Economics 202

Christopher James Liebetrau
G08L2114
Tutor:   Candice Hittler
Period 1

The Differences Between the Great Depression and the Current Global Financial Crisis
Economics 202 Essay 1
29 April 2009

Abstract

This essay sets out to distinguish the differences and similarities between the Great depression of the 1930’s and the current global financial crisis.   It is an important discussion as a depression should not have happened again after learning from the mistakes of the past.   The current crisis and great depression were compared on the basis of their causes and effects and it was subsequently concluded that both recessions were preceded by large credit booms and following uncertainty by investors.

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Introduction
This essay sets about critically analysing the differences between great depression of the 1930’s and the current global financial crisis.   In this essay the relevant theories of the causes of each recession will be looked at; including high and low interest rates, the stock market, unemployment, aggregate demand and the distribution of wealth. The effects that each recession had on the economy of that respective time and on the welfare of people globally will also be considered and discussed in the essay.   With the current recession originating in the United States of America the majority of this essay will be analysed from the American point of view for consistencies sake.  
The great depression
“A depression is a severe economic downturn that lasts several years” (Amadeo, 2009: 1).   There are a number of contributing factors that resulted in the Great Depression that occurred   in the 1930’s and despite the crash of the stock market triggering the great depression there were many other domestic and foreign problems that fuelled the greatest economic crisis that had ever been seen thus far.   (Kelly, 2009: 1). “The two major components of the financial collapse were the loss of confidence in financial institutions,...