THIS DAY IN 1929
THE STOCK MARKET CRASH
SIGNIFICANCE
Although the stock market eventually rebounded as it always has, investors fueled by margin buying were wiped out immediately. While it’s controversial whether this led to the Great Depression or was a symptom of it, the effects of the Depression were certainly worse for those who lost everything on this day.
RESULTS
A correction of this magnitude began the dialogue as to how much government oversight was needed in the market and economy as a whole. The very next election would begin a reform of 19th Century capitalism that today sees the government spending equal to 20% of GDP, but actual control of a much larger segment of the economy through regulations and tax laws.
The crash was the beginning of the end of federalism. The government demanded that states cede authority to the federal government and invented the idea of bribing states with federal money to play ball. In creating a Supreme Court that would go along with his overreaching goodness, he refocused the court to take up every ill of society and that eventually resulted in the creation of laws with little popular support.
DR’s intent to rebuild the country through corporate taxation and regulation only stymied the free market’s ability to create jobs, so although the economy started to recover in the mid 1930s, a severe recession hit in 1937 and 1938. The subsidies to cut farm production are still with us today. Not only is the American grocery bill artificially high, but the consumers are using their own tax dollars to make it so.
1 comment:
For good or ill, there is no question that FDR will go down as one of the most influential presidents of our country.
What irks me is that today's congress sees fit to outlaw online gambling yet the entire wealth of our populace can be directly linked to gambling, be it entrepreneurism or playing the stock market. Anybody is free to risk their life savings by investing in fiber optics but nobody is allowed to play poker against the idle rich.
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