Consumerism- Consumers spending money to support the economy
Buying on credit- Buy now, pay later. Buying on a promise to pay back what one doesn't have
Republican Philosophy of Harding, Coolidge, Hoover:
-Laissez-faire; Government stays out of businesses
-Rugged individualism; Individuals relying on themselves to deal with their issues. No government help
-Trickle down theory; Tax breaks for the wealthy to able them to expand big businesses which will add more jobs and trickle down the social classes
Stock- A small purchasable share of a company
Stock market- Place where stocks are bought and sold based in New York
Dow Jones Industrial Average- 30 largest companies' stock
Buying on margin- Borrowing money from a banker or stock broker to buy stock. Buying stocks on credit
Watered stock- Overvalued stocks
Stock pooling- A group of people buying the same stock for a specific period of time to make a profit
Speculation with stocks- Looking to buy and sell stock for a quick profit
Income inequality-
Federal Reserve Board- People that carry out the rules of the stock market. Created in 1913 by Pres. Woodrow Wilson. Goal was to stop banking panics(runs). Broke the country into 12 districts with a Federal Reserve Bank in each one.
Federal Reserve Powers:
-Banker's Bank stops bank runs
-Controls amount of money in and out of circulation
-Controls interests rates for borrowing money
-Encourages people to borrow money for big purchases(homes, cars, etc.)
Causes of Stock Market Crash-1929:
-Stock prices were grossly inflated, did not have real value(watered stock prices)
-Overproduction of goods
-Uneven distribution of wealth
-Too much borrowing from banks
-Federal reserve increased interest rates
-Lack of Government regulation
-Didn't save blog post-
Effects on the Stock Market
- Investors and business lose millions of dollars
- Thousands of banks failing and had to close down
- Businesses cut production
= Lay off workers
+ Unemployment rises
-Great depression sets in throughout the world
Causes of the Great depression
- Production of goods
- Underproduction of goods by consumers
= people weren't buying anything
-Farmers were making too much food-
- High protective tariff policies of the 1920's
= Tariff means taxes on imported goods
- Tax benefiting the rich-rich got richer, poor go poorer
- Stock Market crash
Effects of the Great depression (know the effects)
- Great depression helped cause WWII
- New Deal program start-makes the US gov. much larger
=Jobs are created
- Deficit spending starts
The Vicious Cycle of the Great Depression
- Companies lose money
=Lay people off
+unemployment rate goes up
>People don't buy goods because they have no money
<Company looses money
- The New Deal creates many organizations that are still around today-social security, welfare
- Fascist, military and communist dictators come to power throughout the world
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