You appear to enjoy coming here and making a fool of yourself.<quoted text> Yeah right! We are setting up the same conditions that led to the crash. I've been saying it for years. Wheat Yes wheat. A sudden drop in the price of wheat due to a couple of countries bragging about their great crops started the slide which lead to the crash. Any little thing can start it. That's the point. I've also said for years we are reliving the 20's and 30's. It wasn't called 'The Roaring 20's' for nothing.
First off, wheat is sold on commodities markets in Chicago, not on Wall St. DUH
Second, the rise in equities has been slow and steady, as compared to 1929, when the market had risen by 400% between 1923 and 1929.
Under Obama, it's risen over 100% in four years, look at the chart, it is very orderly.
Third, it has no bearing on the earnings of Corporations, which were seriously overvalued, with P/E's averaging 60. Unsustainable in any era.
You're such a lightweight. You e]read an article and suddenly you have the answer to what caused the crash of 1929, which economists are still studying. But it's all easy for an over the road trucker, eh??
Let me spell it out for you, truck boy;
Causes of the Crash
There were many causes that resulted in the great depression of 1929. The first and foremost reason is overvalued stocks. Analysts tell that the stocks were priced much and the P/E ratios were quite high. The P/E ratio of the traded stocks in 1929 averaged around 60. Another reason that has been deduced is that of margin buying. Investors had to pay just 10% of the total value of the stocks at the time of buying and the rest they could pay in installments. The stock market could not stay stabilized when such a huge amount of money was borrowed from it. Analysts found out that in 1929, almost 5% of the total value of the stock market was due to margin buying.
The federal policies are also to be blamed as said by the analysts. The prevailing president of the Federal Reserve Board, Mr. Adolph Miller introduced very strict monetary policies. The rates of interest on the broker loans were unnaturally increased making it all the more difficult for the investors. Bad banking structure can also be blamed for the great depression of 1929. There was huge number of new banks that were cropping up every single day. The restrictions that were imposed by the federation weren’t good enough. They didn’t have any regulation to determine the minimum capital required to start up a bank or any rules regarding the amount of reserves that was allowed to be lent. Obviously most of these banks were insolvent and were closing at an equally faster rate as they were opening up. When the market crashed in 1929, the situations became worse. These banks which had invested in stocks heavily couldn’t were perished due to the market crash.
Reforms After the Crash
The stock market crash of 1929 resulted in a loss of around $14 billion of wealth. Now after the crash certain reform acts had to be set up to again stabilize the market. One of the steps that was taken was the setting up of the Securities and Exchange Commission or the SEC. The role of this institution was to lay down the market rules and punish in case of any violation of the laws. An Act called the Glass-Stegall Act was passed. This act told that the commercial and the investment banks could no longer have any association between them. But as the time passed the federal rules and the Glass- Stegall rule have liberalized to a great extent. The other reform that was introduced was the establishment of the Federal deposit Insurance Corporation or the FDIC. This was meant to see that each and every individual bank account was insured up to $100000.