During the 1920s, world economy was hit by an extremely negative event which is nowadays called the Great Depression. Its causes began to become visible after the First World War, and they continued to develop during the following 10 years, period during which the world economy was severely affected. In order to avoid future economic recessions, one must understand the causes and events of this time of unrest. The elements which led to this situation are numerous and intertwined, but they must be well understood in order to avoid another situation like that.
The Great Depression started in the United States in the 1920s. It is the crash of the stock market in new York, on the 29th of October 1929, also known as the Black Tuesday, which marked the beginning of the crisis. The recession began to be felt ever since the early 20s, after World War I finished. The cost of the war was three times larger than tax collections and when government cut spending, the whole economy was affected. So the main causes of this event were over-indebtedness and deflation, with which governments all over the world hardly dealt, despite all the measures taken. The interest rates were also cut, and numerous countries raised the tariffs on imported goods in order to protect the national industries.
As a result, the crisis went out of control and during the following years many banks, firms and factories were closed worldwide. This led to a high rate of unemployment and furthermore, many people lost their houses. Investors lost money and the GNP decreased year by year. There were also political consequences of the recession: in Germany, Adolf Hitler became more and more popular and Japan invaded China in order to open mines in Manchuria and develop its industry. Eventually, these new types of governments and actions led to the Second World War, which had in its turn negative effects on world's history.
New types of governments occurred and during this period, Adolf Hitler's power increased and many conflicts arouse. One of them is between China and Japan, which decided to invade the first in order to open mines in Manchuria and develop its industry. The situation was impossible and countries all over the world seemed to have lost control.
However, once with the term of Franklin Roosevelt, the effects of the Great Depression began to be reduced, but the recent economic crisis proved that we are still vulnerable and unable to predict future economic crisis. In order to avoid another economic recession, or time of upheaval, many investors prefer investing in gold rather than currencies, for gold is a safer and more stable currency, which is hardly affected by drops in the value of national currencies.
The Great Depression started in the United States in the 1920s. It is the crash of the stock market in new York, on the 29th of October 1929, also known as the Black Tuesday, which marked the beginning of the crisis. The recession began to be felt ever since the early 20s, after World War I finished. The cost of the war was three times larger than tax collections and when government cut spending, the whole economy was affected. So the main causes of this event were over-indebtedness and deflation, with which governments all over the world hardly dealt, despite all the measures taken. The interest rates were also cut, and numerous countries raised the tariffs on imported goods in order to protect the national industries.
As a result, the crisis went out of control and during the following years many banks, firms and factories were closed worldwide. This led to a high rate of unemployment and furthermore, many people lost their houses. Investors lost money and the GNP decreased year by year. There were also political consequences of the recession: in Germany, Adolf Hitler became more and more popular and Japan invaded China in order to open mines in Manchuria and develop its industry. Eventually, these new types of governments and actions led to the Second World War, which had in its turn negative effects on world's history.
New types of governments occurred and during this period, Adolf Hitler's power increased and many conflicts arouse. One of them is between China and Japan, which decided to invade the first in order to open mines in Manchuria and develop its industry. The situation was impossible and countries all over the world seemed to have lost control.
However, once with the term of Franklin Roosevelt, the effects of the Great Depression began to be reduced, but the recent economic crisis proved that we are still vulnerable and unable to predict future economic crisis. In order to avoid another economic recession, or time of upheaval, many investors prefer investing in gold rather than currencies, for gold is a safer and more stable currency, which is hardly affected by drops in the value of national currencies.
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