Flashback to the Crash of 1929
As one commentator memorably explained afterwards: ‘Anyone who bought stocks in mid 1929 and held onto them saw most of his or her adult life pass by before getting back to even.’
So why did the Crash — which had been precipitated by government increases in interest rates to cool off the stock market boom — turn into a depression?
Simply because of the uncertainty the Crash fuelled.
No one knew what consequences of the Crash were going to be — so everyone decided to stop trading until things settled down.
Banks stopped lending money. Consumers stopped buying durable goods from shops.
The stores, in turn, stopped buying from the manufacturers.
Firms, therefore, cut back on production and laid off workers. And all of this fed on itself to make the depression still worse.
In the following ten years 13 million Americans lost their jobs, with 12,000 losing their jobs every single working day.
Some 20,000 companies went bankrupt, including 1,616 banks, and one in every 20 farmers was evicted from his land.
In 1932, the worst year of the Great Depression which continued until the beginning of the war, an astounding 23,000 Americans committed suicide in a single year.

