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Originally Posted by 20000miles  The Crash is only a symptom of a much bigger problem. The stock market had already started to sag about 5% in early 1928, but the Fed delivered the killer inflationary blow - a $300million dollar purchase of acceptances. The money supply increased about $2billion and the stock market soared once more.
Even today, there is a great deal of ignorance of the monetary expansion when it comes to bull markets - notice how Zimbabwe had the best performing stock market in 2007!
Moreover this inflation did not enter the economy evenly, but rather capital goods industries. Pig iron workers' wages rose very extensively for instance.
I think you are engaging in circular reasoning when you blame "agricultural recession" and "boom and bust" as causes of the crisis. |
This is the problem when engaging with your comments, you are right and everyone else is struggling to undersatnd. The headings that I give are taken directly from the cirriculum in the UK on the subject. Regarding the 'Pig Iron' workers, the fact remains that the vast majority of US workers were on less than $2000 pa. The fact remains that greed coupled with weak govenrment caused the problem and that is prescisly what occured again on this occasion.