What produced the Great Depression was unrestricted buying on “margin”. Everybody, EVERYBODY, got into the Market not as a long term investment, but on a “flipping” basis, where the last person in line gets stuck with the check. Too many people were buying with a lack of hard money to back up their purchases, so when the market naturally corrected itself, it fell apart.
You mean, kind of like the real estate market today?
What produced the Great Depression was unrestricted buying on “margin”. Everybody, EVERYBODY, got into the Market not as a long term investment, but on a “flipping” basis, where the last person in line gets stuck with the check. Too many people were buying with a lack of hard money to back up their purchases, so when the market naturally corrected itself, it fell apart.You're confusing the '29 Crash with the Great Depression. These are related, but entirely distinct events with distinct causes. Following WWI there was a severe market crash caused, in part, by overexpansion. However, the 1919/20 crash did not turn into an extended depression because the government of 1921, under Harding, didn't try to manipulate its way out of a market correction.
Loose monetary policy fueled the '28//29 bubble, but tight monetary policy, along with the 1930 tariff, extended the crash into a depression. From there, FDR made the depression near permanent with the New Deal and the "National Recovery Act," which was essentially a coup d'etat of the national economy.
So, no, the Great Depression has nothing to do with today's real estate bubble. If there's a more serious crash, it does not correlate that a severe or long depression will follow. That's up to whoever gets elected in '08. Be afraid, very afraid of a democratic government during a downturn.
I disagree. That led to the stock market crash of 1929 but not the Great Depression.
What caused the Great Depression was the passage of the Smoot-Hartley Tariff Act of 1930, which arguably encouraged other countries to retaliate with tariffs of their own. At virtually the same time, Congress unwittingly passed the largest peacetime tax increase in the history of the United States. The combination of these two events caused, not just the United States, but also the entire world to sink into a deep depression.
What percentage of market capital was a margin loan?
I don't think the author is denying the cause of the Depression, but pointing out that FDR's leftist policies made it worse and made it last much longer.
If he had kept the government's meddling fingers out of it, the market would have smacked down the margin-buying Ponzi scheme and then recovered, much as the Dot Com bubble smacked a few people really hard, but didn't tank the whole market for a decade.
No, that produced the stock market crash of 1929. The Depression was another issue entirely.