February 10 - Great Depression First and Second New Deal I...

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February 10, 2009 Great Depression, First and Second New Deal I. Stock Market Crash a. Why did it crash? Why did this trigger a great depression? b. 1920s: stock market kept increasing c. economy was booming in 1920s d. a lot of this boom was due to consumer spending e. consumer culture i. urban and suburban are growing with electricity and automobiles ii. a lot of consumer demands 1. want a car and another car 2. encouraged by mass ads 3. BUT people are not making the money they spend! 4. People are BOROWING the money! 5. Leverage 6. Not just individual consumers, but also companies f. as a country we’ve been lending money to germany for their reperation g. everyone is borrowing money! h. So people start putting money into the stock market i. Corruption in market i. Corporations faking their assets ii. False economy of loans j. October 1929 : the “bubble” pops k. Investors start taking their money out and the market crashes and stays down for decade II. Triggered depression because a. A lot of underlying weaknesses in the economy b. Economy was not very diversified, overdependent on few big industries i. dependent on: 1. automobiles! c. big gap between rich and poor i. need consumers who earn enough money ii. but while corp profit kept going up, workers wages only raise slightly iii.
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