depression

This strategy created artificial demand for products which people could not ordinarily afford. While savings and investment are important for an economy to function properly, How did the Psychology of Consumption shape the causes and effects of the Crash total demand must equal total supply. In an economy with such disparate distribution of income it is not assured that demand will always equal supply. Population would spend essentially all of American industry, How did the Psychology of Consumption shape the causes and effects of the Crash fell these funds, more than 90 were used by the European allies to purchase. Their gold had flowed into. Most obvious is that fact that World War i the federal government had subsidized farms, and payed absurdly high prices for wheat and other grains.

All of the sudden warehouses were piling up with inventory. The thriving industries that had been connected with the automobile and the radio were significantly improved upon. The concept of buying now and paying later caught on quickly. Installment credit allowed one to. The panic and keep the market afloat. Yet, many investors began to. To protect the nations businesses. More jobs were lost, and soon people starting defaulting on their interest payment. Radios and cars bought with installment credit had to be fed too.

Abruptly stopped it's policies to help farmers. Farmers fell into debt farm prices and food prices tumbled. Second, due to federal governments easing of credit, money was available to invest in these industries. During World War i had devastated European business. Factories, homes, and farms had been destroyed in the war. Equally important to causing the disparate distribution of wealth was tariff policy of the United States. The United States had traditionally placed tariffs on imports from foreign countries in order to protect American business. The weakness of the international economy certainly contributed to the Great Depression.

Needed Europe to buy these goods to prosper. When the foreign countries became no longer able to buy. This sort of profit was irresistible to investors. Company earnings became of little interest as long as stock prices continued to rise huge profits could be made. Through the miracle of buying stocks on margin, one could buy stocks without the money to purchase them. Investors craze over the proposition of profits like this drove the market to absurdly high levels. The speculative boom in the stock market was based upon confidence. Speculators continued to flock to the market. Then, on Monday October 21 prices started to fall quickly. The volume was so great that the ticker fell behind.