georgephillip
Senator
Could it happen again? If there's an answer to that question about the future, it is probably found in the past.
http://www.history.com/topics/great-depression
"The American economy entered an ordinary recession during the summer of 1929, as consumer spending dropped and unsold goods began to pile up, slowing production. At the same time, stock prices continued to rise, and by the fall of that year had reached levels that could not be justified by anticipated future earnings.
"On October 24, 1929, the stock market bubble finally burst, as investors began dumping shares en masse.
"A record 12.9 million shares were traded that day, known as 'Black Thursday.' Five days later, on 'Black Tuesday' some 16 million shares were traded after another wave of panic swept Wall Street. Millions of shares ended up worthless, and those investors who had bought stocks 'on margin' (with borrowed money) were wiped out completely."
Some argue it was in January 1928 when the seeds of the Great Depression first began to germinate, and "the economic events of the Great Depression cannot be properly understood without a solid linkage to both the behavior of the money supply with Federal Reserve actions on one hand and the flawed structure of the interwar gold standard on the other."
https://eh.net/encyclopedia/an-overview-of-the-great-depression/
We no longer have a gold standard to kick around, but what about the Federal Reserve and its role as "arbiter of security prices"?
http://www.history.com/topics/great-depression
"The American economy entered an ordinary recession during the summer of 1929, as consumer spending dropped and unsold goods began to pile up, slowing production. At the same time, stock prices continued to rise, and by the fall of that year had reached levels that could not be justified by anticipated future earnings.
"On October 24, 1929, the stock market bubble finally burst, as investors began dumping shares en masse.
"A record 12.9 million shares were traded that day, known as 'Black Thursday.' Five days later, on 'Black Tuesday' some 16 million shares were traded after another wave of panic swept Wall Street. Millions of shares ended up worthless, and those investors who had bought stocks 'on margin' (with borrowed money) were wiped out completely."
Some argue it was in January 1928 when the seeds of the Great Depression first began to germinate, and "the economic events of the Great Depression cannot be properly understood without a solid linkage to both the behavior of the money supply with Federal Reserve actions on one hand and the flawed structure of the interwar gold standard on the other."
https://eh.net/encyclopedia/an-overview-of-the-great-depression/
We no longer have a gold standard to kick around, but what about the Federal Reserve and its role as "arbiter of security prices"?
