The Causes of the Great Depression

The Causes of the Great Depression -...

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We’re still arguing about it but the culprits  likely were:  Underinvestment, underconsumption,  monetary policy and trade wars
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Industrial productivity led to higher corporate profits These profits led to more investment, higher wages Higher wages led to the creation of a large middle class This middle class bought new products like cars and  personal appliances
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Not all segments of the economy boomed (farming  stagnated) The relationship between money, the economy and  unemployment was poorly understood The government did not protect bank deposits or  regulate how the banks loaned money
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By the mid-20s the stock market was booming Investors were borrowing money from banks to buy  stock – this is called buying on margin If banks felt that a loan to buy stock was going to  lose money, they could force the borrower to pay it  back at once – called a margin call
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This note was uploaded on 11/27/2011 for the course HISTORY 103 taught by Professor Livingston during the Fall '08 term at Rutgers.

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The Causes of the Great Depression -...

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