Today we finished up our discussion about the Stock Market Crash and the Great Depression.Causes of the crash:- Over speculation during the 1920’s- Overproduction of goods- Uneven distribution of wealth in the 1920’s- Too much borrowing from banks- Stock prices grossly inflated; did not have “real” value- Stocks were over priced- Massive fraud and illegal activity- Margin buy- Federal Reserve PolicyEffects:- Investors and businesses lose millions- Thousands of banks fail, savings are wiped out- Businesses cut production, lay off thousands of workers- Unemployment rises, consumer base drops further- Economic contraction in the United States spreads to Europe- The Great Depression sets inBuying on margin is like buying on credit. If stocks go up they make more but when they go down everyone started selling. The value of stocks was based on borrowed money. Speculators didn’t look at business’s records they look at the stock value. People soon stopped buying because they either had the product or they were in debt. They weren’t buying much because they had used credit and that is how they became in debt. People lost confidence. We went over the cycle again.The Crash of 1929Movie Questions:1. Causes2. Story of SMC3. What is pooling?4. What did the Federal Reserve Board do?1.2.If the there is a great demand for an item the stock goes up if there is not a great demand the stock goes down. People who had stocks that did well were extremely wealthy. There was hope in the beginning. Things were looking very good. The economy was changing. There were all sorts of new technologies. Buy now and pay later had become a way of life.3.
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