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 great depression started after a time called the roaring 20s. During that time nobody thought that stocks could go down. Everyone was optimistic about the future and believed that stocks would continue to go up forever, even as the prices increased to unrealistic levels compared to what they were backing.
From the false optimism here banks started to lend people money to buy stocks. You could now buy a stock for only 10% down. This meant you could either make or lose a lot of money in the market from just the smallest movements.
This worked out fine when the stock market was heading up. But when the market started to turn around and correct itself the overleveraged investors lost their shirts. Thus began the great depression.
When people lost money they started to panic and needed money now, so they pulled all of their money out of banks. This put added stress on banks and caused others to panic about the likelihood that banks would still be around in the future. So, they pulled their money out causing banks to fail, which in turn lead to more fear. One of the facts about the great depression is that fear had a major impact on the country.
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 jobs were added to the economy people began to feel safer again and started investing money into banks again. This brought on even more jobs as someone 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.