Reasons Why The Crash Of Wall Street Happened - 1066 Words

This paper will talk about the various reasons why the crash of Wall Street happened; such as the credit boom, buying on margin, and irrational exuberance. Also, mismatch between production and consumption, and the weaknesses of the banking system. The many reasons why the Great Depression occurred but the main ones are from the uneven distribution of income, loss of export sales, and mistakes by the Federal Reserve. This paper will also give examples on how the economic problems in 1929 were similar to the economic problems in 2008 in America. Lastly, this paper will talk about the different lessons learned from the very hard struggle of going through the Great Depression. One of the reasons the crash of Wall street occurred was because of credit boom and buying on margin, these two things were are basically the same thing. Many people thought the stock market would only go up so they would use the bank for credit and loans to purchase stock. Everyone who borrowed money from the ban k had to repay it quickly after the market crash in 1929 because the banks needed money to pay back the money they borrowed from their consumers which they invested in stock. Irrational Exuberance happened when the stock broker questioned the value of the shares. Many stock brokers began to grossly overvalue the shares which had a great effect on the crash of the stock market. Mismatch between production and consumption was occurred when companies made lots of product but the demand was loweredShow MoreRelatedImpact of Great Depression on International Relations in the 1930s771 Words   |  4 PagesImpact of Great Depression on International Relations in the 1930s In the early 1920s the Great Depression hit. The chaos caused by the First World War was the main reason for the Great Depression. The USA had lent large amounts of money to other countries to help with their damages from the war. 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