Student Question
How did the WWII savings buildup prevent a postwar depression?
Quick answer:
The buildup of savings during WWII prevented a postwar depression by enabling consumers to have substantial funds to spend on goods once the war ended. Factories, shifting from producing war materials to consumer goods, benefited from this pent-up demand. The availability of money allowed people to purchase items like cars, which were scarce during the war, thus stimulating the economy and preventing a depression through increased consumer spending.
The buildup of savings did this because it meant that after the war, people would have lots of money saved up that they could use to buy consumer goods. Once the war ended, the factories would have to turn from producing war materiel to producing consumer goods again. If people had little money, there would have been little demand for these goods. But during WWII, people saved a great deal of money. Once the war ended, they could use that money to buy things like cars that had not been available during the war. This flurry of buying prevented a depression.
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