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Financial Collapse - Coggle Diagram
Financial Collapse
A Flawed US Economy
Several weaknesses in the US economy
Uneven wealth distribution
The richest 5% fo the population earned 33% of all personal income
60% of American families still earned less than $2,000
Overproduction by business and agriculture
New farming methods and machinery increased crop production
Many Americans were buying less
Many of them could not afford to buy much because they were losing their jobs
Why might Americans have been buying less in the years proceeding the stock market crash?
Because workers kept losing their jobs which caused them to not be able to afford much
What major weakness had appeared in the American economy by 1929?
The rising productivity led to enormous profits
Value
The Stock Market Crashes
Question: How did Margin buying contribute to the stock market crash?
Because when the stock prices did drop a bit everyone started to sell and the prices dropped causing the people that couldn't afford and they lost everything
In 1929 wall Street in New York was the worlds financial capital.
Stock prices started soaring high and middle income people started to buy stocks
But people did buy with loans so it could mean if the prices fall they could not pay their loans
On October 24 stock prices began a sharp decline causing a panic
On October 29 a record 16 million shares were sold causing the stock market to collapse
(Concept: Consequence) The events leading up to the crash show what risky financial practices can do and how you can lose everything so fast
a visual image of the colapse
(Concept: markets) More people than ever started investing in the stock markets causing people to margin buy that should not and leads to the colapse of the stock market
