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Economic Crash
Stock prices rose to levels unprecedented, and people began to invest in the stock market as a quick and easy way to make some cash. Britannica writes that, “even people of ordinary means used much of their disposable income…to buy stock”. When the stock market reached its decline, people panicked and rushed to liquidate their reserves. -
Gold Reserve Act
In 1934, President Franklin D. Roosevelt created the Gold Program, which led into the Gold Reserve Act. TheStreet says that this act “allowed the government to raise the price of gold, control the value of the dollar, and put more money in circulation”, in the hopes it would boost the economy. -
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Banking Panics
“By 1933 one-fifth of the banks in existence in 1930 had failed”, Britannica says. People believed that the US was going to recover from its economic downfall in 1930, but quickly realized that wasn’t true when bank panics began to fall. While earlier panics had been regional, these panics quickly spread nationwide. -
Banking Act
From the governors of the Federal Reserve Bank and Federal Reserve Board, the Banking Act of 1932 came forth. This “reformed the Federal Reserve's role providing credit during economic downturns”, according to Federal Reserve History. -
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Recession
Just when things were beginning to look up, America faced its third-worst economic downturn. Federal Reserve History says that “with real GDP dropping 10 percent and unemployment hitting 20 percent, it was less severe than the recessions of 1920 and 1929” although it still had disastrous effects. -
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World War II
This was the effective end of the Great Depression. With the beginning of World War II, millions of jobs were created for people previously unemployed. -
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Rapid Economic Growth
In Japan, there was a great period of economic growth for six years. International Monetary Fund writes that “Real GDP growth has averaged 1 percent a year over the past 10 years…[which is] only one-fourth of the 4 percent annual average growth rate recorded in Japan in the 1980s” -
Real Estate/Stock Price Plummet
In 1990, Japan faced a downfall of real estate and stock prices. Japan was unable to handle the impact of the decrease of asset prices. Part of the plummet was from the Bank of Japan increasing interest rates to slow down the real estate market. -
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Japanese Government Stimulus Measures
According to Investopedia, “Japan tried several fiscal policy measures to break out of its liquidity trap. However, it is generally believed that these measures were not executed well”. Money was considered to be wasted on different projects and not used efficiently. -
Banking Sector Gets Worse
Banking sectors began to collapse under the downfall of the economy. Trusted banks began to close down. Since 1998, banking has continued to worsen, though not as intensely as it did in the twentieth century. -
Economic Reforms
TheStreet writes that what finally helped Japan was “the quantitative easing program Japan’s central bank began in 2001”, which led to an increase in GDP and exports began to grow again.