Economic History Of The U. S

The Amateur Economist

One of the features in recessions since the Great Depression, which is not common with those that came before, is government protection of bank deposits. Banks would become insolvent along with their depositors in many cases during “runs on the banks”. The creation of the FDIC shifted the burden of insolvent financial firms from depositors to member banks, with the federal treasury as the last backstop. The pattern was extended further by the creation of TARP during the current recession. It placed almost the entire burden of the rescue on the American financial system with those who pay taxes.

Panic in economics - a severe financial disturbance, such as widespread bank failures, feverish stock speculation followed by a market crash,

Panic of 1797
The United States’ first major economic emergency struck in 1797 as a result of a land speculation bubble bursting.
Depression of 1807
The Depression of 1807, which lasted about three years
815-1821 Depression
The U.S. government had racked up heavy debts during The War of 1812,
Panic of 1837
As the United States continued to push westward and “acquire” Native lands.

Panic Of 1857
Due in part to the inflation caused by the discovery of gold in California, the recession in 1857 quickly devolved into a panic after the failure of the New York branch of the Ohio Life Insurance and Trust Co.
Panic of 1873
A series of disasters in the few years before the crash of 1873
Panic of 1893
1893 saw the results of years of over-extension of railroads and the slowing of general economic expansion across the country.
Panic of 1907
Since the Jackson era, the American banking system had been decentralized. Consequently, during periods of boom, banks were able to lend unchecked.
Depression of 1920-21
Although relatively short compared to many other U.S. recessionary periods, the Depression of 1920-21 was extremely severe.  Following World War I
The Great Depression
A period of rampant speculation in the 20′s led to a market crash of epic proportions. Over the course of two days, beginning with the infamous “Black Tuesday,” the stock market lost more than a quarter of its value. Widely regarded as the worst recession in U.S. History, the Great Depression lasted 11 years, 8 months and saw unemployment rates of nearly 25%

Read more: The 13 Worst Recessions, Depressions, and Panics In American History - 24/7 Wall St. http://247wallst.com/investing/2010/09/09/the-13-worst-recessions-depressions-and-panics-in-american-history/#ixzz2d0IPWyrR

My research indicates that the U. S. experienced a financial panic or depression, on average, every 14 years from 1797 to 1940. In the seventy years since the great depression ended with the massive stimulus of government spending for WW II there has been neither a panic nor a depression. The country came close in 2007-2008 but lessons learned from the great recovery of the 1930s were employed and the economy bottomed out short of a depression.

Some, including this writer believe that the New Deal, a series of domestic economic programs enacted in the United States between 1933 and 1936 were at least partly responsible for the economic recovery and the evening out the boom and bust business cycle that had produced past panics and depressions. In the seventy plus years since the depression ended the United States has experienced no panics or depressions.

Those programs involved presidential executive orders or laws passed by Congress during the first term of President Roosevelt. “The programs were in response to the Great Depression, and focused on the "3 Rs": Relief, Recovery, and Reform. That is Relief for the unemployed and poor; Recovery of the economy to normal levels; and Reform of the financial system to prevent a repeat depression.

The economic theory behind the new deal and subseqent policies implemented by succeeding congresses and Presidents was the brain child of Maynard Keynes, a British economist.

John Maynard Keynes 1883 – 21 April 1946) was a British economist whose ideas have fundamentally affected the theory and practice of modern macroeconomics, and informed the economic policies of governments. He built on and greatly refined earlier work on the causes of business cycles, and is widely considered to be one of the founders of modern macroeconomics and the most influential economist of the 20th century. His ideas are the basis for the school of thought known as Keynesian economics, and its various offshoots.

http://en.wikipedia.org/wiki/John_Maynard_Keynes

Paul Hunter paulhunter45177@gmail.com