As the saying goes, those who do not learn from their mistakes are destined to repeat them. This has been the case with themes of war, politics, and industry, and it is certainly true now of the economic situation in which much of the world now finds itself. There is a great deal that can be learned from the events of the past, and financial analysts use data gathered over hundreds of years to predict economic trends. This most recent downward turn in the economic market is certainly not the first and definitely not the worst in the nation's history. When economists look back over the past decades in American history, practically every generation has experienced a recession, to one degree or another. There have even been periods of time in which
recession has worsened until a depression resulted. What our nation's leaders have learned from those tight economic times will hopefully be of value in the years ahead, as our current recession begins to loom heavily over the country like a black cloud.
You are probably familiar with the Great Depression which began in 1929 after a turbulent market day sent the stock market crashing through the floor. From October 29, 1929, known as Black Tuesday, to November 13, $30 billion dollars vaporized from the United States economy as a direct result of falling stock prices. Because of the devastating impact of this single event, changing the lives of millions of American's practically overnight, there are now safeguards in place to protect against a similar happening. We are able to take lessons from hardships of the past that help us deal with and overcome those of the present time and future. Because the United States government operates on a free market society structure, government intervention into the marketplace is generally an unacceptable practice. The government only seeks to intervene when absolutely necessary.
When the
subprime mortgage fiasco crippled the American economy, the government began taking action in the form of infusing money into the economy using tax rebate checks in the amount of around $600 per taxpayer. They were also able to offer cash to banks to guard against another massive stock market crash. Cash can also be infused by lowering the interest rate set by the Federal Reserve Bank, known as the Fed.
Another way that the government has learned to effect change and stave off recession is through bailout packages offered to high level corporations who are faced with the imminent possibility of declaring bankruptcy. When these companies are in trouble, Americans suffer at every financial level. The government and its people look to the past to decide what actions may keep America from being placed in a position of hardship like the Great
Depression ever again. Inevitably, the way that the economic policies are established during this latest round of financial difficulty will be studied from many angles in future decades, as we continue to learn from mistakes that are made and successes that are achieved.
