I try to learn more in depth about topics that interest me. I was reading about the Great Depression, but it is so hard to understand for me what exactly cause it, as I read it, it feels like a mix of fancy words that don’t tell me much (likely due to my lack of knowledge and english not being my 1st language). So, could anyone explain me in simple words what exactly cause the Great Depression?
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One of the things not discussed enough is inflation in the stock market in the 1920s. This article isn’t very long, but it is informative: [https://www.pbs.org/fmc/timeline/estockmktcrash.htm](https://www.pbs.org/fmc/timeline/estockmktcrash.htm). Stock prices aren’t arbitrary. Though pricing a stock is more subjective than other investment vehicles, there does come a time in which stocks are overvalued. The 1920s saw a great overvaluing of stocks as more people were investing post-WWI, and the roaring 20s where thought to be a prosperous time. In fact one way people invested more is by ‘buying on margin’. Buying on margin is a term for buying stock with borrowed money. The idea is you borrow at one rate, let’s say 3%, then you hope to make a greater return, say 8%, and then pay back the loan by selling the stock and keeping that 5% margin as pure profit. But what comes up must come down, and it all came down in a hurry in 1929. Not only did people lose their investments, but those margin buyers also defaulted, straining the financial markets further.
Also around this time the Dust Bowl hit the Midwest. As part of the rush to obtain land, certain lands in the Midwest which weren’t ideal for farming were settled for it in the early 20th century. That land, not ideal to begin with, was overfarmed and by the end of the 20s, the overfarming, coupled with years of poor rainfall, decimated crop yields, which drove farmers to bankruptcy, and strained financial markets further and banks had to foreclose on properties that were effectively worth nothing.
There were other causes as well, but those are two of the major ones.
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