Loc: One of the Mexicos
Originally Posted By: logtroll
It's a good thing the stock market had gotten so high, so there's room to fall a long ways before hitting bottom. Who knew that Trump's economy was so fragile? Not even Big Government bandaids like tax cuts or practically zero interest rates seem to have much effect. I guess he's toast for a second term, even a moldy ham sandwich could beat him in November.
The are many commonalities with 1929 (I highlighted them - some have different causes, such as trade tariffs). And in addition to consumer debt being high, the national debt is also out of control. The national debt:GDP ratio was 16% in 1929. The Federal Reserve helped to create an unsustainable boom in the 1920s by lowering interest rates.
Throughout the 1920s, the U.S. economy expanded rapidly, and the nation’s total wealth more than doubled between 1920 and 1929, a period dubbed “the Roaring Twenties.”
The stock market, centered at the New York Stock Exchange on Wall Street in New York City, was the scene of reckless speculation, where everyone from millionaire tycoons to cooks and janitors poured their savings into stocks. As a result, the stock market underwent rapid expansion, reaching its peak in August 1929.
By then, production had already declined and unemployment had risen, leaving stock prices much higher than their actual value. Additionally, wages at that time were low, consumer debt was proliferating, the agricultural sector of the economy was struggling due to drought and falling food prices and banks had an excess of large loans that could not be liquidated.
The American economy entered a mild recession during the summer of 1929, as consumer spending slowed and unsold goods began to pile up, which in turn slowed factory production. Nonetheless, stock prices continued to rise, and by the fall of that year had reached stratospheric levels that could not be justified by expected future earnings.
What do you think Trump's economy will look like come November?
“You never change things by fighting the existing reality. To change something, build a new model that makes the old model obsolete.” – R. Buckminster Fuller