Being that these types of assets are From significant parts of savings, this is a logical argument. 1982 to 1989, the Dow Jones Average went from 884 to 2,509 which drastically increased capital assets’ values. There was an impressive drop in the unemployment rate during Reagan’s administration as well. 17 million new jobs were created and the unemployment rate fell from 9.7% to 5.5% by the time Reagan’s presidential term ended (Niskanen & Moore 1996). The hours worked by working aged adults grew during
Unfortunately, it did. On October 29, 1929, the stock market crashed, and the United States once again found itself in economic turmoil. Prior to this, many people had begun purchasing stock on margin, or in other words, on credit. When the market crashed, the stock brokers called the loans they gave out back so that their companies may survive, except the loans couldn’t be paid back by the debtors. Many of the nation’s banks soon went under because they too had paid into the stock market and had lost much of their money.
There are several parallels that lead us to believe that history may be repeating itself. Today’s U.S. economy is producing 2.2% more goods output then before the economic recession started in the late 2000’s, but with 3.8% fewer workers. This can be attributed to our modern day recession stimulating huge productivity and efficiency gains as business let mediocre employees go to save on labor costs. They have learned to do more with less. Unemployment rates were steadily on the rise just a few months ago and corporate profits are at all time highs.
Why did the stock market crash in October 1929? In the years leading up to 1929, with the finding of gold in Alaska, South America, and Canada, the US economy which held the gold standard at that time was receiving a large influx of wealth. This led to consumer confidence because if the country was doing so financially well, then logic leads one to believe that the country's businesses will be doing equally well. One way people took advantage of this influx was the stock market. Eventually people started investing more money than they had in the stock market, using loans from lenders.
The average disposable Income rose 9% from 1920 to 1929, while the top 1% enjoyed a stupendous 75% increase of disposable income. An example of the quick increase of the disparity of wealth is Charles Ponzi and the Ponzi scheme who had shipped clients’ money across the oceans and had his agents buy international postal union reply coupons at depressed rates. Then sell them in other alien outposts. This
The stock market crash was involved in the causes of the Great Depression, because it was the trigger point of it all. “In the 1920s many people wanted to put their money into stocks, so prices got higher and higher” (Lunn, Moore 235) the stock markets were very high by 1929. Although there were some people who bought the stocks, “the stock market was fuelled by borrowed cash.” (Berton 29) in other words the stock market mainly made sales from people who could not afford the stock completely and when it crashed on October 29th, 1929 “the Montreal and Toronto stock exchanges also plunged downward; 16 companies alone lost $300 million of their value” (Bolotta, Hawkes 104) also causing investors who were buying on credit, to lose their homes, businesses, cars and many of their other belongings that they put on loan to buy their shares, leaving them homeless, jobless and if having a car for transportation was a necessity, then these investors and their families had nothing at all. Therefore the stock market crash was a very significant part for the cause of the Great
We have downfall and then we pick things back up and everything gets better. But , just when things get better, it happens to get worse again. Many believe erroneously that the stock market crash that occurred on Black Tuesday, October 29, 1929 is one and the same with the Great Depression. In fact, it was one of the major causes that led to the Great Depression. Two months after the original crash in October, stockholders had lost more than $40 billion dollars.
It all starts back at the beginning. In the 20s the prices of stocks were skyrocketing. People had more money and life was good. But it was all an illusion. As prices soured so did business cost.
income inequality. Sixty-one percent in this ABC News/Washington Post poll think the wealthgap is larger than it’s been historically. And despite longstanding public concerns about activist government, six in 10 also say the federal government should seek to reduce that differential. The public’s concern is buttressed by a recent Congressional Budget Office estimate that the wealthiest 1 percent of Americans have nearly tripled their incomes since 1979, while the bottom 80 percent of earners have seen their share of the nation’s total income slightly decline. This poll, produced for ABC by Langer Research Associates, finds that 37 percent perceive the wealth gap as “much larger” than it’s been; just 5 percent think it’s smaller.
Isaac Bernstein Mr. Cooper US History 12 March 2013 What Caused the Great Depression? The Great Depression, which lasted from 1929 to 1940, was caused by over-production and Americans gambling with their stocks. The environment from the twenties drastically changed from being a “roaring” time period, to the thirties, which were filled with depression. America went from spending money, going to baseball games, and buying fancy clothes, to unemployment, severe debt, and living off food stamps. What happened to America?