ECON 2200 Lecture Notes - Lecture 15: Economic Collapse, Openmarket, Bank Reserves
ECON 2200
Lecture 15
• Twenties opened and closed with depressions
• Can learn something from the twenties to help understand and
explain the thirties. The twenties holds clues for the thirties.
A. This was a period of post-war prosperity book-ended by:
• Short, but intense depression of 1921-22
• Crash of 1929 & The Great Depression
B. While economists disagree on causes of Great Depression, 1920s may
hold clues to understanding 1930s.
• Old view:
o Great Depression was an inevitable outcome of the 1920s
“boom”. “What goes up must come down” = A boom is
automatically followed by a bust.
• New view:
o Economic collapse does not inevitably follow a period of growth
(what goes up does not have to tumble down). Cycles can be
smoothed out.
o The 1920s displayed certain “structural weaknesses” that may
have influenced the collapse of the 1930s.
C. Recall (from Econ 2105):
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