What cause the 1929 crash?

POSTED BY: dreamtrove
UPDATED: Friday, August 25, 2006 22:06
VIEWED: 1625
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DREAMTROVE

Friday, August 25, 2006 2:07 AM

Signym pointed out that I had the wrong date on the hoover tax hikes, and so they couldn't have cause the crash of '29, being as they were in '32.

Which opens a can of worms. What did cause it?

Also, what caused the crash of 2000? I suspect the parallel here is that it's the same thing all over again.

Also, I think that the root causes are the causes of the depression which followed. I think I'll dodge the question "are we living in the second great depression?" because mathematically we must be, even if it doesn't seem like it.

But what was the cause, or causes, and what played the largest part?

DREAMTROVE

Friday, August 25, 2006 2:09 AM

Just thought that was intresting, I thought I'd throw it out there.

I want to nominate Boom-bust as part of it, both crashes had overzealous run-ups before them.

DREAMTROVE

Friday, August 25, 2006 2:17 AM

I believe this is federal spending as a % of gdp.

I'm still getting nowhere. I like my simple wrong explanation better.

DREAMTROVE

Friday, August 25, 2006 2:20 AM

The market crash of 1929

The market crash of 2000

FREDGIBLET

Friday, August 25, 2006 2:21 AM

Quote:
Originally posted by dreamtrove:
Signym pointed out that I had the wrong date on the hoover tax hikes, and so they couldn't have cause the crash of '29, being as they were in '32.

Which opens a can of worms. What did cause it?

Also, what caused the crash of 2000? I suspect the parallel here is that it's the same thing all over again.

Also, I think that the root causes are the causes of the depression which followed. I think I'll dodge the question "are we living in the second great depression?" because mathematically we must be, even if it doesn't seem like it.

But what was the cause, or causes, and what played the largest part?

Simple. People bought low, the market swung up they sold high, the market swung down. This reapeated several times getting more and more exaggerated, then the major players in the stock market got scared and stayed out, the market bottomed out and stayed down. Over the next few days or weeks the economic effects took hold and the depression became self-sustaining.

DREAMTROVE

Friday, August 25, 2006 2:24 AM

Fred

I don't buy it. I thought about this possibility, but depression isn't invented out of air, neither is market. If people buy and sell, they shouldn't create debt.

FREDGIBLET

Friday, August 25, 2006 2:29 AM

Forgot to add, most of the people were buying stocks on credit.

DREAMTROVE

Friday, August 25, 2006 2:37 AM

Well, one thing's clear: Wars create national debt.

This was interesting

There has been a taxburden shift in corporate america from the profits to the payroll. This seems extremely regressive to me, instead of taxing the most successful corporations, we are now taxing the ones with the most workers

DREAMTROVE

Friday, August 25, 2006 2:40 AM

In 1929, at the time of the crash, 2% of shares were held on margin. That's not statistically significant. It wasn't in 2000 either. That's been a punching bag of blame for a long time, but I think it's a red herring.

FREDGIBLET

Friday, August 25, 2006 2:46 AM

All right, maybe I'm wrong on that, but as for creating debt how's this sound:

You put all your money into the stock market (because you keep hearing that your friends are making tons with it). The stock market crashes with all your money in it, you get fired because the company you work for lost a lot of money (in the stock market), you borrow to stay alive. Debt is created.

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