1. YeeHaw! Game Rules 1. Each pair begins the game with 5 points.
2. Before each round of the game, you and your partner will decide among the following three options. The option you choose will determine how many points you earn in that round.
Hold Tight: Keep what you have.
Play It Safe: Potential for modest gains.
Go for the Gold!: Potential for amazing gains.
3. For each round, check the box on your scoring sheet to indicate which option you are choosing. This must be done before the die is rolled and cannot be changed
4. After the die is rolled, determine how many points you earned in that round. If you “Go for the Gold!,” points earned are determined by the number rolled. The higher the roll, the greater the number of points.
5. After each round, compute and enter your point total in the “Running Total” column.

2. READY?!?
Place your bet for Round 1 only
Let’s Roll!

3. Round 1

4. Round 2

5. Round 3

6. Round 4

7. Round 5

8. Round 6

9. Round 7

10. Round 8

11. Round 9

12. Round 10

13. Causes of the Great Depression

14. How was the Yee Haw. game like history
How was the Yee Haw! game like history? Create the table on the right on a full page of your notebook. After reading “A Shaky Stock Market Triggers a Banking Crisis,” record at least three parallels between the game and history. Use these Key Content Terms in your response:
Black Tuesday
stock market crash
buying on margin
Add one more comparison on your own.

15. HOOVER WINS 1928 ELECTION
Republican Herbert Hoover ran against Democrat Alfred E. Smith in the 1928 election
Hoover emphasized years of prosperity under Republican administrations
Hoover won an overwhelming victory
On TUesday, October 29, 1929, a day still remembered as Black Tuesday stock prices plunged. Stocks lost their value because all at once, many people wanted to sell their shares but very few people wanted to buy. Many saw their fortunes evaporate and the good times were over. The decade was not supposed to end this way. Just the year before, Herbert Hoover had boasted the the “nation was nearer to the final triumph over poverty than ever before in any history of any land”

16. Young Hoover supporter in 1928

18. Causes of the Great Depression
Overproduction
Banking Practices & Fed Policies
Causes of the Great Depression
Stock Market
Political Decisions

19. Over-production

20. Overproduction
The “roaring twenties” was an era of great prosperity and economic growth.
Americans felt they deserved to reward themselves after the sacrifices of World War I. A return to normalcy.
Assembly-line allowed more goods to be made quickly than ever before
The availability of so many consumer goods, such as electric appliances, radios and automobiles, offered to make life easier.
This led to a high demand for such goods, so companies began to produce more and more, in order to meet that demand
Eventually this led to overproduction: more products are created than people can afford to buy

21. Farm Overproduction
In 1929, Agriculture still makes up half of the US economy
During World War I, with European farms in ruin, the American farm was a prosperous business.
Increased food production during World War I was an economic “boom” for many farmers, who borrowed money to enlarge and modernize their farms.
The government had also subsidized farms during the war, paying high prices for wheat and grains.
When the subsidies were cut, it became difficult for many farmers to pay their debts when commodity prices dropped to normal levels.
Commodity: marketable item produced to satisfy wants or needs

22. So What?!
Overproduction of consumer goods and agricultural goods means…
Supply was greater than demand.
A surplus of goods in the market begins to drive prices down.
Declining prices means declining profits
Declining profits means stock values (for corporations) begin to fall.

23. Banking & Money Policies

24. Consumer Credit
Businesses were investing profits in the stock market and not in workers wages. So….
The uneven distribution of wealth grows % of the population owns 36.7% of the nations wealth by 1929 it has grown to 44.2%
The uneven distribution of wealth didn’t stop the poor and middle class from wanting to possess luxury items, such as cars and radios…
But, wages were not keeping up with the prices …and that created problems!

25. Consumer Credit
One solution was to let products be purchased on credit.
The concept of “buying now and paying later” caught on quickly.
By the end of the 1920s, 60% of the cars and 80% of the radios were bought on installment credit.
Consumerism in the New Era saw a change in US buying behavior. Thrift, saving, and frugality were replaced with consumption and “keeping up with the Jones’”

26. The Federal Reserve Board
The Federal Reserve Board (the Fed) was created by Congress in 1917 in response to the Banking Crisis of 1907.
The Fed was created as the US central bank with two primary functions:
1) Regulate and inspect the nations commercial banks, by assuring banks had sufficient cash reserves
2) Regulate the amount of money circulating in the economy. Known as Monetary Policy
To stimulate growth the Fed increases money in circulation by lowering interest rates for member banks, and decrease in the amount of money banks are required to keep in reserve

27. Fed Monetary Policy
The Federal Reserve was suppose to serve as a protective “watchdog” of the nation’s economy.
It had the power to set the interest rate for loans issued by banks.
In the 1920’s, the Fed encouraged buying on credit by lowering interest rates (discount rate)
Eventually so many people were buying on credit that inflation increased.
In its regulatory role, the Federal Reserve was also established to prevent bank closings.

28. So What?!
By 1929 the Fed decided to slow the rapid (runaway?) growth by increasing interest rates.
Raising interest rates means that it cost more to borrow and raises the price of existing debt.
People borrowed less and purchased fewer goods.
They also started using available cash to pay off debt and therefore purchased fewer goods.
Less demand = surplus goods = deflation = declining profits = declining stock prices = rising unemployment

29. The Stock Market

30. The Stock Market
The Stock Market is seen as an indicator of the nation’s economy.
In reality it is only an index of the value of corporate stocks based primarily on the market demand for a particular stock
As an investment the goal is to buy low and sell high.
The value of stocks soared in the 1920’s as corporate profits rose, fueled by mass consumption
Once a rich man’s game, everyone was “in the market” in the 1920’s

31. The Stock Market’s bubble was about to break
SEEDS OF TROUBLE
By the late 1920s, problems with the economy emerged
Speculation: Too many Americans were engaged in speculation – buying stocks & bonds hoping for a quick profit
Margin: Americans were buying “on margin” – paying a small percentage of a stock’s price as a down payment and borrowing the rest
The Stock Market’s bubble was about to break

32. Stock Market: Banks & Margins
In 1927 banks did two stupid, greedy things:
1) Banks began letting customers borrow money to buy stocks and used the customers stock holdings as collateral for the loan They gave money to people with no money to gamble
2) Banks started to use depositors money to speculate in the stock market. Normally banks pay you interest for savings Then they loan it to businesses or families that were good risks to buy homes or start companies etc.
Not speculate in the market!
By 1929, banks had made billions of dollars in risky loans with little collateral to back them up if borrowers defaulted.

33. So What Went Wrong?
In September the Stock Market had some unusual up & down movements
Wealthy investors stepped in a bought up shares at bargain prices.
On October 24, the market took a plunge . . .the worst was yet to come
Those who bought on margin panicked

34. The 1929 CRASH
On October 29, now known as Black Tuesday, the bottom fell out
16.4 million shares were sold that day – prices plummeted
Investors lose 26 billion dollars (367 billion in 2017 dollars)
People who had bought on margin (credit) were stuck with huge debts

35. By mid-November, investors had lost about $30 billion

36. So What?!
Banks made risky loans to borrowers to buy stocks on the margin.
Banks used depositors money to speculate in the market
When panic shook the market, the banks were left holding the bag

37. Political Decisions

38. Political Decisions
The severity of the Depression could have been lessened if policy makers would have been open to new ideas
Conservative economic policy
Laissez faire, let the market right itself without government intervention
Balance the budget, do not spend more than collected in tax revenue
Prevailing belief that private charities, churches, state and local governments provide relief and assistance to the poor, not the Federal Government
Most of these were ill equipped to deal with the number of people in need

39. HAWLEY-SMOOT TARIFF
The U.S. was not the only country gripped by the Great Depression (Much of Europe suffered throughout the 1920s post-WWI)
In 1930, Congress passed the toughest tariff in U.S. history called the Hawley- Smoot Tariff
raised tariffs by 50%
It was meant to protect U.S. industry yet had the opposite effect
Other countries enacted their own tariffs and soon world trade fell 40%

40. So What?!
Hoover supported government actions to ease the crisis BUT they were not enough
The Hawley-Smoot Tariff
Shantytowns would later be nicknamed Hoovervilles and he would inherit a bad reputation

41. https://www.youtube.com/watch?v=zSfzFWU5LbY Time: beginning-12:05

42. Effects of the Crash Great Crash World Payments Investors
Businesses and Workers
Investors lose millions.
Businesses lose profits.
Consumer spending drops.
Workers are laid off.
Businesses cut investment and production Some fail.
Banks
Businesses and workers cannot repay bank loans.
Savings accounts are wiped out.
Bank runs occur.
Banks run out of money and fail.
World Payments
Overall U.S. production plummets.
U.S. investors have little or no money to invest.
U.S. investments in Germany decline.
German war payments to Allies fall off.
Europeans cannot afford American goods.
Allies cannot pay debts to United States.
Pathways

43. Bubbles and the 2008 Recession
Copy the diagram below into your notebook. Write a definition of speculative bubble. Then list at least four examples of speculative bubbles from the past and at least one way a speculative bubble might affect your life today.
Take notes on the video of the 2008 recession and write a paragraph that includes responses to these questions:
How did the 2008 financial crisis happen?
How did the government respond?
Some say the government should not have intervened and others say without the bailout it could have gotten much worse and there could have been a worldwide depression. What do you think, should the government intervene?
Can you make any predictions about the our economy and what may happen next?