Myth or Fact? The Great Depression was caused by a failure of the free market and was resolved by government intervention.

False, I find the accusation that The Great Depression was caused by a failure of the free market. There are multiple things that contributed to period of economic struggle known as The Great Depression many of them being caused by the Government. I will expand on some of these topics throughout my blog article.

                The First step in which the government caused problems to come about in the market was when they created Expansionary Monetary Policy which is artificially low interest rates. The Federal Reserve created artificially cheap credit trying to create economic expansion. However, this caused for the stock market to become overheated causing the market to weaken.  Not only did the government weaken the market through trying to expand it but also decreased the supply of money flow in the economy which is known as Contractionary Monetary Policy.  This was very bad for the economy because when an economy is in a weakened state it is important that the money supply is increased so that interest rates are low. This is important because when interest rates are low and there is more money flow people are more likely to spend which in the long run helps create a strong market and national economy.  Not only was the government affecting the citizens of the United States but they also instilled what is known as the Smoot-Hawley tariff of the 1930’s.  That tariff placed the highest level of tariffs on imported good recorded in history. Most Economics would agree that is had a negative effect on the Nation’s economy. It’s obviously that if a tariff is too high other countries are not going to want to trade with us and even if they were trading with the U.S. they would most likely place a tariff back on the U.S. so in reality the Smoot-Hawley Tariff really did not help the economy in any way. At this point in time The Great Depression was already largely in place, so instead of the government letting the free market balance out itself the government felt the need to control the market even more. They did this by creating the National Recovery Act of 1933 and the Wagner Act 1935. These were acts which consisted of anti-business and pro-labor regulations which were largely controlled by the government. This had a negative effect on the economy because when small and large businesses are bombing most of the time the economy is too. This is because these businesses are creating products in which consumers would benefit from and want to buy which means money is being put back into the economy and is flowing freely.  However, when the government passes Acts that restrict businesses and when they create “jobs” such as clearing trees in a national forest and other jobs that really serve no purpose they aren’t creating money flow in the economy. Rather they are depriving there nation of its true potential to grow.

These are just a few of the example of why I think the government caused The Great Depression rather than helped the economy to recover. The implemented Acts that limited the chance for the economy to grow in technology and economically, and they restricted the money flow in the United States. Rather than controlling so much of the economic trade they should have just allowed the Free Market to balance itself out. Even if the Economy would have taken a little bit longer to balance itself out and recover the effects of a weakened Economy would have been much better than the effect of The Great Depression which was caused by the Federal Reserve.

Charter cities

Charter cities

            Charter cities are cities in which make it possible for a nation to grow and gain prosperity. However in order to make a charter city prosperous there are some guidelines or rules that should be implemented or followed. I believe that economic freedom, the right to owning property, and a free market economy are all things required to help charter cities prosper.

            I would like to start off by talking about the right to owning property. If we as men have the right to life, we should have the right to sustain that life through property. Not only is this important to help people want to come and live in our charter cities but it also increases the value of life style provided, helping to set up a free market economy. People have the right to pursue happiness and one way they can do that is through the right to owning property. If people have the right to owning property it helps the economy to have growth opportunities because in an economy there will always be scarcity.

            Secondly I would like to talk about the second rule I would make for my charter city, which is having my city be one of economic freedom. Economic freedom is created by a system of rules where property rights are protected. In countries with economic freedom they usually low tax rates, low amounts of regulation, and little corruption. This is an important thing to have in a charter city for multiple reasons one it helps create a strong free market economy and secondly it sets up and economy where growth can take place. One place that this would help growth take place is in technology. If you look at cities all over the world that have advanced in technology their standard of living is high. They have prosperity because they are creating faster and better ways to accomplish tasks. Their economies are strong because of their developments in technology. A free economy also gives the right of choice to the people causing opportunity costs. Like I mentioned there will always be scarcity in an economy but with this scarcity comes opportunity costs, which are the costs of making a choice. For example I am writing this essay therefore I am forgoing an activity. For every action that you make there is an opportunity cost, this helps to create a free market.

            Thirdly I would like to talk about a free market. This is in my opinion the most important element to make a charter city prosper. Why? You might ask. Well you see a free market creates a society in which all the things I have just talked about are made possible. How are they made possible? Well through a free market economy there is something called the “invisible hand.” the market forces of the price system through the invisible hand because the invisible hand guides each self-interested market person to act in the interests of others. When they act in the interest of themselves whether it be for money or status they are acting in the interest of others by creating a better product. When people act in the interest of themselves they try to put the best possible product out there and through this the market gets more competitive which creates better prices and products for society. A free market economy is a win-win solution if you want to have a prosperous economy. A free market economy also creates the opportunity for people to have to make choices, the right for them to have property, and it works well in free economies.

            The rules or standards stated above are the things that I would implement into my charter cities because I feel like they give the most opportunity for growth and prosperity. I also thing my rules are appealing to people so I believe that my charter cities would have an abundance of people willing to comply with the rule of my society. I think overall these are the main things needed to start what could become a very prosperous economy.