Just In: Economies in shambles!!! 。゜゜(´Ｏ`) ゜゜。

     This week in class, we are discussing The Great Depression and the New Deal (1929-1941). Key focuses during this time were obviously The Great Depression itself, what the consequences of this time were, and the lasting effects by the government onto the economy. To provide some background, The Great Depression was a devastating time as people were out of jobs, businesses were shutting down, and the public morale was at an all time low. Families were being torn apart as every able-bodied member was being forced to work just to survive in horrid conditions. Specifically, the homes of these families were crowded due to low costs of tenement homes being full of people and filth, along with the streets around these buildings which wreaked illness on all those forced to live there. Moreover, the government was unsure whether intervening in the economy would be a good idea and therefore allowed for this to perpetuate due to inaction. Eventually, the government would finally step in and provide some relief to the people and businesses fortunately.

    This event of unemployment and disruption in the economy can be connected to the modern day, regarding the economy during and after COVID-19 within the US. To explain, during COVID, many businesses were forced to close down simply because there was not enough customers. As people began to stay at home under lockdown, this business owners began to lose money and demand. Consequently, they were forced to let employees go as they could no longer fund their workers nor their supply because the demand had dropped so much. Following this same logic, these workers were left with less money than before COVID because they were either out of jobs or making less due to cut hours because of the strain on business owners lack of consumer demand. This mean that these same workers could no longer afford to buy what they used to and therefore perpetuated this dropping demand and shutting down of other businesses. Notably, this period of inflation during COVID pulled the consumers purchasing pattern regarding "food and nonalcoholic beverages" from "9.6% to 7.6%." This goes to show that this time economic disparity was a serious outlier as it was much more devastating to the economy in such a short and sudden period. This cycle would continue seemingly forever; Until the government decided to take action.

    These two events both share similar issues in their economic troubles. Both the Great Depression and the COVID economic disruption were affected by inflation. To explain, there was an economic disequilibrium happening as there was too little demand and too much supply. One case of this can be seen from the Dust Bowl during the Great Depression era in which farmers were producing far too much for the steady decrease in demand by the now unemployed. In order to fix this economic disruption, the government had to take action for both events in order to stimulate the economy and return back to economic equilibrium. For the Great Depression era, this meant more public work projects to create jobs and acts such as the AAA to pull back on the amount of supply. For the US and COVID-19, this meant the government providing stimulus checks and more projects to create jobs as well. Admittedly, the government may have been fearful that too much intervention in the economy could worsen the inflation or cause the economy to become permanently damaged, however, they were careful to not put too much of a hand in the economy and thus stimulated in just enough to bring it back to an equilibrium.

 How COVID-19 May Be Affecting Inflation. Federal Reserve Bank of St. Louis. (n.d.). https://www.stlouisfed.org/on-the-economy/2021/february/covid19-affecting-inflation