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What Caused The Great Depression Essay

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The Great Depression, one of the most severe economic crises in history, is a time that left an indelible mark on the global economy and impacted countless lives. It occurred during the 1930s and is considered the most significant economic downturn ever to occur in the industrialized Western world. The causes of the Great Depression are manifold, ranging from the stock market crash in 1929, the abuses of credit, to the excess agricultural production leading to reduced prices. As the U.S dominated international economy experienced an economic downturn, agricultural industries felt the full brunt of the depression, exacerbating their dire economic condition. Ultimately, the Great Depression was a product of both national and international events …show more content…

One of the contributing factors that led to this massive economic breakdown was the widespread abuse of credit. During this time, banks and financial institutions were making risky loans to individuals and businesses, despite knowing that many of these borrowers were unlikely to pay them back. One of the reasons why credit was so widely abused during this time was due to the culture of optimism and risk-taking that dominated the financial sector. Banks and investors were confident that the stock market and the economy would continue to grow indefinitely, which led them to lend money without considering the consequences. Many people took advantage of this relaxed lending environment, taking out loans and investing in stocks and real estate, even if they didn't have the means to repay the debts. The overall significance of this abuse of credit was immense. As the economy began to falter and people were unable to repay their loans, banks began to fail. This triggered a domino effect, leading to a wave of bank closures and job losses. Many people lost their homes, businesses, and savings, and the impact of this financial disaster was felt across the world. In conclusion, the abuse of credit during the great depression was a significant contributor to the economic downfall of that period. It highlights the importance of responsible lending practices and reminds us that greed and short-sightedness can have devastating consequences. The lessons learned from this difficult time continue to shape financial policies and regulations

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