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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: NOW who wrote (58281)4/15/2006 4:36:11 PM
From: CalculatedRisk  Read Replies (5) of 110194
 
Answer: Farm Tractor.

Question: What was the root cause of the Great Depression?

People focus on the stock bubble, monetary policy, trade barriers, etc., but the root cause was the rapid productivity increase at farms, due to the farm tractor - and the shift of workers from farms to cities.

This forced down real wages throughout the '20s and boosted corporate profits. Greater profits led to stock appreciation - and eventually appreciation led to speculation and a stock bubble.

The President, Silent Cal, thought anything that was good for business was good for America. His focus was on cutting taxes for the wealthy. Coolidge was an ideologue who didn't understand the limitations of the free market and ignored the growing problems of the less fortunate in America.

Meanwhile the consumer base was getting in trouble ...
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