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The banking crisis of 1907 that preceded the great depression and the banking crisis in 2008 were both caused by: short-term changes in the business cycle.
What was the 1907 banking crisis?
- At the beginning of the 20th century, the United States experienced a brief banking and financial crisis known as the Bank Panic of 1907.
- The collapse of highly leveraged speculative ventures that had been encouraged by the US Treasury's cheap money policies in the years before was the root of the problem.
- A spike in speculative investment, supported by loose monetary policy, set off The Panic.
- Without a national central bank to rely on, wealthy individuals, personal guarantees, and well-known bankers and investors like J.P. Morgan and John D. Rockefeller helped the American financial markets escape the crisis.
What exactly was the 2008 Great Depression banking crisis?
- The early twenty-first century saw a significant global economic catastrophe, the 2008 financial crisis, also referred to as the Global Financial Disaster (GFC).
- Since the Great Depression, it was the worst financial catastrophe (1929).
- In the United States, years of extremely low interest rates and loose lending laws sowed the roots of the financial crisis by encouraging irrational real estate and stock market speculation and a housing bubble.
- It started out with good intentions, as usual.
Learn more about the Great Depression here:
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