1929-1943 Great Depression

• depressions/recessions occur when there is not enough demand for all goods & services than an economy produces.
  • economists believe that falling demand is normal as part of a “business cycle”
• [] [1920s American economy boo] was part of the “high point” of a business cycle

Simplified, thanks to ChatGPT

Keynesian School of Thought

So, there’s this absolute legend, right? His name is John Maynard Keynes, and he’s come up with this high-key woke idea about how the economy should vibe.

He’s like, “Yo, you know when the economy hits a major L and people are catching strays ‘cause they’re out of work? Well, maybe it’s ‘cause businesses and peeps are just, like, ghosting on spending enough bread.”

But check this out. He’s like, “Maybe the government, you know, the squad in D.C., should come in clutch and spend some dough. Like, throw down on some infrastructure or schools or something. So people secure the bag, they start flexing some dough again. It’s all about that cycle, but with cash instead of, like, eco stuff.”

He’s not just about letting things do a vibe check and sort themselves out. Nah, Keynes is about that action, fam. He’s like, “If we just sit and wait, it’ll be a low-key disaster, big yikes for everyone.”

When the economy is slaying, all Gucci and stuff? Keynes is like, “Okay, now’s the time to chillax. Maybe the government should fall back, save some bread, or even raise taxes so things don’t go all extra.”

So, imagine the economy is like the school’s TikTok following. One minute you’re vibing with the popular crowd, next thing you’re getting cancelled. So like, when the follower count, I mean, economy, crashes, the school principal (aka the government) has to come through, fix the sitch, maybe throw a lit pep rally to get everyone hyped and vibing again.

And when everything’s lit, the principal falls back and lets the students do their own thing. Like, that’s totally a vibe, right? I mean, Keynes was on point with this theory, no cap!

Monetarian School of Thought

Oh, absolutely, let’s spill the tea on Monetarism. This is like another major theory about the economy, made popular by this smart dude named Milton Friedman.

Friedman is like, “Hey, it’s not all about spending or not spending. It’s all about the moolah, you feel me? The amount of money we have in our economy is what decides if we’re thriving or just straight up tanking.”

Like, if there’s too much money going around and not enough cool stuff to buy, prices go up. That’s inflation, fam, and nobody is here for that. But if there’s not enough money, then businesses can’t grow and people can’t spend. That’s a recession, and it’s a real buzzkill.

So, Friedman says, it’s all about the Benjamins. The central bank (like our Federal Reserve, or the Fed) needs to keep a close eye on the money supply. Too much or too little, and the economy gets all kinds of messed up.

In our school analogy, think of Monetarism like the principal controlling how many hall passes are out at any given time. If there’s too many, the halls are crowded, and things get chaotic (inflation). Too few, and students can’t get to where they need to go (recession). The key is to keep it just right for smooth vibes.

Monetarists would tell the principal to chill on throwing big school events and focus on keeping the hall pass situation on lock. That’s what’s gonna make the school, like, totally thrive, no cap!

International Explanation

Sure thing! So let’s take this school analogy global.

Think of the whole world as, like, a bunch of different schools. Each one has its own squad (like, its government) and its own students (its economy). Just like different schools have different vibes and rules, so do different countries.

But here’s the tea: even though each school is doing its own thing, they’re all part of, like, this global network of schools. And what happens at one school can totally affect what happens at the others.

That’s like, international economics in a nutshell. It’s about how different economies vibe with each other, through trade and stuff. Like, when one school’s basketball team is lit, another school might want to play against them. That’s like trade - when one country has something cool, other countries might want it.

Now, monetarists in this global setting are all about keeping the value of their school’s hall passes (currency) steady. If the hall passes from one school start to seem less valuable, like, if they don’t get you as much, that school might have a harder time trading with other schools.

Keynesians, on the other hand, might say it’s cool for the squad (the government) to adjust the value of the hall passes (like devaluing or revaluing the currency), especially if it helps their students (their economy).

So, like, there are different ways to roll with the international scene. Each school (country) just has to figure out what works best for them. But they’ve gotta remember, what they do can totally affect the vibe at other schools too. It’s all connected, fam!

Gold Standard

Gotcha, fam! Let’s dive into the Gold Standard and the Great Depression in our global school network.

The Gold Standard is like, imagine if every hall pass from every school was, like, backed by gold. Doesn’t matter which school you’re from, your hall pass is as good as gold, literally. This made trading between schools super easy because everyone knew what they were getting.

But then, bam! The Great Depression hit. This is like a major drama bomb dropped on the network of schools. All of a sudden, everyone’s scared to trade, people are hoarding their hall passes, and the overall mood is just… not lit.

Now, each school is trying to cope. Some schools, like the American one, decide to stop using gold for their hall passes. They’re like, “We need more flexibility to help our students.” That’s like, ditching the Gold Standard, which the U.S. did during the Great Depression.

This gave them more control over their hall passes (or currency), so they could try to make things better for their students (their economy). This is similar to what Keynesians might suggest. They’d be like, “Yeah, it’s totally chill to change up the rules if it helps your students.”

But, on the flip side, some other schools decided to stick with the Gold Standard. They’re like, “Our hall passes have to stay gold. It’s just how we do.” They thought keeping things stable was the best way to deal with the drama.

In the end, most schools decided to ditch the Gold Standard. They realized they needed more control over their own hall passes (currency) to respond to big shocks, like the Great Depression.

So, the Great Depression and Gold Standard are like a major plot twist in this global school drama, pushing each school to decide how to best help their students (their economy). And it’s all about finding the right balance, you feel me?