Where did all the money go during the Great Depression?

Question

Was trying to find some sources to answer this question (sources, not opinons please)

If there is a finite amount of money.. And the nation suffers a depression...Shouldnt there still be money there, just in the hands of fewer people?

Were there not people who profited off the depression? Buying forclosed properties, resources and goods. People were loosing their homes, but someone was taking ownership of them. People were loosing their belongings, but someone was buying things at estate auctions.. Banks were going under, but someone was buying their assets. Real estate doesnt vanish.

Things do not dissappear with out a trace. The value of the dollar may of been lower, but the dollar still existed...Instead of the wealth being distributed across the nation, it became more centralized.

Answer 1

There is indeed a finite amount of money. The question is, how often does that money change hands? Recall the Hume-Fisher equation of exchange:

MV = PQ, where

M is money supply,
V is velocity of money,
P is price level, and
Q is real GDP

Let's rewrite it: Q = MV / P

During the Great Depression, velocity of money dropped sharply (people who had money were unwilling to spent it, partially because of deflation; a dollar would buy more today than it did yesterday, so hoarding money was profitable). So while money was still there, it didn't work nearly as hard as it used to. As a result, incomes tanked and jobs became very hard to come by...

As to your other question (were there not people who profited off the depression?), there were. People who shorted stocks made a bundle, but there were relatively few of them. Also, quite a few large companies profited from the value of the dollar (which, contrary to your intuition, was very high during the depression, as the U.S. government finances were in top shape); Ford and Coca-Cola, for example, acquired land, real estate, and factories in Europe during that time. Several large U.S. financial institutions also made European acquisitions during this period...

Answer 2

During the depression, the world had widespread inflation....

After the first world war, Germany had a depression, because there was a lack of military and agriculture.....This affected European nations, and later influenced America.....

The 20's were considered "Roaring" because of false prosperity....

people would buy stocks on margin credit.....(they would only pay 10 of a stock and later pay)

The stock market wasnt regulated back then, so in october of 1929, everyone sold stock and the stock market crashed, which was a direct result of the false prosperity...

Businesses failed because nobody had the money to afford appliances and goods....

In the 20's there was surplus food, so farmers did not get a good income( supply and demand) They went down first and years later, the nation went starving....The food prices skyrocketed

Yes, people did profit....Have you ever heard of Al Capone and rumrunners?

Well the mobs were successful and the people who distributed alcohol were sucessful....(18th amendment made alcohol illegal)

Answer 3

The commonplace prosperity of the Nineteen Nineteen Twenties ended without warning with the inventory industry crash in October 1929 and the excellent economic melancholy that observed. The melancholy threatened human beings's jobs, mark downs, or perhaps their properties and farms. on the depths of the melancholy, over one-quarter of the yank artwork stress became out of artwork. for many human beings, those have been annoying situations. human beings had no money that became properly worth something stable success with the project :) playstation . sure there has continually been wealthy human beings,even during the melancholy.which will in no way substitute.(there is even a concept that they have been to blame for it!)

Answer 4

The money went to a few select individuals who secretly manipulated the stock market for their own world-dominating agendas. In time, governments caught on and printed more money, reducing their net worth by reducing the value of their stockpiled currencies. As the wealthy individuals sought means to recoup their losses, they started 2 world wars, and financed both sides carefully, pitting them against each other at different times, creating a 'war market economy'

Answer 5

A GOOD Q THAT I NEVER GIVE MUCH THOUGHT TO UNTIL YOU MENTIONED IT I DO KNOW THE BANKS KEPT A LOT OF IT UN TILL THINGS PICKED UP I GUESS THEY DIDN'T PAY INTEREST ON IT I HAVE AFEW OTHER THOUGHTS ON IT NOW BUT IF I SAID WHAT I'M THINKING I WOULD BE GAG ED & THROWN OF THE SITE SO I WONT SAY BUT IM LOOKING FORWARD TO SOME OF THE OTHER ANSWERS

Answer 6

If you buy a used car for $5,000, but now want to sell it and no one will pay more than $2000 for it, where did the $3000 go?

Answer 7

That makes sense, but what I was taught was tht all the costs of everything went up, it was a huge change, so people had to spend more money tht they didnt have. Plus taxes were going up.

Answer 8

the stock market wasn't regulated, and people where trading stocks as a form of money... essentially printing money.

and when money is printed without a stable base, it becomes worthless. it happened in USSR, and it happen in the states. Printing money at a whim leads to devaluement of money as it is just colored paper.

Answer 9

down the drain?