Comment by tekla
3 hours ago
Are you kidding me? Have you heard of a tiny event called the Great Depression?
The Japanese Lost Decade?
Greece Debt Crisis?
3 hours ago
Are you kidding me? Have you heard of a tiny event called the Great Depression?
The Japanese Lost Decade?
Greece Debt Crisis?
Those are credit bubbles bursting, not the result of hard money.
Yes, this often happens in pairs: the overcorrection after excessive credit results in a deflationary money market, destroying any chance at recovery.
This is a almost entirely oversimplified take on the Great Depression to the point of meaninglessness
For a decade before Black Thursday,there had been many things that were signs that the economy was having trouble even if the "Roaring Twenties" made it seem like everything was fine.
IMO the largest issue was that American farm sector was teetering on the edge because of the dramatic drop in crop prices. This deflation screwed over farmers who mechanized with lots of debt, which because of said deflation, became impossible to pay off.
The fed also implemented rate hikes to curb speculation right before 1929 which froze up credit contributing to deflation
The problem of the Great Depression was NOT the stock market crash, it arguably wasn't even the real start, just the most "spectacular" one. The problem was that with the entire economy deflating, it caused a massive downward spiral that the Fed did not really have the tools to fix, because of Gold Standard and lack of legal authorization.
This was why the Govt went to extreme lengths to try and figure out how to raise prices, which is why you get programs to pay farmers to NOT grow food, and mass killings of pigs and cows and other farm animals, even as the farmers who raised those lifestock went hungry.
So no, speculation was not the problem, it just sparked the key issue of the fact that the economy was deflation uncontrolled, but was just hidden.
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