Great Depression

The mother of all American economic disasters (and there have been plenty…), the Great Depression wasn't called "great" for nothing. It was no 98-pound weakling of a financial crisis.

Beginning with the Stock Market Crash of 1929 (but not directly caused by it, FYI), the Great Depression lasts through all of the 1930s and into the 40s. Historians mostly agree that it only ends thanks to World War II (silver lining, we guess?).

Get your Shmoop on about the Great Depression here.

Bank Run

Here's an equation for you: lack of money + fear = a bank run.

People rush to their local bank to pull out their money, because they're afraid the cash won't be there later. (You might remember the famous bank run scene from everyone's favorite holiday feel-good film It's a Wonderful Life.

Sound

As in "keep your money in a sound bank." In this case, sound means solid, stable, reliable.

Fiat Currency

In some countries, Fiat cars are used as money. So sleek. So tiny. So Italian.

Sorry, we're lying to you (one of the many things that distinguishes us from FDR). Fiat currency is money that is backed by the government, is government-issued and government-printed.

Any currency that is the nationally recognized trading item in a country (the dollar in the U.S., the euro in the European Union, the peso in Mexico, etc.) is fiat currency.

Speculation

A lot of people make a lot of money (or lose a lot of money) through speculation. It means guessing (gambling, if you will, because people speculate with their dollars) whether the stock market, the value of currency, or even the economy as a whole will go up or down in the future.

Deposit

Putting your money in the bank. A key point of FDR's "First Fireside Chat" is that when you deposit your money into a bank, it doesn't just sit in a vault. It is actually loaned out to people so that they can buy a house, or a car, or pay for college. That way, money is constantly in use and is helping to increase the country's economy.

U.S. Treasury

The government department that handles the country's money. Technically speaking, the Treasury oversees money in circulation and issues bonds (which are loans to the government that have to be paid back).

Bond

Think of a bond like an I.O.U. (as in, "I owe you")…rather than a slick British super-spy.

If a person or a business loans money to, say, the U.S. government, the government gives them a bond. The bond is worth money, because the government is agreeing to pay back that person or business (with interest) after a set period of time.

Here's a quick example: you give the government $1,000, to be paid back in ten years at an interest rate of 2% (which is a per-year deal). Two percent of $1,000 is $20, so each of those ten years you're making $20, and at the end of the ten years you get your initial loan back as well. Bam, you just turned $1,000 into $1,200 and helped your government in the process.

Credit

Credit is kind of like a loan to buy something. You buy something now, without paying for it, agreeing that you'll pay for it later. (One reason the Great Depression happened was because so many people in the 1920s were buying things with credit, but then couldn't pay back their loans…)

A credit card works the same way—when you swipe it, you're "paying" for the item by taking out a small loan from the credit card company, who then bills you for it later. When you pay that bill with actual money, you're then paying off that loan.

Mortgage

Ever bought a house? No? Well, you might buy one someday, and you'll probably take out a mortgage. It's essentially a loan for buying property.

Houses and apartments usually cost hundreds of thousands of dollars, and it's rare for someone to plunk down all of that money at once. So, people have mortgages—they buy the property with a loan, then pay it back slowly every month or so.

Legislation

A fancy word for a law or laws. If someone says, "Congress passed new legislation today" that means they passed a new law today. Fancy-shmancy government jargon FTW.

Rehabilitation

Bringing something back to normal. In "First Fireside Chat," FDR talks about rehabilitating the banks, meaning bringing them back to a functioning state.

Federal Reserve System

This is the government's central bank. It supervises and regulates other banks in the country, and carries out monetary policy, a crucial part of keeping our country out of another Great Depression.

Twelve Federal Reserve Banks

Turns out the U.S. is pretty big, so just one central bank can't coordinate everything on its own. The twelve Federal Reserve banks are spread across the country, so that each one is in charge of a region. If you're curious, these banks are in: Boston, New York, Cleveland, Philadelphia, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.

Bureau of Engraving and Printing

Among other things, this government agency designs and prints your dollar bills. They were behind the redesign of the updated $20 bill.