Recession Depression Questions

Disclaimer: I do not claim to be an authority on this subject. In fact, I am very much a non-authority. This is a result of my admittedly limited observations, based on some slight research. I am a college student, and have some very strong views which are subject to change in the future as I gain more knowledge. This is mostly just the outpouring of my head into print--welcome to a tour of my head.

The stock market crash in 1929 was partially a result of inferior technology. The archaic ticker tape machines in use at the time couldn’t handle the volume of transactions that occurred on October 29th. A record 12 point some-odd million transactions happened that day, and the machines fell far behind this volume. Since people couldn’t track their stock ownership, they tried to get rid of it as fast as possible, which led to the massive drop in the DOW.

The relinquishing of stock was a natural and logical response to the lag in the ticker tape--why hold onto it if you can’t track where it’s going?

Technology would have helped immensely here. Had we had the technology we now do--the internet, computers, databases, etc.--the stock market crash would probably not have happened, and we might have just seen more growth as usual in the late 20s and early 30s, whatever. People jumped onto the bandwagon and sold their stock as fast as possible, and the simple supply and demand laws were starkly illustrated; too many sellers, not nearly enough buyers. Stock prices, and therefore the economy, rocketed toward the ground.

People weren’t able to see that things would certainly even out in the long run--supply and demand works both ways. As supply goes down, demand goes up. Supply goes up, demand goes down. Once it gets out of balance, the economy WILL right itself eventually. Those that took hard risks may be out of luck, but anyone that didn’t do something stupid and bet the farm on their livelihood will be just fine.

Instead of letting things even out naturally, the Democratic party stepped in and pandered to the crass demands of the American consumer to “have it now!” The American attitude is as follows: “I cannot see the end, so I panic. I look for a source besides myself to try to quell my panic. Look! The government is offering me money! I’ll take it, and hope that the money comes from somewhere other than myself.”

This is a stupid outlook. The money the government hands out ALWAYS comes from YOUR pocket in the long run. You always have more money than someone else.

The recent recession was a bit of a different story. This one was a product of human greed--and on a very large scale. Many people did, in fact, “bet the farm” on their livelihood by taking out massive loans on housing that they couldn’t possibly pay back. The banks, too, were to blame, by even giving these loans out in the first place. The housing market wasn’t the only one to blame for the bubble, though. Americans were buying EVERYTHING on credit, and buying far beyond their means.

The government is now trying to get everyone to spend again to try and jumpstart the businesses (and therefore the jobs) that were hit by the crash. This is a bad idea, though. Where’s that money coming from? Joe Consumer, in the long run. How does this make sense at all? “Let’s take money from nowhere and give it to people!” Oh wait. Yeah.

This has been a very long and rambling post, but here’s a summary for you--the Depression was triggered by technological inadequacies, and prolonged by the stupid little Americans and their stupid little government. The current recession was caused by greedy people, and has been prolonged by greedy people putting empty promises in office. Big difference in a lot of ways (a stock market crash will never happen again based on a record-setting day in stock trading), but not so big in others (people are still uninformed and greedy, and the Democrats are back in power at this point). Also, never trust your friendly local politicians who promise to make it all better by giving you free money.

This concludes your tour of my head for now.