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In a nutshell: the Great Depression

A New Deal

In 1933, then-President Franklin Roosevelt promoted his recovery path of Relief, Recovery and Reform, to give shape to the slow and arduous reform process that will take decades.


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In a nutshell: the Great Depression

In a nutshell: the Great Depression




Key Ideas

The Great Depression

.. was a devastating economic collapse which started in the US in 1929, lasting a decade. Europe was already struggling post the WWI recession, while the US was thriving. As borrowings and stock purchase increased, Wall Street went into a meltdown as soon as the share prices nosedived. This led to the failure of all the major banks and 15 million people losing their jobs.

Sandwiched between two World Wars, The Great Depression affected the entire world in its 10-year run.

Wall Street Down

On 29th October 1929, the infamous crash of Wall Street happened, where 30 million dollars were lost in a week, leading to customers rushing to withdraw their money, known as the ‘bank run’.

The entire world felt the capitalistic fall and realized that a boom leads to a bust, eventually. The disastrous effects felt around the world showed how economically interconnected the world had become.

A New Deal


The Great Depression in Pop Culture

Two great novels of the Great Depression were Of Mice and Men and The Grapes of Wrath, written by American novelist John Steinbeck. A famous song, Brother, Can you Spare A Dime, was written in 1931 by Bing Crosby and has been covered many times.

The United Kingdom And The Great Depression

Already struggling with four years of war, Britain was trying to recover when the crash occurred, and reeled in it for a decade, only to participate in another expensive and deadly World War: WW II.

The Great Depression was mostly felt by the North of England as well as the industrial centres across Britain, resulting in protests from the part of shipbuilders and different industrial workers. The recovery began only by the end of the decade, pretty late, if we are to take into consideration that another world war was to break out.

Germany And France

Germany had already been in the previous World War and the Great Depression led to its banking systems to collapse in 1931. It also gave rise to the radicalized politics of Adolf Hitler.

France was still better off, but the global recession caused a fall in demand for exports, sinking it in an economic turmoil.

What led to the Great Depression

While the USA proved to be by far superior to Europe both financially and industrially, after having got its independence, it did know a huge economic crisis in 1929, through the crash of the Wall Street stock market.

Everything started on the 18th of October, when prices fell sharply, resulting in customers rushing to withdraw their money from the banks, which might have actually been the real cause of the depression. Furthermore, what made this crisis even more memorable is that it spread around the world in almost no time.

The Great Depression and its specificity

What made the Great Depression so different from other crises was the fact that in the very same period when the Wall Street stock market fell, farmers also started having big issues with their harvest, due to a string of dust storms.

The storms eventually led to many farms drying up. Therefore, unemployment increased and even families with workers began having difficulties with money.

Al Capone and the Great Depression

Chicago gangster Al Capone opened a soup kitchen and, therefore, succeeded in feeding millions of people.


Two of the biggest innovations
Two of the biggest innovations

Two of the biggest innovations of modern times are cars and airplanes. At first, every new invention looks like a toy. It takes decades for people to realise the potential of it.

Innovation is driven by incentives

There are three types of incentives:

  1. "If I don't figure this out, I might get fired." It will get you moving.
  2. "If I figure this out, I might help people and make a lot of money." It will produce creativity.
  3. "If we don't figure this out now, our very existence is threatened." Militaries deal with this, and it will fuel the most incredible problem-solving and innovation in a short time.

During World War II, there was a burst of scientific progress that took place. The government was in effect saying that if a discovery had any possible war value, then it had to be developed and put in use, regardless of the expense.

The conditions for big innovations to happen

The biggest innovations seldom happen when everyone's happy or safe. They happen when people are a little panicked and worried, and when they have to act quickly.

In 1932, the stock market fell by 89%. It was an economic disaster where almost a quarter of Americans were out of work. However, the 1930s was also the most productive and technologically progressive decade in history. Economist Alex Field writes that in 1941, the U.S. economy produced almost 40 percent more output than it had in 1929, with little increase in labor hours or private-sector capital input.

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Using free time

Since the WHO declared the new virus a pandemic and officials have urged people to stay home as much as possible, many Americans have suddenly found themselves with more free time and limited ways ...

William Shakespeare

William Shakespeare was an actor and shareholder with The King's Men theater troupe when the bubonic plague forced London theaters to close.

The theater industry was out of action for much of 1606. After suddenly finding himself without a steady job and lots of free time, Shakespeare wrote King Lear, Macbeth, and Antony and Cleopatra before the year was over.

Isaac Newton

In 1665, during one of the last major outbreaks of the bubonic plague in England, classes at Cambridge University were canceled, and Newton had to retreat to his family estate.

With zero structure, the young mathematician produced some of his best work during his year in quarantine, writing papers that would become early calculus and developing his theories on optics while playing with prisms in his bedroom. The theory of gravity also germinated during this time.

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Economic Free Fall
Economic Free Fall

The current pandemic has led to an economic free fall which is unparalleled in history. In the US alone, the unemployment rate plummeted at such a speed that more than 10 million have claimed unemp...

The Lockdown: U.S.

The Pandemic Lockdown in the U.S. directly affects the livelihood of a shocking 80% of American workers who work in retail, real estate, education, entertainment and restaurants.
Many of these offices and stores are not going to open after that.

The Lockdown: Europe And Asia
  • In Europe, The north of Italy, which is the main tourist hub, is seeing a collapse in economic activity, along with Germany, which is falling at a steeper rate than the United States. Even countries like Japan, which are not hit that hard, are about to witness an apocalyptic fall.
  • In India, with the abrupt 21 days shutdown, which was recently extended by another 19 days, only a small percentage of the 1.3 billion population is covered by any social security, and millions of daily wage or migrant workers, have no hope, future or place to stay.

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WWI and women working
WWI and women working

Over a century ago, women in the UK weren't allowed to own property, open a bank account, or work in a legal or civil service job.

When WW1 broke out in 1914, over a million women j...

WWII and the NHS

The National Health Service (NHS) was established in 1948 and is funded from general taxation. Before the NHS, people were expected to pay the hospital or a private doctor if they needed to use medical services.

WWII necessitated government-supported medical services to become freely available for everyone.

More people go to university

Recessions and the lack of jobs that ensues can lead more people to pursue education. This progress also affects subsequent generations.

A more educated workforce tends to make an economy more productive and profitable. The knock-on effects include society's health, lower crime rates, voting, and volunteering.

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“History never repeats itself. Man always does.”

History lessons
The most important lessons from history are the takeaways that are so broad they can apply to other fields, other historical times, and other people. 

The point is that the more specific a lesson of history is, the less relevant it becomes.

Adopting new views 

One of the interesting parts of the Great Depressions from history is not just how the economy collapsed, but how quickly and dramatically people’s views changed when it did.

People suffering from immediate, unexpected adversity are likely to adopt views they previously thought absurd. It’s not until your life is in full chaos (with your hopes and dreams your dreams unsure) that people begin taking ideas they’d never consider before seriously.

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Understanding recessions are vital
Understanding recessions are vital

Recessions are part of the fabric of a dynamic economy. The average investor fears recessions because they mean lower home prices, lower stock prices, and less or no work.

Several things ca...

Naming a recession

Recessions are really "depressions," but the term "depression" seems too terrifying. After the Great Depression, economists began to use the word "recession" instead.

The 2007-09 recession involved a financial crisis, high unemployment, and falling prices, and was named the Great Recession. Our current recession is still without a name.

An official recession

A standard measurement for a recession is two-quarters of consecutive GDP contraction. But the official arbiter of recessions and recoveries, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), prefers domestic production and employment indicators instead. Other signs of the recession include:

  • Declines in real (inflation adjusted) manufacturing, wholesale-retail trade sales, and industrial production.
  • Extended declines in production, employment, real income, and other indicators.

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Seeing Isn’t Believing

Most of us have heard stories of hardships and catastrophic events of the past, like the great depression, or the dot-com bust, but haven’t lived through it, and not experienced the real pain of th...

Blind Spots

In the world of investing, having gone through a traumatic experience first-hand makes the difference between a cautious investor and a blind one. The scarred investor cannot think in the way the fresher, who hasn’t experienced the turmoil can. 

Our unique experiences impact our vision in ways we cannot comprehend on the surface.

Learning From The Past

Different generations have different investment risk appetites, with the younger generation wanting to take bigger risks and going into uncharted waters without any experience.

The New Generation, who hasn’t experienced turmoil and loss, are good at getting rich. However, the older, scarred generation is good at staying rich due to their general pessimism and conservatism. There is a need to balance the two aspects while taking an investment decision. People with different experiences aren’t necessarily smarter than others but just have a different worldview.

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Getting Rich Vs Staying Rich
Getting Rich Vs Staying Rich

The economy follows a cyclic path, with a different set of dynamics for getting rich, and for staying rich.

Nothing stays the same, and change is the only constant, with the very forces tha...

Humility And Fear
  • Being successful narrows our vision, making us rigid and averse towards change. The people who feel invincible and 'bullet-proof' after getting rich, usually do not stay rich.
  • Humility, coupled with a healthy dose of fear, keeps us on our toes and prevents us from being complacent.
  • Being open to change can make one's shift its business model, and pivot towards even greater success

Example: Netflix was a DVD rental service before pivoting into the world's biggest content streamer.

The Lessons Of History
The Lessons Of History

History is a treasure-house of learning, and as many books teaching us lessons from history point out, what was true in the medieval ages is often true even now, though the circumstances, technolog...


“History never repeats itself, but man always does.”

1920 and 2020

1920 is a hundred years apart from 2020, yet how people think is largely unchanged. Human behaviour is still hinged on greed, fear, opportunity, scarcity, and basic instincts.

We have no idea what will happen in the future, but we do have a good idea about how human beings might behave in certain situations.

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Netflix And Chill In Lockdown
Netflix And Chill In Lockdown

The global crisis of the 2020 Pandemic, resulting in billions in lockdown, has resulted in 16 million people signing up for Netflix in March, taking the total subscribers to 183 million.

Clueless Companies

Consumer companies around the world are in limbo. They are groping in the dark due to a lot of variables in the current situation.

Many are non-essential businesses, others rely on logistics and physical goods to be delivered. Many businesses are forced to close by the government, due to the social distancing norms, even though the consumers need them.

What Makes Netflix Tick

.. is that it is:

  • An internet-only business model, with no physical goods to deliver, having no interruption due to the lockdown.
  • Not dependent on advertisers, being a subscription-based service.

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