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Comparing the roaring twenties to today s america

How Do 1920s And Today Compare? What caused the Great Depression, and how do economic conditions then the 1920s and now compare? I know because a desperate friend called, seeking references for her daughter. My first reaction was: For decades, the causes of the Depression baffled economists.

My second reaction was: Lots of people may be asking similar questions.

  • Congress created the Fed in 1913 to prevent banking panics;
  • Congress created the Fed in 1913 to prevent banking panics;
  • The 1920s' optimism boomeranged;
  • Countries tried to protect their gold stocks.

So now that her paper is done, I'll attempt some answers. The parallels between the 1920s and today are intriguing and unnerving because the Depression was -- after the Civil War -- America's greatest social calamity. In 1933, joblessness hit a record 25 percent of the labor force.

  • The average person's fashion sense paris set the fashion trends for europe and north america the most memorable fashion trend of the roaring twenties was;
  • No more meddling seeking to avoid future wars, many americans opposed the country's membership in the league of nations, believing it would obligate america to.

Indeed, unemployment remained high until it was cured by World War II defense spending. The Great Depression was terrifying because it was so resilient. Hardly anyone thinks that it could happen again. Governments now respond quickly to economic weakness.

  1. Scott fitzgerald's the great gatsby follows jay gatsby while today it provides readers and movies and tabloid newspapers gained a foothold on america,. As for radio, "there was no such thing as radio broadcasting to the public until the autumn of 1920, but.
  2. Gone is the mechanism the gold standard that spread the Depression around the globe. Cuts in interest rates and taxes are crude weapons.
  3. Countries tried to protect their gold stocks. Hardly anyone thinks that it could happen again.
  4. They have spent or borrowed too much. Heavy consumer borrowing characterizes each era.

Last week, the Federal Reserve lowered its key interest rate the fed funds rate to 5. That makes a full percentage point cut in the past month. Most economists think the Fed will cut more. Similarly, the odds that Congress will pass a major tax cut increase daily.

Still, the slowdown or recession could prove unexpectedly nasty. Cuts in interest rates and taxes are crude weapons. People may trim spending if they fear losing their jobs.

Businesses curb investment if profits fall and idle capacity rises. Booms often end badly because people and firms -- foolish or too optimistic -- become overextended. They have spent or borrowed too much. Here, parallels with the 1920s become troubling: The celebration of technology is common to both periods.

In the 1920s, autos, the radio and refrigerators changed people's lives more than computers and the Internet have today. From 1919 to 1929, the number of cars more than tripled, to 23 million.

As for radio, "there was no such thing as radio broadcasting to the public until the autumn of 1920, but. People then, as now, were transfixed by the stock market.

Investors in the late 1920s had "boundless hope and optimism," said one contemporary observer. Stock ownership, though much lower, grew proportionately more.

As late as 1928, only 3 percent of Americans had shares; by 1930 -- even after the 1929 crash -- it was 10 percent. In our era, stocks have become truly democratized. From 1989 to 1998, the share of households with shares or mutual funds rose from 32 percent to 52 percent.

Heavy consumer borrowing characterizes each era. By 1929 about 15 percent of households bought a car on credit, up from 5 percent in 1919. The recent rise in borrowing is more widespread.

How Do 1920s And Today Compare?

There's a parallel faith in the Fed. The belief today that Fed Chairman Alan Greenspan can navigate the economy around almost any shoal has a predecessor. Congress created the Fed in 1913 to prevent banking panics.

Despite mild recessions in 1923-24 and 1926-27, the '20s' prosperity seemed to vindicate hopes for more stability. The 1920s' optimism boomeranged.

Comparing the roaring twenties to today s america

After the 1929 crash, consumer spending dropped almost 7 percent in 1930. Debt played a role, Olney said. Consumers with loans feared that if they defaulted, their car or refrigerator would be repossessed. So they cut other spending to maintain monthly payments. Fortunately, some major differences also separate then from now. For one, bigger government makes more room for tax cuts or spending increases.

Moreover, the world is no longer on the gold standard. Back then, paper currencies were backed by gold reserves.

  • The parallels between the 1920s and today are intriguing and unnerving because the Depression was -- after the Civil War -- America's greatest social calamity;
  • I know because a desperate friend called, seeking references for her daughter;
  • There's a parallel faith in the Fed.

This gold standard was unstable. The United States and France accumulated much of the world's gold 55 percent by 1929because exchange rates were unrealistic and trade flows were lopsided. Without ample gold, other countries couldn't easily expand their economies.

Once the Depression started, fears that countries would "go off gold" made matters worse. Countries tried to protect their gold stocks. They kept interest rates too high so that speculators wouldn't convert investments into gold. The Depression went global. Only when countries left gold did the Depression abate.

  1. In the 1920s, autos, the radio and refrigerators changed people's lives more than computers and the Internet have today. So they cut other spending to maintain monthly payments.
  2. Cuts in interest rates and taxes are crude weapons.
  3. As for radio, "there was no such thing as radio broadcasting to the public until the autumn of 1920, but. So now that her paper is done, I'll attempt some answers.

Highly simplified, this is the scholarly explanation of the Depression. Gone is the mechanism the gold standard that spread the Depression around the globe.

If there's not a modern counterpart, then the U. Unfortunately, that's still a big "if.