The Great Depression is an economic crisis that started in 1929 and soon engulfed virtually every manufacturing nation and all the food as well as raw materials producers. Back in the years 1931, Keynes, who was an English Economist, discovered that the entire world was then in the most exceptional economic catastrophe. In the modern world, there is an excellent possibility that once this crisis is looked back up, primarily by most of the economist of the future, it will mark one of the top turning points. According to Keynes, this was what caused the 2008 Financial Crisis and the table 1.0 below shows some of the dimensions that were applied to evaluate the Great Depression.1
Table 1.0: The Great Depression Vs. Great Recession in the advanced countries2
|Year||Real GDP||Price Level||Unemployment (%)||Trade Volume|
Therefore, sustained recession did not start in the United States until the year 1933, but the United Kingdom trough happened back in the late 1931 and during the year that followed, it also occurred in Germany. Both the United States of America and Europe, even in the recovery process, they encountered a persistent of mass unemployment, which was denoted as the curse of depression decade. Back in the year 1937, all over to 1938, a further sharp Depression happened in the economy of United States, which raised the rate of unemployment and of course, imposed more deflation compared to the previous period. By the late 20th century, the overall memory of the international financial seizure in the two States, and there was a recede of severe deflation, and mass unemployment.3
However, during the year 2007 to 2008, an unexpected and astonishing collapse happened which made all the core economic variables to fall at very high rates compared to the fall what was encountered during the early 1930s. In fact, ccording to Eichengreen and O’Rourke (2010),4 the World Trade Volume, the entire achievement of equity trades as well as the industrial production fall steeply in the year 2008, especially during the 2008 Financial Crisis. Furthermore, a full-blown financial crisis emerged very quickly. In fact, the United States real estate and the sub-prime mortgages dropped, which were the most attractive investments for both the residents and international, became a millstone on financial institutions that had earlier snapped them up. Back in April 2007, the New Century Financial, one of the largest United States sub-prime lenders, filed for the Chapter 11 Bankruptcy. Therefore, in this essay, I will discuss what the Great Depression taught us about the Canadian Economy and also how did it help us deal with the 2008 Financial Crisis. The essay will also point out how future crises can be avoided by the lessons that were learned from the Great Depression.
Lessons Learned From The Great Depression In The Canadian Economy