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Economies vary with every country and government. Economist

use it to run our financial markets and are extremely useful in

trading, and helping countries throughout the world. What most

people will not understand is that sometimes economies will begin

to falter to some degree. History has given several solutions to

fix faltering economies. The most advantageous way to turn around

a down economy is to stimulate it. Stimulating an economy is the

equivalent to dumping mass quantities of money into the economy

in order to get it to grow back to how it was before the plummet.

Another way to fix a downed economy is by the austerity method.

This method has almost never been proven to be successful or help

the economy. Austerity by definition is the process of tightening

the belt, and cut growing budgets to help frugal spending. Many

cases of both austerity and stimulus have been used throughout

history and have proven most prosperous. In many cases, stimulus

has been proven beneficial in helping the economy recover faster,

while at the same time helping the economy begin its uprise.

Stimulus has been used traditionally in North American countries

mainly in the United States of America. Most recently, it has

been used to bail out the American economy when the housing

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bubble burst in 2008. Also more notably in the past a huge

“stimulus” plan was used to help America out of The Great

Depression. Not many Americans look at it as a stimulus plan, but

the building of our military forces for World War II; however

this was essentially a stimulus plan that put hundreds of

thousands of Americans back to work. Austerity on the other hand,

can be used to help satisfy economies in the European nations, as

it has been used for many centuries, but to no avail and almost

leaves the economy in worse shape then it was prior to the

decline. Austerity, when used has also been the gateway to many

parties gaining power most infamously, the Nazi regime.

The year was 1929, just after a decade of exponential

growth, due to the growth of automobiles and the assembly line.

Life seemed to be good for all at the time, however that was all

about to change and no one saw it coming not, even expert

economists. August of that fateful year saw stocks that once were

furiously growing, plateau. September saw more decline to the

market as well as a much more uncertainty. When October finally

arrived and the downturn was in full effect. The week of October

18th through October 24th was quite possibly the worst week on

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Wall Street as billions of shares of stock were traded and money

seemed to be evaporating before everyone’s eyes. On October 29th

or better known as, Black Tuesday, the market had crashed. Twelve

million shares of stock had been sold, as well as billions of

dollars changing hands. When the crash occurred, thousands of

investors lost their jobs and The Great Depression had begun.

Americans struggled with the depression, a vast majority of the

population lost jobs, which sent the unemployment rate from a

modest 5 percent all the way up to 27 percent. This was single

handily the one of the steepest increases in unemployment since

the founding of our the nation. During the year 1932, one quarter

of the United States’ population was unemployed. The Great

Depression lasted a long ten years stretching from 1929 to 1939.

Prior decades of rapid expansion in the economy had been wiped

out in mere weeks and sent the economy into a decade long,

spiraling recession. Franklin D. Roosevelt, the President at the

time enacted new plans to help diminish the effects of the

depression. The economy would not fully turn around until the

beginning of World War II, when President Roosevelt enacted the

New Deal. Around the year of 1938 when austerity had failed the

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German government, the Nazi regime began to take rise making

promises for a prosperous future and a better living. It did not

take long for the German public to buy into this new regime’s

propaganda. The Chancellor of Germany at this

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time was Adolf Hitler, as he began his reign of power over

Germany, he began to build up massive military forces, which he

planned to decimate the European allied powers from the pervious

World War, as he aspired to have his arian race rule supreme

throughout. Once allied powers began to catch drift of what he

was planning they do, they began to build their armies up.

Franklin D. Roosevelt enacted the new plan which meant that

American factories would begin producing wartime products incase

of a attack on America by the Germans. This began to boost the

economy as it created thousands of jobs and put unemployed

Americans back to work. This New Plan as FDR had called it, can

be considered a stimulus plan as it boosted the economy in a time

of downturn and had positive results. Once the World War broke

out, the Americans remained solitude until December 7th, 1941

when they were viscously attacked at Pearl Harbor by the

Japanese. This plunged America, who had remained out of the war

until this time, into war along with the rest of the world. Jobs

became more openly available due to the Draft that was enacted

for the need of soldiers into the military. Many women took the

place of men in the factories as they went off to fight overseas

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in Europe to protect their freedom. After World War II had

concluded, there was a tremendous influx of Americans coming home

from war that needed jobs. Upon return to the United States, the

economy was as strong as it had ever been, and many of the

factories that had been producing wartime goods had ceased

operations and began to produce peace time goods that once again,

made living in America a pleasant experience.

Austerity, however, was one of the main causes for the rise

of fascism in Germany during The Great Depression. When the

depression hit European countries, they began to turn to

austerity as their outlet for solving the sudden decrease in the

economy. Adolf Hitler saw this as

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his time to rise as he promised a prosperous time to live if he

was in power. The German people saw no other option as they still

had the sour taste of defeat from World War I in their minds.

Hitler used his propaganda to appeal to the lower middle class,

unemployed, and young people which led to his rise to power. If

not for the use of austerity the Nazi regime may have never taken

power in Germany. This is just one example of how Austerity has

failed the European countries and economy.

Throughout the next 50+ years the world economy had its ups

and downs but nothing compared to that of the 2008 economic

recession. The Mortgage industry was to partially blame for the

downturn. Banks on Wall Street were selling mortgages backed by

securities, but the only problem with this was there was no money

to back them up it was all to gain more money. As per the

previous downturn many people lost jobs and the unemployment sky

rocketed. Many banks had lost traction in the markets and ended

up declaring for bankruptcy, most notable of the banks was Lehman

Brothers. Lehman Brothers were an investment bank which was the

largest of its kind in America. They had previously survived the

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Great Depression, but this time around they could not conquer the

downturn and were forced to file for bankruptcy. When the

recession hit it was almost immediately compared to The Great

Depression. It was not as severe as the depression and did not

last nearly as long as the previous crash. The United States

government acted upon the recession working up the stimulus plan

that would jump start the economy and help us recover. The

government planned to dump a astounding fee of 800 billion

dollars in to the economy through many planned expenditures. One

of the first parts to the plan was a 170

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billion dollar bill that was passed that would send tax rebate

checks to almost every American family in the amount of between

600-1200 dollars, that they had hoped would stop a recession from

happening or at-least keep it brief and not a major factor on the

economy. When that did not prove to work more bills were passed

to help stimulate the economy. Cash for Clunkers was another plan

they had to help grow spending and help the failing auto

industry. The Government would foot the bill for any American who

had a car that was 6 years older or more and at least owned by

the same person for the last year before trading it in. The

dealer would give them a base minimum of 3000 dollars towards the

purchase of a new car. Bailouts were another form of stimuli for

the American economy. Majority of the American car makers

required bailouts to ensure they would not have to file for

bankruptcy. The recession finally started to give way after 3

long years and the economy in 2012 finally began a upswing and to

this day is still going strong and prosperous. The American

economy is having a strong period of growth and the time when

European countries are having a rough time.

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When the recession hit in Europe they relied on the age old

method of austerity again, which still has almost never been

successful. In order to reestablish an economy you must spend

money to get a positive result that is why it never works. The

European nations started cutting frugal spending again and it has

still not helped as a handful of countries in Europe are in

turmoil Greece and Spain to name a few. Greece is in such a

recession they owe nearly 1 billion euros to the International

monetary fund my May’s end. They are faced with being kicked out

of the eurozone and if that happens the collapse of the nation

could spiral downward very quickly.

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In many cases austerity is compared to stimulus. Today’s day

and age will always ask what is better and why, that is just how

people are now a days very competitive and always want a decisive

winner. In my own opinion and in the case of what has worked in

real life stimulus seems to always be the better choice for

leaders of countries to choose if a recession happens. Stimulus

results in a faster turn around of the economy and helps the

patrons of a country to maintain a living during the recession

with out going hungry or struggling to live. Austerity on the

other hand everyone tightens their belt and waits for a turn

around to happen, which in turn will destroy small businesses and

sometimes whole cities.

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Work Cited

1. American History. "American History: Life in

the US After World War Two." VOA. N.p., 28

Dec. 2006. Web. 20 Apr. 2015.

2. BBC. "Greece Asks Public Agencies to Hand over

Reserve Cash." BBC News. Buisness, 17 Apr.

2015. Web. 20 Apr. 2015.

3. Channel, History. "Stock Market Crash of

1929." History.com. A&E Television Networks,

2010. Web. 20 Apr. 2015.

4. Museum, Holocaust. "Hitler Comes to Power."

United States Holocaust Memorial Museum.

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United States Holocaust Memorial Council, n.d.

Web. 20 Apr. 2015.