as far as 20th century was concerned.  4th September, 1929 in United States was the date, when share market crashed and immediately spread like forest fire throughout the world.  Famously called as Black Tuesday, the Great Depression certainly cannot be forgotten. Most of the countries were struck through never before happened event.

Outcomes of the Great Depression

As far as outcomes are concerned, there is no match in the negative influence that it created over numerous economies.  From most advanced to third world countries, each one experienced the most terrible economic period of their history. Tax, the prime source of income for most of the governments along with revenues and rates were all in the lower side. Unemployment level crossed over 25% in United States, which was the worst condition ever. But it was not the worst, since in some of the nations it crossed 33% mark. All those countries, where economy heavily relied on larger industries were affected badly. The Great Depression did not stop here and construction process was almost stopped in whole world, making the sudden stop in any sorts of development.  Since the prices were falling rapidly even farmers were up to extreme losses. Lowest cost of production and raising crops failed to make any revenues, since crops price went down by 60%.

Causes of the Great Depression

When it comes to major reasons of the Great Depression during 1929, biggest mistakes made during creation of structural policies.  Some of the biggest and worst events that caused the Great Depression were few most renowned banks and stock market crashing suddenly. Some of the leading economies as that of Great Britain and United State are believed to be the reason why this economic phenomenon occurred. Though economist still do not agree over a single reason of the Great Depression, as several factors altogether turns a normal recession into dangerous situations like that.

Recovery

The actual recovery process started among few countries by mid 1935. The effects were almost over once World War II started. Though World War II is believed to be the most destructive war happened ever, but one of the most positive results of this war was overcoming the Great Depression by world economy.  Millions spent over war throughout the world by governments is also considered as one of the prime reason of quick recovery.

admin