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Based on what you have learned about the Stock Market Crash of 1929, which of the following might help you spot another stock market crisis?

User Bolick
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2 Answers

3 votes

Answer:

Step-by-step explanation:

Based on what you have learned about the Stock Market Crash of 1929, which of the-example-1
User Armen Avetisyan
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6 votes

Answer:

Step-by-step explanation:

The major problem with the market crash in 1929 was that the banks had extended too much credit to people and were left with the purchased shares as collatoral. That was fine as the market was going up.

When the market began to fall, the banks tried to sell the stock they held, but there were no buyers, or the buyers that there were just covering the shorts. Those buyers made money, but there were not enough of them.

As the market fall steepened, more and more banks were in trouble because their losses were greatly exceeded by what the stock was actually worth.

It was not only the stocks had become worthless, but the banks had as well.

That is not what is happening now. Now the problem is money. The money used to buy stocks is becoming more and more worthless, and no one seems to care. As long as the Fed keeps on printing money and creating liquidity the market bounces up to new highs when people invest in it.

Eventually someone is going to scream that the emperor has no clothes (ie that the money is worthless), and the whole mess is going to collapse around everyone's ankles.

If you think I'm pessimistic, you should read the comments written by people who are into gold. They are there because gold is money. It is perhaps the only true money left.

It may take a long time for what I'm writing about to happen, but it cannot fail to happen. There are no free lunches, except in people's imagination.

User Dom Shahbazi
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