What prompted to the start of the great depression

1 answer:

4 0

During the great depression the prices of goods went DOWN, and that made consumers hoard hard cash because they felt the longer they waited the more prices would FALL and this restriction of supply was paradoxically making it more attractive to hoard cash, king of like a monopoly on the supply of money.
On the other hand speculators went bankrupt as deflation made the price of the lender's assets LESS than the value of their loan, which decreased their equity, which meant even if they sold all of their assets they could not pay off their loan, which made the BANKS lose a part of their money, and as the demand for hard cash rose that led more banks to go bankrupt, which in turn led more savers to get their assets in hard cash, paradoxically increasing the rate of bank failure.
My theory is that to stop this paradox from continuing is to cause inflation by literally "making" money, adding it to the Government balance, and that this should have been done immediately. Normal Governments do this all the time during recession, usually in the form of monetary policy by lowering rates and taxes to increase the supply of money in the economy (during boom years they increase taxes and interest rates to restrict the supply of cash and limit inflation). But during the great depression doing this was not enough, lowering rates and taxes was not enough, so in my opinion they should have literally printed off more money, which could then be used for infrastructure programs, which increases supply of money so it was not attractive to hoard money and thus increase supply more, while also increasing the value of properties and so increasing equity and stopping bankruptcies, and in the end this might lead to short term inflation, this could be stopped by higher taxes and rates, and then the Government can permanently remove the money from circulation. The only downside of this system is that it won’t punish the financially “special” people as to dissuade them from being so irresponsible, so the Government may have to adopt an asset tax(?) or something like that so the Government can reimburse, if only a little, the sensible people, as well as implement policy to stop banks from funding such speculation And Please don't be childish and report me I hope this helps

You might be interested in

Considering the “Article of the Declaration of the Rights of Man”, in what ways was the Declaration a dramatic change from the r

Alla [95]

Answer:

The Declaration of the Rights of Man and of the Citizen (French: Déclaration des droits de l'homme et du citoyen de 1789), set by France's National Constituent Assembly in 1789, is a human civil rights document from the French Revolution.[1]

The Declaration was drafted by the Abbé Sieyès and the Marquis de Lafayette, in consultation with Thomas Jefferson.[2] Influenced by the doctrine of "natural right", the rights of man are held to be universal: valid at all times and in every place, pertaining to human nature itself. It became the basis for a nation of free individuals protected equally by the law. It is included in the beginning of the constitutions of both the Fourth French Republic (1946) and Fifth Republic (1958) and is still current. Inspired by the Enlightenment philosophers, the Declaration was a core statement of the values of the French Revolution and had a major impact on the development of freedom and democracy in Europe and worldwide.[3]

Explanation:

3 0

3 years ago

7. Which of the following can trigger a tsunami? a. Typhoon C Undersea landslide b. Undersea Earthquake d. None of these

USPshnik [31]

Answer:

It's b) Undersea Earthquake.

5 0

3 years ago

Who extends credit to the government?

djyliett [7]

The central bank.
it is important, i wouldn’t necessarily say good.
no.
central banks, retail banks

8 0

3 years ago

What more could done to change the situation?

12345 [234]

Answer:

Not assuming who did it. Lokking more into it :-/

Explanation:

6 0

2 years ago

Describe how the performance management process is linked to employee selection, training, and development.

Serjik [45]

Answer:

Performance management process is a communication process whereby managers and employees communicate and work together to plan, monitor and review an employee's performance on the job, and to identify if an employee is working according to their job objectives and overall contribution to the organization. This involves planning, coaching, training and improving.

Performance Management is linked to employee selection because, it tells the job objectives and selecting the best candidate who's records fits in best to the job objectives.

Performance Management helps to identify the aspect an employee need to improve on, by going through the employee performance and noting the areas the employee has not been performing very well. For instance an employee may be perfect in lab samples, but very poor in writing a lab reports, the management will take such employee for a training to build his/her performance.

Performance Management helps to develop an employee because it helps to train an employee on a recent technology, and build the employee to diverse knowledge. It also develop the employee by coaching them on the job, so their learn more on the job.

6 0

3 years ago