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Why does this pose a problem during the Great Depression?

June 30th, 2013 2 comments

“More than 60% of the population was living below poverty levels, while a mere 5% of the wealthiest people in America accounted for 33% of the income, and the richest 1% owned 40% of the nation’s wealth."

Why does this pose a problem during the Great Depression?

The biggest problem was because there was a currency shortage, so to speak, in the country. With so many unemployed, few people had ready cash to use on anything but the most basic necessities.Those who did have the large cash reserves(i.e. the 1%) were unwilling or unable to spend their money to generate new jobs. There was a variety of reasons. Loss of potential customers, fear of government policies(look up the tax rate on those 1%ers back then),or being rich but not having liquid assets(owning land, industries, or other properties, but not much cash).
Years under the Roosevelt administration and his attempts to overcome the Depression failed, until the start of the war. Only then did currency begin to circulate more, though ironically the government then took actions to cut back on the money in circulation to curb inflation. War Bonds and rationing were two large tools. No matter how much money you had, in theory, without ration cards you could not buy products. War bonds helped finance the war as helping to avoid inflation.