Name: 経済学者だけど「大恐慌」について質問ある？| Tech Support | WIRED Japan
Uploaded: 2025-11-21T18:04:33.000Z
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I'm an economics professor at Washington State University, and I'm here to answer your questions from the Internet.

Caterpillar 330 asks, was the Great Depression really as bad as it's commonly portrayed to be?

In the Great Recession of 2009, we maxed out at 10%.

Other places across the planet where we see this somewhere, say Greece in 2012 also hit 25%.

It spurred us to create the first federal welfare systems.

This is where we got Social Security, unemployment insurance, federal minimum wage, housing subsidies, all throughout the 30s.

Trying to address the suffering that we saw then, Bright Sherbet asks, explain it like I'm five.

What caused the Great Depression between 1929 and 1933?

In the late 1920s, the United States financial markets were experiencing a speculative boom.

Now, the real economy was growing, and there were real profits to be shared on Wall Street.

But they started investing heavily on margins.

Now, what this means is that they would take out huge loans and then buy stocks with those loans.

And then they would set up a different company to buy stocks in that company again on huge loans.

That meant an initial investment of, say, $100 could turn into $1,000 worth of stock.

So any rise in the stock would be a huge boom.

But any speculative boom is eventually going to end.

The economy hit a run of the mill recession in the summer of 1929.

The slowdown in economic activity led the market to peak on September 3rd.

But because so many of these stocks were not held outright but by loan, and

any fall in the price meant a cascading chain of everyone calling in their loans, which meant by October, we experienced a huge crash.

Here's a picture of Wall street on the corner of Wall street and Broad showing the crowds all worried about their falling fortunes.

Now, despite what everyone thinks, the stock market is not the economy.

Only 1 to 2% of Americans at the time held any stock.

This event could have primarily just affected folks in New York and other financial markets.

How did it start affecting the rest of the economy?

A falling stock market means there's less wealth in the economy.

Things start cascading into the real world once we start seeing massive bank failures.

You see if a bank loses a lot of their stock, they're not going to be able to honor folks who put their deposits in.

You come along, you put your money in the bank, they take it and then they lend it out to other people.

But if those loans aren't being paid back, then the bank can't pay their depositors back.

Which means you as a depositor are only going to get there if you're first.

You got to be the number one person in that line.

If you're too far back, the banks ran out of cash and they're not going to be able to pay you back.

The bank doesn't have any loans available because the people who owe them money are now going bankrupt.

If not just one or two banks here and there, it's 10,000 banks that are collapsing across these years.

One of the reasons is because all these banks are forced to be really small.

So if you get a modest shock, they don't have the resources to insure themselves or to draw on other regions.

Surprisingly, just north of the border, Canada only had 10 banks served the entire country and they didn't experience runs.

This was unique to the United States and our fractured banking system.

By 1932, the unemployment rate had reached 25%.

That meant one out of every four people can't find work.

Men would line the streets advertising themselves for work.

Relief efforts set up soup kitchens to serve the unemployed.

Economists still today debate on what are the ultimate causes of the Great Depression.

But these are the primary events that got us along the way.

The namesdrjane asks when does a Great Depression start?

A great Depression is going to involve a lot of economic collapse, not just production, but

we'll have high unemployment all across the board.

We're going to see a slowdown in economic activity.

And the period between 1929 and 1933 was the worst economic decline in United States history.

That's the National Bureau of Economic Research.

They're actually not part of the government.

They're a non profit research group based in Massachusetts.

And after some time for research purposes, the committee gets together and they decide what month and year a contraction starts.

And then when does the economy start growing again?

A Reddit user asks, why do Americans call the 1930s depression?

Actually, the term depression goes all the way back to James Monroe this is the term that they would use for any economic downturn was depression.

And they actually called the episode in the early twenties a Great Depression.

It started having capital letters as the Great Depression.

By about the mid-30s, we have Lionel Robbins, an economist, who wrote a book called the Great Depression.

In the subsequent years, we capitalized it, called it the Great Depression.

Zobetops asks, what effect did the Smoot Hawley act have on the Great Depression?

The Smoot Hawley act was a large increase in tariffs.

One of the hypothesized reason for the Great Depression at the time was not enough economic activity at home and a greater need for protection from abroad.

The idea was, if you increase the tariffs here, it'll protect our businesses and they'll be able to succeed more and that'll get us out of the Depression.

Unfortunately, economists have long known and argued and warned at the time that trade is one of the ultimate secrets for long run economic growth.

It allows more economic activity, more diversity and more options across the world.

It was signed into law by President Hoover in 1930, just as we were getting started on the Depression.

Now the effect on the American economy was modest, largely because the US economy was one of the biggest on the globe and the role of international trade was relatively small.

Economists have estimated it declined our economy by maybe a couple of percentage points.

But the effect on Smoot Hawley was bigger.

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経済学者だけど「大恐慌」について質問ある？| Tech Support | WIRED Japan

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