Monday:
Mr. Bruns talked about the Stock Market game
Great Depression/Stock market key terms
-Consumerism: The Philosophy that people should spend money to help the economy -> lots of advertising
-Buying on credit: Buy now, pay later; allows 'normal' people to buy bigger things now
Republican Philosophy of Harding, Coolidge, Hoover
Laissez-faire: Government should stay out of business; Government should have their hands off of business
rugged individualism: It's up to you, the government isn't responsible for people's economic lives. It refers to the idea that each individual should be able to help themselves out, and that the government does not need to involve itself in people's economic lives nor in national economics in general.
trickle down theory: rich people get tax breaks -> big business can get bigger and give 'normal' people more jobs -> economy can turn around, people could spend money again
-Stock: it's a piece of the company, which you can buy to make/lose money
-Stock market: where stocks are bought and sold
-Dow Jones Industrial Average: Stock for the 30 largest company in the United States; if this stock is doing well the whole stock market is doing well
-Buying on margin: Buying Stock on credit; borrowing money and buy stocks with it; was one of the cause why the stock market crashed in the 1920's
Tuesday:
-Watered stock: Overvalued stock; happened because many bought stocks on credit (the money wasn't really there)
-Stock pooling: rich people got together and bought a new upcoming first cheap stock; led to overvalued stocks (watered stock)
-Speculation-with stocks: people who look at Stocks, buy it, and then sell it to make money; caused watered stock
-income inequality: gap between poor and rich one; United States for example have a problem with this, cause 10% of people control the money of everything; rich get richer and the poor get poorer
-Federal Reserve Board: group of people who carry out and made up rules
Federal Reserve's Powers: Banker's Bank- stop bank runs; controls the amount of money in circulation-> controls inflation and deflation; makes it a powerful organisation; controls interests rates for borrowing money
Federal Reserve's Powers: Banker's Bank- stop bank runs; controls the amount of money in circulation-> controls inflation and deflation; makes it a powerful organisation; controls interests rates for borrowing money
At the end we watched a movie about how the wealthiness is divided on the population of the United States
Wednesday:
Causes of the stock market crash:
1. Stock prices were inflated, didn't had really value; stock market prices went up, but the company did worst -> watered stock
Causes of the stock market crash:
1. Stock prices were inflated, didn't had really value; stock market prices went up, but the company did worst -> watered stock
2. over speculation
3. buying on margin: led to higher stock prices; stock isn't worth the money it costs
4. Overproduction of goods: farmers and companies made to much products -> prices (profit for the company) go down -> make less, prices go down, firing people
In late 1920's people were in dept, because of buying on credit and they had things so they didn't bought as much anymore
5. Uneven distribution of wealth: wide gap between rich and poor -> many poor people didn't buy anymore
6. Too much borrowing from bank: They gave money out easily; encouraged people to borrow money; didn't do background check; later the banks didn't got their money back;
7. Federal Reserve increased interest rates: is a bankers bank; controls deflation and inflation;
8. Lack of government: not many rules in the stock market, in 1930's government started to put rules on the stock market; rich people could play a game with the lower classes, which didn't really know the rules
October 1929: Black Tuesdays -> Stock market crashed
Watched a video: Crash in 1929
Thursday:
We finished watching the movie
We finished watching the movie
Friday:
Effects of the Stock Market Cash:
- Investors and business lose millions of dollars -> business closed -> people lost jobs
- Thousand of banks fail-savings are wiped out (took about a month
- Businesses cut production - lay off workers
- Unemployment rises - people quit spending money
- Great Depressions sets in
- Depression spreads to Europe and other parts of the world
Causes of the Great Depression: (Test: explain how the cause led to a depression)
- Overproduction of goods: can't sell it -> drop prices/deflation -> laying people off -> close it down
- Under consumption of goods by consumers: were in dept; had everything (car, fridge,..)
- Agriculture slump due to overproduction: they still product too much, because of the production amount during the war
- High protective tariff policies of the 1920's: makes you buy thing from America -> world trade goes back
- Taxes benefiting the rich; rich get richer and poor get poorer: there weren't enough rich people to keep it going, cause companies didn't make money
- Stock market crash
Effects of the GD (Test: know the effects)
- New Deal programs start - makes the US government much larger (was before 1930's really small) -> led to government spending much money -> higher tax
- Deficit spending starts
- The New Deal creates many organizations that are still around today - social security, welfare - (new deal, Franklin Roosevelt's idea to end the Great Depression; all about spending money)
- Fascist, military and communist dictators come to power throughout the world
The vicious cycle of the GD:
companies lose money -> unemployment rate goes up -> less people buy goods -> Companies profits fall -> lay more people off
At the end we talked about the video project
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