The Great Depression began after the stock market crash but was not the result of the stock market crash. The stock market crash is not equivalent to the Great Depression. During the Great Depression there was a massive unemployment rate, hardships but this didn’t occur until 1930-1931. The causes that contributed towards the Great Depression were America’s weak banking system, the Federal Reserve, and the Hoover Administration. Majority of the banking systems were small and individual institutions relied on their own resources. Depositors began to withdraw their money at once causing the bank to collapse, the bank collapsed because there was not enough money on reserve. A wave of banks began to fail, they called in loans and sold assets causing credit to freeze.
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They did not infuse money into the economy to combat the deflationary cycle. The Hoover Administration did not allow the government to take total control of the situation. They relied on private businesses, and state and local government to stimulate the economy, which was insufficient. Hoover used the powers of the government to cushion the situation at hands. The 2008 housing crisis resulted in greed from investors. To summarize the housing crisis, investors would invest into real estate because it was a low-risk, with high profitable returns. Due to the success rate of real estate still increasing, more people took advantage of this opportunity. Individuals with low-income and poor credit history had access to acquire a mortgage because the belief of the bank was the worst thing can happen is default. When default happens the bank resales the house to the next person. Well the bank was inevitable wrong, more and more individuals began to let their houses fall into default. There were more houses on the market than there were interested buyers. Homeowners who were paying the mortgages, were paying a high-end mortgage that was more than their house was
They did not infuse money into the economy to combat the deflationary cycle. The Hoover Administration did not allow the government to take total control of the situation. They relied on private businesses, and state and local government to stimulate the economy, which was insufficient. Hoover used the powers of the government to cushion the situation at hands. The 2008 housing crisis resulted in greed from investors. To summarize the housing crisis, investors would invest into real estate because it was a low-risk, with high profitable returns. Due to the success rate of real estate still increasing, more people took advantage of this opportunity. Individuals with low-income and poor credit history had access to acquire a mortgage because the belief of the bank was the worst thing can happen is default. When default happens the bank resales the house to the next person. Well the bank was inevitable wrong, more and more individuals began to let their houses fall into default. There were more houses on the market than there were interested buyers. Homeowners who were paying the mortgages, were paying a high-end mortgage that was more than their house was