what started the great depression and how did it end? That is probably something that you have wondered before. How could the world fall into such a bad economic disaster and what eventually drove us out of it? Here is a short summary of what happened.
The roaring 20s saw higher stock prices and was a major cause of the depression. In the 20s stocks went higher and higher to even more unrealistic levels. While stock prices continued to head up many people of the era believed that stocks were a safe investment and that they would never go down or crash.
From this false optimism banks started lending people 90% leverage on stock purchases. You could now buy a stock for pennies on the dollar and make or lose a lot of money depending on what the market did.
When the stock market was heading up this system worked out fine and both parties benefited. When the stock market started to turn around however, both investors and lenders lost their shirt. This started what would be known as the great depression
As more and more people panicked and took money out of the bank banks began to fail. One of the great depression facts was that the fear people brought on to the world actually made matters worse. This even became a saying, “the only thing we have to fear is fear itself.”
So how did it end? The depression ended when the government started pitching in and creating new jobs. These jobs were created by programs that built new infostructures and National Parks.
As more people found work they started to feel safer and even started to invest their money back into banks. This in turn created more jobs as people had to work at those banks.
WW2 was what finally lead to the end of the great depression. When WW2 happened the government had to start out producing other governments around the world. This would eventually lead to more jobs and bring unemployment way down. After WW2 the U.S. would become the largest economy in the world and it would remain that way until even the present day.
To learn more about the Great Depression read these Articles of The Great Depression. This article, Beginning and End Of The Great Depression is released under a creative commons attribution license.