US industries were producing more goods then it could sell, this is bad because if the people are not buying goods it becomes useless and people needed to but them so that the economy grows but instead people didn’t buy because they had them already, therefore it was wasteful as no one wanted to buy, so it decreased the wealth of the economy. The most important reasons why the Wall Street crash happened were; the speculation ‘on the margin’, this was important because buying shares with a banks money and not being able to repay
The collapse of stock market happened because it had a weak foundation. In fact, it was dependent on borrowed money; banks would lend money to the population to buy shares in the market without making sure the borrowers were able to pay back. Moreover, facing the crisis over nine thousand banks were obliged to close, for they invested their client's savings in the stock market. Going through rough time financially, Americans are drastically forced to reduce their spending which lowered the amount of production; therefore, employers slashed the numbers of employees that caused the unemployment rate to rose from 4.2 in 1928 to 8.7 in 1930 and to 23.6 in 1932. In the middle of the crisis, several social classes experienced a harsh time.
The worst affected groups were farmers, farm labourers, workers in old industries, Black Americans and new immigrants. Also in many industries wages were low because the bosses opposed trade unions and resisted increases in pay to maximise profits. This added to the unequal distribution of wealth which in the long run decreased demand for products and so was therefore a long term cause of the depression. The next factor, Tariff policies, led to the rise of the country however they were exploited and ultimately led to the economic downfall of America. Tarriffs such as the Fordney Mcumber Tariff restricted imports on foreign goods to protect domestic industries from competition.
However, the government blamed the financial problems on the workers and especially the unions as strikes caused workforce to stop and the government went to the IMF, this however does not include Wilsons decision to devalue the pound as this was damaging on the economy because people were getting loess for their money and it disheartened a lot of the population. Source 7 agrees that the Labour Government’s failures outweigh its successes as it’s ‘achievements were not enough to dispel the impression
People thought these very companies were worth a fortune but because they were completely made up, they didn't have any value! He definitely abused capitalism and how the market runs. Ken Lay got obsessed with this fraud/ponzi scheme even when Enron was out of money and bankrupt. Ken Lay thought that this would in turns help them get back on their feet but he kept making the company go deeper and deeper into the hole where there was no chance of coming back up. Some of the head people in charge saw what was going on and took a couple of millions and bailed out just in time.
Even though production of goods increased by 50% it didn’t matter as people wages were not high enough and the vast majority of people did not have the disposable income to buy any luxuries with. The depression included almost everyone the majority of people at the time were working class. The poor couldn’t handle the economic turndown and unemployment, meaning they required aid, something which deepened the financial problems even further and was what really kept the depression going. An incredibly important factor for the great depression was overproduction. Overporodacution was not just an industrial manufacturing problem, but also an agricultural issue.
By buying on margin, the investor had to pay a fraction of the quoted price of any particular security. The additional money needed to cover the purchase was supplied by the broker, who obtained these funds from a bank with which he had deposited his customer’s stock as a collateral” (Doc G). While people thought of this as a good idea at the time, buying on a margin really caused more damage than good once the stock market began to crash. So rather than earning money, they were losing more money than they put in, which inevitably caused problems because they could not successfully pay the bank all the money that they owed. However, as bad as that may seem, being in debt was
Still, a lot of the gold was being used by the Romans to pay for luxury items. This then meant there was less gold to be used in coins. As the gold in coins decreased, so did their value. To make up for loss of value, merchants raised prices of the goods they sold. Many people stopped using coins and started to barter to get what they needed, Soon, salaries had to be paid in food and clothing, and taxes had were collected in fruits and vegetables.
This means thousands of American jobs are lost (Goldman, & Cleeland, 2003). Then, Wal-Mart and other stores look to other countries for their products which are cheaper and of lower quality. Another reason shoppers should avoid Wal-Mart is because it hurts the American working-class. Once factories have closed or moved to foreign countries, the working-class lose their jobs here in America. After, they lose their jobs, they search for jobs elsewhere.
After a certain amount of time the winner will notice that all of his fortune has been wasted on a drug that wasted away their body. Their money ends up being gone and they end up being broke with an addiction. A positive effect from winning the lottery would be less stress with their families finical problems. The economy today is making it hard for people to get jobs, keep their jobs, and commute to work. For an average family many are cutting back on things that aren’t needed such as going out to eat and family day trips.