PBS – Surviving the Dustbowl Let’s look at the environmental causes of the Great Depression

The Great Depression

Now we will look @ the economic causes of The Great Depression

Credit: Buy Now… Pay Later Interest = 1920s people began buying items on credit Previously: Installment buying becomes common practice 1) 2) 3) 4) If you fail to make payments……

Speculation Get rich quick schemes Florida Land Boom Example: Speculator = Florida Land Boom Example: Real estate developers selling lots on Florida coast to speculators Many bought w/o ever seeing the land Price for Florida real estate was rising (buy low, sell high = profit) many bought useless land that was under water w/o knowing it Hurricane hit, devastating Florida, real estate prices plummeted & speculators lost big (couldn’t sell land under water) Does this happen today?

Speculation in Stock Market Federal Reserve Board (Fed) Main purpose = Does this by ______________________ affects availability of credit (loans) & can increase or decrease $ supply During roaring 20s interest rates were _________ What does this lead to?

Speculation in Stock Market Low interest rates created bull market  Led to buying “on margin” What’s this mean? Why would you do this? What happens if the market dips?

Speculation in Stock Market (Bull Market) What is stock? FYI: Dow Jones Industrial Average (The Dow) An average measure of stock performance Currently made up of 30 large companies in various industries (McDonalds, Coca-Cola, Walmart, Disney) Measured in points (sum of all 30 companies’ stock prices divided by a divisor… currently, every $1 change in price in a particular stock within the DJIA = 7.56 point movement)

Speculation in Stock Market (Bull Market) 1928-1929 DJIA doubled People were trying “day trading” techniques What is this? Result: September 1929: prices began to slip Creditors began calling in on loans, which people could no longer afford Wednesday, October 23, 1929: Tuesday, October 29, 1929 “Black Tuesday”:

Speculative Bubbles What happened? Speculative bubble: What have been our most recent bubbles?

Government Failure After 1929 Crash During an economic downturn what gov’t policies usually get put in place & why? (think about what has happened recently) What did the FED due after the Oct. 1929 crash & why? Consequences?

Run on the Banks Market crashed then what… The way banks “make” money: When the market crashed the worst case scenario happened Remember reserve requirements were low (FED) By 1933 1/5th of banks in business in 1930 were gone (3,800 failed in 1931 & 1932)

American Experience Crash of 1929

Ponzi Scheme Presentation (20 pts) With a partner: Research Charles Ponzi & his Ponzi Scheme What was his scheme? (2 pt) How did it work? (3 pts) Find one example of a present day Ponzi Scheme & report back to the class what it is. Discuss what the scheme is, who does it target, what can you do to avoid becoming a victim of it? (7 pts) Create a quick public service announcement presentation that describes the original Ponzi scheme & a present day example Can be poster, powerpoint, prezi, movie maker, etc. (5 pts) MLA Citation (3 pts)

Maxed Out Issues w/ credit today