Editing The Great Depression (section)

== <span style="color: #FFFFFF;">Understanding</span> ==
The Great Depression is understood through '''Liquidity''' and '''Confidence'''.

'''1. The "Downward Spiral" (Deflation)''':
Why did it last so long?
* Prices "Started to Fall."
* People "Stopped Spending" because they thought "Prices will be lower tomorrow."
* Businesses "Fired Workers" because no one was buying.
* Workers "Had no money" to spend.
* The cycle "Feed itself" until **25%** of people were unemployed.
* It was a "Black Hole" of "Missing Demand."

'''2. The "Keynesian" Fix (Spending)''':
John Maynard Keynes argued: "The Market is Stuck."
* If the "People" can't spend, the **Government** must spend.
* Even if you "Pay people to dig holes and fill them back up," they will "Have a paycheck."
* They will "Buy Bread." The Baker will "Hire a Helper." The Helper will "Buy a Coat."
* This is the **Multiplier Effect**. "Spending" is the "Fuel" of the machine.

'''3. The "Confidence" Game (Psychology)''':
FDR's famous line: "The only thing we have to fear is **Fear Itself**."
* The depression was a "Mental Sickness."
* People "Lost Faith" in the future.
* FDR used "Fireside Chats" (Radio) to "Talk to the Nation" and "Restore Trust."
* He created the **FDIC** (Bank Insurance) so people would "Feel Safe" keeping their money in banks again.

'''The 'Bank Holiday' (1933)'''': One of FDR's first acts. He "Shut down every bank in the country" for 4 days. Only "Healthy Banks" were allowed to re-open. This "Shock to the System" stopped the "Panic" and proved that the "Government was in Control" of the money.
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