Just a copy and paste I saw online. I know margins are much tighter, but it looks a lot like today... As people became comfortable buying stocks, speculation became comfortable, too. When stories of overnight fortunes were reported in the news, regular folks wondered: Why not me? As the boom market continued, people were increasingly willing to buy stocks with borrowed money. The "buy now, pay later" method of credit was introduced to the stock market as "buying on margin." The deal was to put some of the money down, then pay for the rest of the shares with profits when the paper was sold. The concept works, provided that the stock prices keep going up. Buying on margin became so popular that by the late 1920s, "ninety percent of the purchase price of the stock was being made with borrowed money." Not only that ... the U.S. economy had come to depend on that activity. Before the crash, nearly forty cents of every dollar loaned in America was used to buy stocks. As more people bought stocks with borrowed money, the demand for stocks increased - as did the prices. In 1928 alone, the stock market doubled. Applying the formula of the time, a person with $6,000 could buy $60,000 worth of stock because all one had to do was put down 10% of the purchase price. With a market going ever upward, who would have thought about "paying the piper" - that is, the rest (90%) of the purchase price - in the event the value of the stock "tanked?" Recklessness became part of the national consciousness. "The market takes care of things pretty well," so why not join in? Calvin Cooledge, then President of the United States, had friends in the financial industry. Regulations, at the time, were so minimal that "the street" could run itself. (Does any of this sound familiar?)
the cause of the great depression was lack of regulation. the federal reserve created fiat money and created inflation. after 1918 or world war. The federal reserver created the boom of the 1920's by increasin 'debt' or easy credit . people were borrowing 95% margins to buy penny stocks and 99% mortgages and CAUSED the 'depression' via money tightening. and high interest rates and less loans. everybody was borrowing money since it was easily available and pushed by banks and central bank who was creating money. money was literally everywhere. fiat money was the new 'bitcoin' of the day. global trade still require hard currency for payment like gold, silver, or bonds. not fiat currency. a difference between a bond and fiat currency. bond has more value. fiat currency as we know it today is just trust in the central bank or (government) whether it's authoritarian or democratic gov't it doesn't matter .that it has value. causing 'bankruptcies' in corporate and individual 'bankruptcies....it took 10 years for the 'system' to recover and new 'regulations' so this type of boom and BUST won't happen again. or will it. bitcoin? and this federal reserve of using monetary policy to create GDP growth and prosperity rather than actual GDP growth.
the Federal Reserve like every central bank is an engine of inflation and instability, if there is an exception in the world please show with proof. two of the worst decisions of the US Supreme were declaring the creation of the Federal Reserve and the Federal Income Tax as being constitutional.
you want 100 banks issuing 100 different bank 'notes' as for taxes...taxes been around since creation of gov't 5000 years ago. that 'sales taxes' or tax. property tax.. whatever you call it. the gov't needs the money to pay for the 500 billion/year US military machine. protecting you! the income tax was created in world war 1 to fund the war. wasn't it? and never went away cause it was low like only 10% or small percentage. not like now where it's almost half of your money you earn. if taxes were low like under 10% people or corporations won't be hiding their income as it 's not worth it. people evading taxes have to pay money to money launders a fee. you know what i'm saying.
yes. people in those days performed due diligence on the credit worthiness of the bank. today with Federal insurance they don't care if banks make out[-sized risks. maybe for small amounts there should exist some kind of insurance.
the cause of the Great Depression was trade wars and onerous payments placed upon Germany after losing World War leading to German hyperinflation and the rise of hitler 's germany/
Do these two accounts of the cause of the great depression make the current score one all, between the Keynesians and the monetarists?
Not really. Stocks have not doubled in a year in recent times. You cant buy stocks with 10% margin (unless you count futures). I don't know if the current president has friends on Wall Street or not (probably has a few).