Stress of the Great Depression, Essay Example

The events that were responsible from allieviating stress of the Great Depression in the United States was FDR’s implementation of the New Deal in addition to the start of World War II. The president recognized that the economy and business owners needed help to reestablish themselves, noting that this help from the federal government would stimulate the economy. As a consequence, he helped failing banks continue to run and created programs that would put people back to work. Furthermore, laws were put in place to prevent a future depression. World War II aided the efforts established by this legislation because it increased trade with Europe, enhancing the sales of many local businessmen.

According to the information above, the most significant mistake that the people and the government made during the Great Depression was to allow the banks to crash. It appears that if policies had been previously put in place to prevent this from happening, the inflation would not have been too significantly affected. Furthermore, businesses would have been able to quickly recover because they would have had the funds needed to support themselves. This resulted in unemployment rates that caused the economy to further destabilize. As a result of this situation, the country now acts with foresight in order to prevent disaster. This is why the impacts of the recession in 2008 and 2009 were not as dramatic as the impacts of the Great Depression in the 1930s.

Investing more money into the economy is having a rapid money growth impact. Ultimately, this is positively influenced the GDP because people are spending the money that are in their pockets due to a fear that prices will soon rise. As a result, they are hoarding items and waiting for prices to increase in order to protect their own interests. This is hurting the economy further.

It is expected that the long-term impact of the money supply growth is that it will cause inflation to continue to increase, which will cause the prices of products and services to increase as well. Because salaries will not adjust to these standards, goods and services will become less affordable.

The exit strategy attempts to resolve this problem by using less treasury money to stimulate the economy. A second technique would be for the Federal Reserve to begin to sell assets, which would lower the GDP but help stabilize the economy.

The downside of this plan is that decreasing the money that has been put into the system for so long may cause a small recession. While the economy may not actually crash, it could appear that it has superficially. Fortunately, this is a controlled method of lowering the GDP back to normal, which is necessary to protect the people against these high rates of inflation. While the economy will be impacted in other ways during this process, it is expected that it will eventually stabilize in a manner that will promote the happiness of the American people for years to come.