One of the main causes of both the crises was the federal government’s action. This led to the choking of the overall investment. During this time, President Hoover signed the law sky-high Smoot-Hawley Tariff. As a result, a lot of damage was done to the trade and American exports. The cause of great recession had been first observed during the times of 1990’s when the government was forcing the homeownership. This was the rule even for the people who did not deserve the same. This was done with the help of the vengeance. The mortgage based securities led to the building of the dubious mortgage loans. Consequently, the housing market faced a huge downturn. This led to the collapse of a large number of banks. The desire of the government to uplift the banks and the corporations led to the creation of the condition related to uncertainty and instability which resulted in the widening of the recession.In spite of the huge spending done by the federal government, the rate of unemployment was constantly high There was the fluctuation of unemployment but recovery had never been observed.
By the end of the second term of President Roosevelt, the rate of unemployment was around 21 percent. It was stated by the Treasury Secretary that the overall spending was much more than before. But most of the FDR’ programs continued even with the increase of the annual budget. During the times of Obama, the unemployment rate was around 8 per cent but the same increased to around 10 per cent. His advisors was puzzled that in spite of the large spending, the unemployment rate didn’t slash. He argued that the money which he spent was saving the jobs which had been lost otherwise. It had been insisted by the critics of Obama and Roosevelt that it was impossible to spend the money out of a recession. In one of the new deals, it was observed by the economics writer Henry Hazlitt that the spending on the public works by the large extent destroyed a large number of jobs in comparison to what had been created.