Katyia26 September 2012 12:43PM
Response to DaveG333, 26 September 2012 2:34AM
In the less industrial Midlands and Southern England, the effects were short-lived and the later 1930s were a prosperous time. Growth in modern manufacture of electrical goods and a boom in the motor car industry was helped by a growing southern population and an expanding middle class. Agriculture also saw a boom during this timeWikipedia
Every major currency left the gold standard during the Great Depression. Great Britain was the first to do so. Facing speculative attacks on the pound and depleting gold reserves, in September 1931 the Bank of England ceased exchanging pound notes for gold and the pound was floated on foreign exchange markets
In most countries, such as Britain, France, Canada, the Netherlands, and the Nordic countries, the depression was less severe and shorter, often ending by 1931. Those countries did not have the banking and financial crises that the United States did, and most left the gold standard earlier than the United States did. In the United States, in contrast, the contraction continued for four years from the summer of 1929 through the first quarter of 1933. During that time real GNP fell 30.5 percent, wholesale prices fell 30.8 percent, and consumer prices fell 24.4 percenthttp://www.econlib.org/library/Enc/GreatDepression.html
In June 1937, the Roosevelt administration cut spending and increased taxation in an attempt to balance the federal budget
and then there was the dust bowl and failed employment programmes - - - its looks almost as thought the economy didn't recovery until a bit of austerity was applied actually - - - not a very nice fact to consider - - -
it seems that President Hoovers attempts to stabilised wages backfired and caused unemployment, increased tariffs actually well meant strategies - - - strategies designed to look altruistic but not actually in line with the real needs of the economy at the time - - - it looks as though we used less stimulus - - - and at the time took a more right wing approach funnily enough - - -
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Katyia26 September 2012 1:21PMvery different to what you might do under a boom
During the boom banks extended more credit to the non-tradable sector of the economy, and there is a surge of capital flows into the country. Capital inflows tend to be 4% above its long run trendWiki
Still another explanation of the boom?bust episodes goes back to John Maynard Keynes. Keynes argued that changes in investor?s expectations about respect to the state of the economy. These animal spirits that drive sudden changes in consumers? and investor?s optimism can have implications for the behavior of aggregate economic variables like output and consumption. In good times, optimism is contagious, investors are willing to take more risk and households are willing to consume more. This approach to explain boom and bust cycles require some form of irrational behavior in which agents based their decision on the basis of ?sentiments? and can be fooled consistently
Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits ? a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities
A credit boom?bust cycle is an episode characterized by a sustained increase in several economics indicators followed by a sharp and rapid contraction
A boom?bust cycle is also associated with the existence of bubbles in stock market that lead to a period of accelerated investment and over borrowing. After the buildup there is a stock market crash which is often attributed to speculative behavior and Herd behavior on the part of investors
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