Assigned Blog #1-pick any topic on the great depression-person/event due Sunday night
Expectations- don't plagiarize, good effort how ever long it take to do topic justice, grammar and spelling correct, short paragraphs/indent, at least two pictures and two sources, personal thoughts and opinions. 30 points. 20 points for discussion.
Presentation Notes
What were the causes of the Stock Market Crash and the Great Depression?
Stock Market-a market where stocks and bonds are traded: stock exchange. Stock- buy/invest a part of a company. If they make money you make money, if they loose money you loose money.
Great Depression- the economic crisis beginning with the stock market crash in1929 through the 1930's
Stock market crash:
- Millionaires became penniless over night
- People that invested lost everything
- People believed in the strength of the stock market so they invested everything they had in it.
- Dow Jones Industrial Average-30 largest companies in the US (walmart ,disney, coke, microsoft,etc) It is a Stock market indicator-people look to Dow Jones to see how the stock market is doing in general. If dow jones is doing well, so is everyone else and vice versa. How the economy is doing.
- As soon as the gov't stopped spending money (New Deal) things went down again
Causes of the crash:
- Uneven sharing of wealth-1% of pop controlling all the money, other 99% weren't enough buying products, bad for companies
- Wages couldn't keep up production
- Heavy Increase of gambling and buying stocks
- The Business Cycle
- Tight Money Policy-when the fed reserve lowers interest rates the gov't is encouraging people to buy, but the gov't back then raised interest. People weren't buying anything so companies lost incomes and jobs. BUT the stock market was rising!?
- Buying on Margin- getting a loan to pay for stock. Buying stocks on credit. Buying on margin allowed average people to play the stock market. People assumed stocks would never go down. People borrowed from broker and couldn't payback-broker couldn't pay banks back-banks closed. People started realizing the stocks were increasing but the company was loosing money. Many people started selling their stocks.
- People were making too much or not enough products-
- Giant gap between rich and poor
- Shady Banking-banks invested in stock market. They used peoples money and invested in the stock market. When it crashed people's money was gone. that is how it effected a lot of people that were not investing in the stock market.
- Many people went into debt- people stopped spending money-cycle
- overexertion of using credit-buying on credit
- Overproduction of farm goods-lower prices. farmers weren't making money
- Government using a Laissez-faire approach-few laws and regulations on the stock market and banks
- Pooling- a bunch of rich guys pooled their interest together and invested in a company and they made a ton of money.
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