Depression in USA

The collapse of the international trade also triggered the economic depression in the states. After the World War I, the European nations had a lot of debts in the American banks because of their demolished reserves (Aldarondo, 2007). Instead of settling debts, the US banks lent more money to the European nations; hence, piling up debts. This, in turn, weakened the US economy that also affected the international market. Without any foreign exchange income, the US had no money to pay their loans; hence, they defaulted.

The great depression was also caused by population dynamics in the United States. The decrease in the population rates led to the reduced demand for housing and mortgages. The decline in the population rate resulted from deaths in the World War I, few families, developing secularism and the 1918 flu (Dow, 2000). For this reason, the banks experienced reduced borrowing form the nation; hence reduced money in their reserves. This affected the economy negatively; hence, the great depression.

The USA economic depression had detrimental consequences in the nation at large. One of the negative effects is unemployment that resulted in poverty among the people. By 1933, many Americans were already jobless as they went round the country in search of food, shelter and work (Aldarondo, 2007). This happened because many institutions and business firms closed down due to depression. Due to lack of jobs, the people’s living standards deteriorated as they had to put with the hard economic time.

In addition, the depression affected the amount of profits in the businesses. This is because the owners could not access the bank loans as the banks had raised the interest rates. The investors also backed out as the conditions in the country were not favorable. This, in turn, affected the nation’s economic growth in that it greatly slowed down (Vile, 2007). Also, depression negatively affected the people’s chances for personal advancement as they could not get the banks’ support. Besides, it led to deflation since little money was in circulation.

Lastly, the USA depression also had negative impact on the country’s politics, culture and social life. The country became a creditor to the European nations since it had lent them money. Moreover, they were increased migrations out of the country as people searched for basic needs and job. It also affected the social set-up as marriages were delayed by the World War I (Dow, 2000).

In conclusion, the great depression in the USA was a severe downturn in the country’s history. Its causes include debt deflation, collapse of international markets, failure of the banks, population changes and the gold standard. Consequently, it had detrimental effects on the people, such, unemployment, deflation, poverty, low profits slowed economic growth and personal enhancement. Therefore, there is need to develop strategies that will help curb the recurrence of depression in USA.

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