Talk:Stock market crash of 1929
What caused this? Were stocks overvalued?
Did the Federal government prolong the boom too long, thus making the bust far worse than it would have been naturally?
Is this anything like the period of 1994-1999 when stocks rose 15% per year (instead of the normal 10%) in the "Internet Boom"? Microsoft stock was rising exponentially until December 1999, when it reached a peak to which it never returned. --Ed Poor Talk 15:33, 9 July 2007 (EDT)
- Well I assume we're going to have to get into some discussion of monetary policy and the gold standard. RobS 15:39, 9 July 2007 (EDT)
- As to over valuation, exactly right. The market topped out about 1927, and as always, tended to the extreme with a top side blowoff (to use the technical term). However, we need to articulate that the over valuation was based upon stocks bought on credit (10% margin) tied to the gold standard. When the value of stocks dropped, the original debt was still due in constant dollars. The Federal Reserve was not in the business of devaluing currency and debt obligations in those days by artifically pumping up the money supply. RobS 16:06, 9 July 2007 (EDT)