What do you think caused the Great Depression?

What do you think caused the Great Depression?

swing_voter said:

What do you think caused the Great Depression?

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We already know, one of the first real examples of bubble and pop economics on record.

OrphanSlug said:

We already know, one of the first real examples of bubble and pop economics on record.

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What bubble popped?

swing_voter said:

What bubble popped?

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Reactionary WWI decisions.

Most of the issue boils down to how the US aligned itself staying on the gold standard against various European nations fighting out WWI who tried to temporarily abandon the gold standard and print their way through warfare spending needs. Post WWI many of those European nations tried to go back and it resulted in consequences.

Post WWI in the US industry was booming and so was investment.

The issue was demand for Gold was off the chart as nations tried to go back, and the US had already increased its own reserve of gold some 40% just outside of a decade in time while other nations were scrambling while also rebuilding their own economies. One thing that could not happen was the US dollar being out of sync with its gold exchange, so in a way that means inflationary pressures were inherent. France and the UK had somewhat better success in trying to get back on some concept of the Gold Standard but in the end it was still out of balance with other nations (including the US that never left the standard) and ultimately everyone agreed to deflationary policies to sort this out.

One small problem, the US was cruising right along with internal economic gains, including new found levels of investment in the stock market. Something like 400%+ in not just participation in the stock market but also holding. Another small problem, deflationary policies could not include much US monetary policy because of the Gold Standard.

It worked, and those deflationary policies kicked off a world wide Great Depression, caused the Stock Market collapse, and both the US and various nations across Europe fell into horrible economic conditions. Because of the Gold Standard, and other nations trying to get back on that standard, monetary policy was not all that great at dealing with real aggregate demand fault.

The bubble popped, a sharp rise in economic and investment mentality in the US collapsed in spectacular form. For the purposes of this discussion the Great Depression was one of the first real examples of bubble influences in an economic entirely exploding. It was also the first real example we had of why conservative hands off economic thinking was an absolute failure. The collapse eat itself as production halted to match demand collapsing, in the absence of any sense of fiscal policy to deal with all this aggregate demand fault the result was prolonged disaster claiming both plenty of life and wiping out plenty of wealth along with it.

swing_voter said:

What do you think caused the Great Depression?

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Too much production, corrupt Wall Street and stock market, unregulated markets, falling farm prices during Coolridge, over valuation of commodities.

I think it was the banks collapsing. We didn't have a central banking system back then, banks were independently owned. The movie "It's a Wonderful Life" is about this.

There was a run on the banks, and they collapsed. They called in their loans, people didn't have money to pay the loans cause nobody was working.

After the banks were put out of business, you couldn't get a loan to buy new farm equipment, a house, a car, nothing. That mean all those people who built that stuff lost their jobs, and it all snowballed.

I shudder to think about what would or could happen if the FED unloaded their 7 trillion dollar portfolio and stopped pumping up markets, along with other central banks.
People thank Trump policies for the market bubble -- no, it's the FED. Everything is in a mega bubble now, gold, stocks, homes... everything except real jobs and the economy, good luck when the unwind happens.

swing_voter said:

What do you think caused the Great Depression?

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Greed.

swing_voter said:

I think it was the banks collapsing. We didn't have a central banking system back then, banks were independently owned. The movie "It's a Wonderful Life" is about this.

There was a run on the banks, and they collapsed. They called in their loans, people didn't have money to pay the loans cause nobody was working.

After the banks were put out of business, you couldn't get a loan to buy new farm equipment, a house, a car, nothing. That mean all those people who built that stuff lost their jobs, and it all snowballed.

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well we had the fed reserve