The Legacy of the Great Depression and Its Misinterpretation: The Forgotten Social Costs of Monetary Instability
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2012
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Haverford College. Department of History
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Thesis
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Award
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eng
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Abstract
After emerging from the Great War as a global economic power, America immediately experienced a decade of prosperity in the 1920s. Popular economic optimism inspired a massive overinvestment in the domestic stock market, which ultimately collapsed in October of 1929. The precipitous fall of stock prices marked the beginning of America's most devastating economic crisis - the Great Depression. While the Depression is best known for its high levels of unemployment, American citizens were also burdened by the social costs of deflation. The U.S. only escaped the grip of Depression with the help from wartime production in the 1940s. After World War II, policymakers looked to use lessons from the Great Depression to help reform America's political economy. Unfortunately, in the forging of the Great Depression's Legacy, the social costs of deflation were largely overlooked. Ultimately this Legacy became synonymous with a political obsession with "full employment." While economic policies aimed at maximum growth and job security did yield positive economic effects from 1950 to 1970, this narrow strategy was largely discredited with arrival of stagflation in the 1970s. The social costs that Americans faced during the 1930s effectively returned in alternate, yet similarly troublesome forms.