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Established in 1913, this act made many reserve banks, this contributed to the cause of the Great depression by fueling stock market investments and making credit easier for normal people, helping inflate and create more fake wealth until it eventually exploded. -
WW1 ends, due to no need for war supplies, layoffs in those and other secondary military fields were common. -
The past opinions of credit was bad because people knew they couldn't pay it off, opinions shifted when the economic boom hit, making it seem they'd only get richer and be able to pay their credit off. Credit became popular and many people used credit for large purchases or took loans out for stock market investments. -
18th amendment that stated the ban on alcohol creation, sale, and transportation. People ratified this amendment because they believed they could amend their lifestyles onto others, and that alcohol was the cause of many problems such as domestic violence/problems, gambling, and many things wrong with the world. However this did not work and only made about 3X as many illegal bars as there was legal bars. This also lead to the creation of dating without a chauffeur or chaperone. -
Income taxes were reduced during the roaring 20's to boost economic growth after WW1, this affected everyone, meaning not only did the rich get richer, the poor got less poor with income tax reductions all over. This made unemployment rates drop. -
Get-rich-quick schemes grew very popular during the 1920's, so did the stock market- which at the time was more like blindly gambling since no information or rules for investing or giving information about the companies were installed. It became more and more common for normal people to invest to get rich.
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Economy became stable again, America was leader of the economic boom. Many people's paychecks were raised, but only few saw an almost 70% increase as others saw barely anything. -
Farmers were left out of economic boom, less demand for more supply meant lower prices on crops and less income for farmers. Many of the rich got richer and didn't spend their money, making the gap between the average and the wealthy even larger. -
Laissez-faire policies is the lack of government involvement in the economy; Herbert Hoover (served 1929-1933) who was president at the time abided by this construct, his lack of involvement made the economy grow more unstable and "fake", more made up of promised money (credit) and less of actual numbers or materials. -
Gross Domestic Product of the US dropped about 36%, the market- despite small booms, was dropping rapidly everyday. On Black Thursday, it had dropped 11%, a small boom had occurred but then on Black Tuesday, it fell another 12% -
When the stock market crashed and all savings were wiped out, many people still had to pay back all their borrowed credit, and with Herbert Hoover's Laissez-faire policies, the economy only got worse.
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Now that nobody could pay back their credit or loans with real wealth, many had to take out loans to survive. But as they couldn't pay back their original loans, many of these were very risky to banks that were still open for business, because none could possibly be paid off and no real money was in circulation. -
Once the stock market had crashed, many people had gone to the banks to retrieve their savings. This overwhelmed the banks and they were not able to give anyone 100% of their money, most people's savings accounts had been wiped out entirely, about 7 billion $ in total. Banks closed down due to how many withdrawals were taking place, and because of most people owing credit to the banks, meaning everyone had real and fake wealth that had caused a ga that eventually was triggered into collapsing. -
Without any consumers to buy products, or demand for the supply, many layoffs occurred, which means the production of goods went down, only further increasing the prices.
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Though the New Deal didn't solve the depression, it is not to be underestimated in its involvement in healing. When FDR became president of the US, his new deal was called alphabet soup because of how many different corps were involved and created. His new deal has begun to pick at many of the underlying causes of the depression, however, only WW2 got the US out of the depression because of the new motivation/goal to give purpose workers and pull the US out. -
Cites/sources:
Investopedia
Cato Institute
Federal Reserve History
Library of Congress