stock market graph great depression

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the Great Depression: the timing and effectiveness of the new covenant see detail?

if you look at a graph of the stock market since the accident so far, the new agreement came after the depression began to improve. the market is already beginning to straighten. Why do you think was effective or only luck at the time?

Contrary to popular belief, the New Deal did more harm than good. To explain, let's talk about the economic cycle. The business cycle exists because the central bank and government intervention (and not by the free market.) By 1929, depression lasted only a year or two because the government let the market correct itself, it was painful, but short. The Great Depression lasted a decade because of all that government intervention Hoover and Roosevelt administrations. They thought that a "central planners some" are more knowledgeable than the market itself so they created their "new treatment. "History proves them wrong. Because of all government interventions they did during the 30's, the market was not capable of correcting themselves same and did the last straw. To better explain, let's talk specifically about the theory of business cycles of the Austrian School of Economics: Theory begins to show how interest rates affect investment decisions. If left to free markets, interest rates are determined by the supply of credit (which is a mirror of the return on capital), and willingness to take risks in the market (a mirror of the return on capital). What distorts the "normal" is the manipulation by the central bank. Entrepreneurs are the experts in predicting the market, so they can venture capital investment and business decisions. Some do not because they are not as good as those who succeed. That is how markets work normal. But if the market is manipulated by the government (through interest rates artificially low pricing, wage setting, inflation, etc), send wrong signals to these entrepreneurs who are leads to making bad investments (bad investments), all at the same time – and a temporary / false prosperity ensues (this is the cycle of boom). Occurs because of a false prosperity a large amount of expenses and investments in business projects that are not really profitable or not current resources are actually available to complete or maintain these companies. Only "Appeared" profitable because of the danger signs of poor moral or created by government intervention. Once the market comes back or equilibrium real rates, will begin liquidation of bad investments created by the boom cycle (this is the bust cycle.) This is the part where prices fall and all the bad investments are clearly what they are – investments in unprofitable enterprises. The market then liquidate all these bad investments back to real rates, prices, etc. A perfect analogy would be: Imagine a small landlord who rents the space for presenting your business in a small town. One day the circus came to town bringing it its large staff and attract tourists. Because of this, plus the demand for wine for your business. It then began to buy lots next to your accommodation of land and built more for the people the circus attracts. Once the circus leaves town, however, did not only bring his staff with him, his departure also left large numbers of tourists coming to town. Now, the owner pays extra for very few customers. He now has to "settle" the land created additional accommodation when the circus came to town to maintain solvency. Now that we have an economic cycle because the Federal Reserve, the best thing to do during depression is only to let the market correct because that is what is needed to eliminate the bad investments. The depressions are the corrections required by the market. And to stop these corrections to occur, has high. That's exactly what Hoover and Roosevelt administrations did during the Great Depression. That is the reason why depression lasted for more than a decade.

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