What started the great depression?
Too many people engaged in a frenzy of margin buying…a decrease in the stock market which caused lenders to call in the margin orders…which led to the borrowers needing to come up with cash to meet their margin calls…coupled with a less than rock solid banking system, which began to tremble when more and more people began to ask for their money back…which buckled when people began to lose confidence in the banking system and started runs on banks…which came about because of lack of regulations on the banking industry, and lack of enforcement of what regulations there were…and on and on and on… There’s a great book on the depression by John Kenneth Galbraith, whose name escapes me at the moment, which will provide a far more accurate and interesting picture than I have done.
