Question

In 1929, the great depression began in the united states, caused mainly by the stock market crash. what was a major cause of the stock market crash?

Answer 1

Overspeculation in the stock market was the main cause of the Stock Market Crash of 1929 (Black Tuesday). This overspeculation was worsened by peoples' lack of knowledge on how the stock market functions and led to over-inflation of stock prices

Answer 2

According to the historians, what triggered the fall of the stock market were these nine factors interacting with each other under debt conditions (Obligation that a person has to pay or return a thing, usually money), and deflation (Situation of excess supply that can cause a generalized decrease in prices or an economic recession), to create the mechanics of boom and bust.

The chain of events proceeded as shown below:

1.- Liquidation of debt and forced sales.

2.- Reduction in the money supply because the bank debts were liquidated.

3.- A fall in asset price levels.

4.- An even greater fall in the total value of companies, precipitating bankruptcies.

5.- A fall in profits.

6.- A reduction in production, trade and employment.

7.- Pessimism and loss of confidence.

8.- Accumulation of money.

9.- A fall in nominal interest rates and a rise in interest rates adjusted for deflation.