December 19, 2010

RFC, Emergency Relief Act, and Trickle Down Economics

October 1932.

Some of Hoover's plans to deal with the Depression are the Reconstruction Finance Corporation (RFC) using the concept of Trickle Down Economics, and the Emergency Relief Act. The RFC is a plan to get people back to work, which lets the federal government lend loans to banks, so the banks can loan money to businesses, making businesses expand and hire people, then that way people can earn a paycheck and start spending money, and people spending money puts back into the economy, people can pay taxes to the government, and put their money into banks. This plan has failed because banks held on to the money and didn't want to loan it out. The other plan is the Emergency Relief Act, which is a program the provides loans to small businesses and state governments to help provide relief, but has also failed because businesses and states didn't have the money to repay the loans.

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