Extract
[...] The 1929 crisis and the 'Great Depression' - Crisis: It's when the economy suddenly collapses, like someone pulled the rug from under our feet. From one day to the next, everything that was working well starts to crumble.", " - Depression: There, it's not about a small temporary drop. It's a big hole that lasts, with business bankruptcies, bank closures, unemployment exploding, and poverty everywhere. In short, a general disaster that casts a shadow over everyone for a good while. [...]
[...] The mechanisms of crisis diffusion The world becomes an immense economic spider web: the United States repatriates its capital, Europe lacks liquidity, and American imports collapse, which means that Latin America and colonies in Asia and Africa lose their main customers. Result? It's a global crisis, everyone is affected. 3. Des réponses without consultation So, how do we react? Not very well, to be honest: - In 1931, the United Kingdom abandoned the convertibility of the pound to gold, and in 1933, the United States did the same for the dollar. [...]
[...] The shareholders are ruined 2. Banks go bankrupt and stop lending 3. Companies lack money, so they close and lay off their employees 4. People no longer have work, so no income 5. Consumption drops, product stockpiles accumulate 6. Prices drop, companies collapse even more - And there, it's total chaos. 3. The Dust Bowl As if that were not enough, there was a climatic catastrophe: The Dust Bowl; In the Great Plains, a terrible drought transforms fields into dust Farmers go bankrupt, entire families flee their misery to the big cities. [...]
[...] We realize that letting everyone do what they want can lead to catastrophe. To such an extent that liberalism is viewed poorly until the 1970s. Then, Roosevelt arrives in 1932 with his New Deal, a recovery plan that aims to create jobs (large projects, social security?). And finally, it is ultimately World War II that will get the United States and the world out of the Great Depression. But attention, after 1945, there is a new overproduction, so the famous Marshall Plan is launched to put order back in Europe. [...]
[...] The collapse of Wall Street In October 1929, the 'big investors' (the wealthy investors) began to sell their stocks. The small investors saw this, panicked, and sold everything in turn. Total panic, Thursday 24 and Tuesday 29 October 1929: it's the 'stock market crash'. In a few days, $30 billion disappeared. To give you an idea, it was a third of the GDP of the time. The banks had bet big on the stock market, so when everything fell, some lost all their money and went bankrupt. [...]
