Jun 182012

understand the economic depression When we talk about economic depression, we can never leave out The Great Depression that surfaced in 1929 and its effect could be felt for no less than 10 years. After that period, quite many depressions were faced but nothing ever matched the 1929 Wall Street crash. It was one time when US GDP went really low and unemployment percentage went very high.

So, exactly what results in an economic depression? If we take the example of the Great Depression, we will find that the culprit behind it was monetary policies that were contradicting. While Federal Reserve wished to pull stock market to a little low, it ended up with a crash and as it so happened, interest rates kept going up only to maintain gold standards. No one seemed eager to put fuel into the economy by supplying money and as a result, the fall was 30 percent.

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