All economies float on a sea of confidence.
A boom occurs when the confidence increases based more on emotion than economic reality.
Prices of trade able assets rise , thus causing a buying spree of these trade able assets .This has the effect of increasing the price of same.
The trade able asset can be anything. Stocks and Shares, property
commodities ,paintings ,vintage cars ,precious metals , rare birds eggs ,wine.
During the period of time in question the trade able assets were Stock Market related.
A boom and bust could occur in rare bird's eggs . People would make money -people would lose money-but because the scale of the activity is very low -it would have zero impact on the economy at large
Not so Stock market assets -Not so houses in recent times
During the late 1920's everybody wanted a slice of the action .i.e. Stock market assets.Houses did not feature at that time.
Mass borrowing took place to finance this buying spree.
The brokers who organize the trade often lent the money. 20% down -the Broker supplied the rest .Pay me back later
The emotion element is based on the misplaced belief that prices will rise forever or at least not decline . That attitude is essential for any boom.
On October 24, 1929 saw heavy selling. The bankers stepped in and saved the day. Life is still good
On October 28, 1929 Many people reviewed the events of the few earlier days. Life is still good -but let's not push our luck. Can we always rely on bankers?
Better to get out now whilst we are ahead.
On October 29, 1929 A mass exit from the stock market caused a drop in share values that no power on the planet could control .
Its panic time!
Confidence tanked-Globally
True confidence did not return until USA declared war on Japan .
8th December 1941
Business knew that the American government had no choice but to spend, spend, spend.
Confidence has made a welcome return.
Booms and Busts will remain. Fundamental human behavior has not changed
Copyright © 2026 eLLeNow.com All Rights Reserved.
