Nov 15, 2014
what was it?
• “For most Americans, at most times in American history, the economy has provided real opportunity for real individual success.
But what would you do if the economy suddenly stopped providing that opportunity? If it no longer seemed to matter how hard you worked, how smart you were, how responsibly you took care of your money? If the system just stopped working, seemingly dooming you to a life of poverty through no fault of your own?
Would you blame yourself?
Would you work harder, striving to prosper, against all odds, within the failing system?
Or would you try to change the system itself? And if so, what would you try to change it into?”1
1. Shmoop Editorial Team, "The Great Depression, "Shmoop University, Inc., 11 November 2008, http://www.shmoop.com/great-
depression/ (accessed November 28, 2010)
How Could This Happen?
By the test you will be able to answer:• Why did the stock market crash?• Why was the economy so bad for so long?• How did it affect people?• How did the government try to stop it?• Did it work? • What made the economy get better again?• Could this happen again? Are we headed
to another Depression?
Could another depression happen?
This is a video!To view go to:http://got.im/e3v
Unemployment now
Unemployment:
Stock market
• Stock: A small piece of a company that is bought and sold
• Stock market: A place where stocks and bonds are “traded” (bought and sold)
• Goal is to buy the stock, hold on to it for a time, and sell it for more than you paid
Risks of the Market
• Stocks go up and down
Stock price of Apple this year
iPad announced
iPads go on sale
Holiday shopping season
Short-term investors selling
September 1929: Greatest Crash in history
Causes
1. Speculation: Buying stock with the plan to sell it again quickly when the market rises
2. Buying on margin: Borrowing money to buy stocks
Example: I make a down payment of $5 for a $50 share, you promise to pay back the rest when you sell the stock I can buy $1,000 worth of stock for only $100. If stock crashes, I still owe $900
causes
3. Using too much credit: Booming economy, advertising, easy loans and installment plans made people borrow more than they could pay back
4. Overproduction: Too much stuff to sell, no one to buy it
5. Unequal distribution of wealth: Rich people got richer but workers’ wages didn’t rise, so they couldn’t buy the stuff being made
causes
6. Government policies: No regulation of the stock market
7. Problems in European economy impacted the U.S.
8. Weak farm economy: production too high, prices too low, debt too much
But most of all..
• Overconfidence: Investors felt like if they bought stocks they couldn’t lose.
They were wrong.