The Causes of the Great Depression
There is a reason behind every event that occurs. Throughout history, there are many unfortunate circumstances which happened; to be able to thoroughly understand these, one must trace its underlying causes. The Great Depression was one of the most difficult phases in history. In essence, the era was defined by economic failure and widespread unemployment. Though the Great Depression was experienced in various parts of the globe, the negative effects were heavily concentrated on the United States of America. This essay seeks to determine and explain the causes behind the Great Depression.
One major cause of the Great Depression was the consumerist American lifestyle in the 1920s which threatened the equilibrium between supply and demand (McElvaine 1). The 1920s in the United States, also known as the Jazz Age, was marked with the constant fixation on consumerism. People became focused on wealth and material goods. The excessive lifestyle was encouraged by the abundance of commodities which were easily produced by the industries (McElvaine 1).
It is important to note that the success of the economy relied on the balance between supply and demand (McElvaine 1). However, this balance was not maintained during that time. While there were many consumer goods available, only a fraction of American society could afford to purchase them. The wealth of the Jazz Age was unequally distributed; most of the income was in the possession of a few Americans. Hence, while there were many goods being produced, there were only a few who could buy them. To resolve this problem, credit was invented. This invention allowed the people to buy products now and pay the costs later. Nonetheless, the emergence of the credit only exacerbated the situation. People have relied heavily on credit, causing them to accumulate debt. In the end, people still cannot buy all the available commodities. There was too much supply and...