Other than the STOCK MARKET CRASH OF 1929. what was a cause?
2006-10-23 17:19:30 · 6 answers · asked by cari 1 in Education & Reference ➔ Homework Help
One of the causes of the Great Depression, if not THE cause, was the loosening of credit, during the '20s. So much money flowed into the economy that prices rose, for everything, including stocks. People borrowed and borrowed and borrowed, and used the money to buy houses in Florida or stocks in New York. But then, the Federal Reserve began to tighten its monetary policy. Credit dried up. Loans were called in, but the people who borrowed were unable to pay.
Kinda similar to what's happening, now. Monetary policy has been extremely loose, since the 1990s. After the stock market crash in 2000, monetary policy has been even looser. People could borrow money for less than the rate of inflation. So people borrowed and borrowed and borrowed, and used the money to buy what? Real estate. Stocks. So real estate prices went through the roof. Stock prices regained their pre-crash highs. And now, interest rates are rising. People with credit cards and adjustable-rate mortgages are being asked to pay more for their loans. Sometimes, more than they can afford to pay. Homes are being foreclosed on, already, and we're in the early stages of the tightening.
Hold onto your hat. It could happen, again.
2006-10-24 01:27:28 · answer #1 · answered by Larry Powers 3 · 0⤊ 0⤋
Record droughts created "dust bowls" in the prairies of the U.S. and Canada. These draughts caused severe food and water shortages. Google dust bowl + depression. Also, the economic events that led up to the Depression had a significant impact. It wasn't just that the stock market crashed, but that people were already living in huge debt in order to keep up the "roaring 20s lifestyle." When the stock market crashed people lost vast amounts of invested borrowed money. This caused many people to jump out buildings on Wall St.
2006-10-23 20:04:15 · answer #2 · answered by Tink 2 · 0⤊ 0⤋
Installment payments (credit purchasing) came into vogue. When the market collapsed, the economy went into a tailspin, businesses closed, jobs were lost, and people couldn't repay their loans. This in turn caused many banks to fail.
2006-10-24 00:12:00 · answer #3 · answered by Puppy 2 · 0⤊ 0⤋
The conclusion of WW I brought many veterans home and seeking employment. The war machine had employed many people that were suddenly without jobs. There were layoffs and not enough jobs for the returning soldiers.
2006-10-23 17:26:29 · answer #4 · answered by feliciadawn7 2 · 0⤊ 0⤋
The dust bowl. Combination of drought and wind literally transformed huge areas of farmland in the praries into a giant dust bowl.
2006-10-23 17:38:45 · answer #5 · answered by Mech_Eng 3 · 0⤊ 0⤋
there is some information on this site
http://en.wikipedia.org/wiki/Great_Depression
2006-10-23 17:25:10 · answer #6 · answered by tami 2 · 0⤊ 0⤋