Significance of the Great Depression

In the history economic of capitalism Various crises and turning points have been recorded that have contributed to weakening or strengthening the system in the territories in which it operated. One of the most influential and resonant cases of this circle has been the Great Depression, a complex set of historical phenomena that had its center in the United States and that quickly reached all West.

Origin and explanation of the name

The Great Depression is the phenomenon that began to develop in 1929 on the New York Stock Exchange in the United States. It was the direct consequence of years and years of investment fictitious financial institution that had been created as a reality but that revolved around money that did not exist and that then ended up exploding. Although it occurred in the aforementioned year, it is usually associated with the 1930s because it profoundly affected all subsequent activities.

The name by which this phenomenon has been known has to do with the fact that it was one of the greatest economic depressions in the West. The fact that it emerged in the United States, the center of capitalism, is not a minor fact.

Why is it necessary to know what happened in the Great Depression?

As a historical phenomenon, the Great Depression becomes a central event in the development of political and social events of the 20th century. Due to the huge recession that was generated from the explosion of the financial bomb, the society The US entered a severe crisis that led to an increase in unemployment, a very high number of mortgages that had to be foreclosed thus harming families who were left on the street, inflation and other indices that showed that the quality of life had decreased enormously.

In this way, knowing why the Great Depression occurred and how it was carried out is important to know how to recognize the indices and avoid future recessions of such size.

The Welfare State played a vital role for economic recovery

In the midst of such a gigantic economic and social crisis, it was necessary for the States to activate policies and measures tending to satisfy the needs of the most humble. This is how the Welfare state, a political model that represented for the first time in the capitalist world a present state that was directly concerned with ensuring a minimum standard of living for those most in need. He accomplished this by creating jobs, controlling the economy, and having a colossal presence in monetary decisions.

Photos: Fotolia. Knut Wiarda – jorgophotograph