It is not that the financial world has stumbled now; it has
been grasped by many such predicaments even before.The financial breakdown in
countries can be found in the history since 16th century, when the
concept of banks was not popular & goldsmiths used to issue promissory
notes. However, some people argue the occurrence of these crises to be more fatal
after the establishment of banks were regarded dominant factor in rising
economy. Even Prof Rodrigue Tremblay writes: "Banking Establishments Are More
Dangerous Than Standing Armies" Thomas Jefferson (1743-1826), 3rd US
President.
Examples of some crises are the Dutch Tulip manias (1634-1637), the British South Sea Bubble (1717-1719), the French Mississippi Company (1717-1720), the post-Napoleonic depression (1815–1830) and the Great Depression (1929–1939). Among all of these crises through years, it is 1930’s Great Depression in U.S. which almost handicapped the whole world’s economy. The great depression commenced its journey with the stock market crash in 1929 and kept going with bank runs, panics, plummet in production, consumption, economical breakdown and recessions, back to back. It felt like the U.S economy has gone into a mood of having a roller-coaster ride, leaving the government, monetarists & economist with no gadget to stop the ride. Finally with many hit-&-miss plans, they managed to put an end to this chapter and emerged as a powerful economy. This horrendous episode in US prompted the world-wide government to introduce various Reforms, Acts and Revolutionization in financial system to abate any future crises. They were confident enough of their precautionary methods and thought no recession can haunt them again. The confidence gradually matured into over-confidence, paving way for another disaster. The appearance of 2007 Great Recession was the result of over-confidence and negligence of past lessons. Thus it can be stated “Those who do not learn from history are doomed to repeat it.” With speculation going around that we are headed for a tougher time ahead, and the great recession may turn into second great depression, only one question pops out. Is the savior of 1930 depression reusable to get out of this difficult time?
Examples of some crises are the Dutch Tulip manias (1634-1637), the British South Sea Bubble (1717-1719), the French Mississippi Company (1717-1720), the post-Napoleonic depression (1815–1830) and the Great Depression (1929–1939). Among all of these crises through years, it is 1930’s Great Depression in U.S. which almost handicapped the whole world’s economy. The great depression commenced its journey with the stock market crash in 1929 and kept going with bank runs, panics, plummet in production, consumption, economical breakdown and recessions, back to back. It felt like the U.S economy has gone into a mood of having a roller-coaster ride, leaving the government, monetarists & economist with no gadget to stop the ride. Finally with many hit-&-miss plans, they managed to put an end to this chapter and emerged as a powerful economy. This horrendous episode in US prompted the world-wide government to introduce various Reforms, Acts and Revolutionization in financial system to abate any future crises. They were confident enough of their precautionary methods and thought no recession can haunt them again. The confidence gradually matured into over-confidence, paving way for another disaster. The appearance of 2007 Great Recession was the result of over-confidence and negligence of past lessons. Thus it can be stated “Those who do not learn from history are doomed to repeat it.” With speculation going around that we are headed for a tougher time ahead, and the great recession may turn into second great depression, only one question pops out. Is the savior of 1930 depression reusable to get out of this difficult time?
To find an answer to this, we need to go back
in history and search for the causes and battle weapons of the 1930s great
depression.
(Some of the
information has been obtained from wikipedia & other relevant articles)
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