•
Roaring
Twenties
Boom
– Materialism
– Spending
– Prosperous

Bust
• Great
Depression
– Stock Market Crash
– Banks Fail – Fed took no action
– Foreclosures
– High Unemployment

Trickle Down vs. Pump Priming

Hoover vs. FDR
Two approaches to the Great Depression.

Herbert Hoover
•
Conservative approach.
•
Rugged Individualism.
•
Believes in the Business
Cycle.
•
Philanthropist – charity work for those who need it.

Prosperity
Business Cycle
Prosperity
Recession
Recovery
Trough

Hoover – Trickle Down

Give-A-Job campaign

Limited government hand-outs

Limited public works programs

R.F.C. -
Reconstruction Finance Corporation
- Provided $2 Billion in aid to Banks, Insurance
Companies Railroads, and other Big Businesses

Trickle Down Theory
R.F.C. – $2 Billion
Businesses
Jobs
People Spend Money
Recovery

Roosevelt – New Deal
• FDR’s Plan to provide relief to Americans.
•
The Brain Trust helps FDR develop the
Alphabet Soup programs.

Keynesian Economics

Government must be involved in economy to keep it safe.

To get out of Economic
Depression, a government must spend money.

Deficit Spending is needed.
John M. Keynes
British Economist

“Pump Priming”
Recovery
Business Expands
People Spend Money
$ $ $
Work Relief & Direct Relief Programs

What do we have today?
Does this work?