-
Postwar America shifted from wartime production to consumer goods and fueled rapid industrialization. GNP rose by about 40 percent, and manufacturing output surged. The key was mass production, where Henry Ford's assembly line turned out the Model T automobile. Electrification and new technologies boosted sectors like appliances refrigerators, radios, and aviation. Radio sales exploded from 100,000 units in 1922 to 5 million by 1929. -
The 1929 Black Tuesday crash brought to light the failures of unregulated free-market mechanisms and ushered in the Great Depression, while the bursting of a speculative bubble in easy credit and margin buying during the 1920s wiped out billions as overleveraged investors suffered huge losses.
Fully 9,000 banks had exposure to stocks and/or bad loans and failed by 1933. -
Sponsored by Senator Carter Glass and Representative Henry B. Steagall, the Glass-Steagall Act of 1933 was actually part of FDR's New Deal. It sought to avoid any future bank failures by requiring more stringent regulation of bank activities and affiliations. Hailed for its success in making the economy stable after the 1929 crash, its repeal fanned the flames of argument about deregulation as causing the subprime mortgage meltdown of 2008. -
Wartime Mobilization Government contracts and collaboration with private industry doubled manufacturing output, dropped unemployment to 2%, drove technological innovations such as radar and penicillin production, increased GDP 75%, mobilized 16 million troops, gave women power in factories, as Rosie the Riveter, and showcased the flexibility of capitalism through wartime profit incentives and mass production techniques such as Liberty ships. -
The announcement by President Nixon on August 15 shelved dollar-to-gold convertibility, thus ending the Bretton Woods system despite inflation, the costs of the Vietnam War, and trade deficits. This put the US on a fiat currency with floating exchange rates and increased monetary policy flexibility, reduced dependence on gold, and dynamic global trade, investment, and forex markets in the capitalistic framework. -
Signed into law by President Jimmy Carter, this first large-scale deregulation removed much government regulation of transportation, increased competition, lowered fares, added routes, consolidated the industry through company bankruptcies, and gave birth to discount carriers like Southwest, epitomizing a free-market economy while reducing concerns for passenger safety. -
Tax Cuts A 25% cut in marginal income tax rates under Reagan ignited investment, economic growth, and entrepreneurship, yet restrained inflation - all elements of greater supply-side economics. With the Economic Recovery Tax Act (ERTA), this reduced the uppermost rate from 70% to 50% and indexed brackets for inflation, fostering the longest peacetime expansion in U.S. history. -
The North American Free Trade Agreement, initiated between the United States, Canada, and Mexico, reduced tariffs and non-tariff barriers to promote cross-border trade and investment, reinforcing globalization and market integration to increase corporate profits, efficiency, and economic growth on the continent. -
A technology-fortified stock market boom where the SP 500 more than tripled, from ~450 to over 1,500, led by Internet-related technologies such as e-commerce and web browsers, heavy venture capital infusions, and a spate of technology IPOs, including Netscape and Amazon. The episode was symptomatic of how capitalism can promote astonishing growth through technological disruption. -
Bursts The sudden collapse of the NASDAQ wiped off trillions of market value, underlining the highly volatile nature of all speculative investments in emerging industries within a deregulated financial environment. That caused widespread bankruptcies, lay-offs, and a reassessment of tech valuation, creating the conditions for more viable internet growth. -
Great Recession Housing bubble burst and subprime crisis brought about bank bailouts, such as TARP; $787B ARRA stimulus; widespread foreclosures; a 10% US unemployment rate; a drop in GDP by 4.3%; stock crashes, with the Dow falling 50%; global contagion hitting both Europe and Asia; and, finally, reforms on financial oversight and consumer protection, such as Dodd Frank.923ms