Essay on Woo: Financial Crisis Comparison

Submitted By danielbwatson
Words: 570
Pages: 3

Financial Crisis Comparison 1929 vs. 2009 In the crisis of 1929 and 2009 a mass production is accompanied mass consumption which in turn implies a distribution of wealth, wealth that in non­existent but wealth that is currently being produced by the consumption. In 1929 the object being mass produced were stocks and in 2009 the housing and credit crisis. In both crisis’ the prices of the objects were greater than the actual value, so when individuals see that they go running to get the true value and when banks don’t have that money due to the
“just numbers in your account” and not actual money.
In 1929 banks loaned large amounts of money to business that were never able to pay back the loans, giving banks less money and many businesses to go out of business. As people started to move out of the agriculture phase and into the industrial sector, agriculture started to fall as the industries started to bloom. Which led to farmers taking out loans that could not be repaid because of crop failures and the start of the dust bowl. This was one the key elements into the stock market crash of 1929. As many people started to fail the prices of stocks started to go down, leading to widespread bank runs as many Americans tried to get their money out but when they banks did not have enough money they were shut down.
In 2008 a somewhat new financial crisis came into play. The use of credit cards was not new but now many people started to use them. As more and more people used them with money they did not have banks had to pay the credit without having sufficient funds, gold and silver, to back them up. This was the fall of the banks in 2008 as many people started to rely on credit. “This was less than the 80% drop during the Great

Depression, but that loss took three years” (Amadeo 2). The company Lehman let people with dubious financial means to borrow money at lower interest rate and lower payment if they would later pay back with high interest rates. Everyone was expecting