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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: AC Flyer who wrote (47092)	3/7/2004 1:46:14 AM
From: Ilaine	Read Replies (3) \| Respond to of 74559

"The fundamental cause of the Great Depression in the United States was a decline in spending.......which led to a decline in production..." Well...duh! No, that's actually more subtle and controversial than you seem to be picking up on. There was a weird, flukey, inexplicably sharp decline in consumption which occurred in the middle of 1930 that nobody can quite figure out. It appears to be unrelated to anything else going on at that time, including the money supply. By that I mean that economists can't model a cause and effect mathematically. The population explanation also suffers from a lack of causation - why didn't it cause a depression in 1928, or the first half of 1929? Why did the bottom drop out so swiftly, so sharply, so deeply? The country went from almost full employment to 25% unemployment in a very short time. As for the utility of Romer's article in the Encyclopedia Brittanica - it's written for laymen, intelligent high school students, really. Each sentence could be expanded to a book, a number of books. But she does make it clear that the Great Crash did not cause the Great Depression, at least, not all by itself. She also leaves out some of my own pet theories, like the Great Drought, although she does talk about bank failures, which were in large part caused by the drought. One thing you can't tell from your chart is that the main reason net immigration was so low is that the Depression led to people going back home to the Old Country, where they could at least live with their families.