Yee Haw Game Rules 1 Each pair begins

Yee. Haw! Game Rules 1. Each pair begins the game with 5 points. 2. Before each round of the game, you and your partner will decide among the following three options. The option you choose will determine how many points you earn in that round. ● Hold Tight: Keep what you have. ● Play It Safe: Potential for modest gains. ● Go for the Gold!: Potential for amazing gains. 3. For each round, check the box on your scoring sheet to indicate which option you are choosing. This must be done before the die is rolled and cannot be changed 4. After the die is rolled, determine how many points you earned in that round. If you “Go for the Gold!, ” points earned are determined by the number rolled. The higher the roll, the greater the number of points. 5. After each round, compute and enter your point total in the “Running Total” column.

READY? !? ● Place your bet for Round 1 only ● Let’s Roll!

Round 1

Round 2

Round 3

Round 4

Round 5

Round 6

Round 7

Round 8

Round 9

Round 10

Causes of the Great Depression

How was the Yee Haw! game like history? Create the table on the right on a full page of your notebook. After reading “A Shaky Stock Market Triggers a Banking Crisis, ” record at least three parallels between the game and history. Use these Key Content Terms in your response: ● Black Tuesday ● stock market crash ● buying on margin Add one more comparison on your own.

HOOVER WINS 1928 ELECTION ● Republican Herbert Hoover ran against Democrat Alfred E. Smith in the 1928 election ● Hoover emphasized years of prosperity under Republican administrations ● Hoover won an overwhelming victory

Young Hoover supporter in 1928

Banking Practices & Fed Policies Overproduction Causes of the Great Depression Stock Market Political Decisions

Over-production

Overproduction ● The “roaring twenties” was an era of great prosperity and economic growth. ○ Americans felt they deserved to reward themselves after the sacrifices of World War I. A return to normalcy. ● Assembly-line allowed more goods to be made quickly than ever before ● The availability of so many consumer goods, such as electric appliances, radios and automobiles, offered to make life easier. ● This led to a high demand for such goods, so companies began to produce more and more, in order to meet that demand ● Eventually this led to overproduction: more products are created than people can afford to buy

Farm Overproduction In 1929, Agriculture still makes up half of the US economy ● During World War I, with European farms in ruin, the American farm was a prosperous business. ● Increased food production during World War I was an economic “boom” for many farmers, who borrowed money to enlarge and modernize their farms. ● The government had also subsidized farms during the war, paying high prices for wheat and grains. ● When the subsidies were cut, it became difficult for many farmers to pay their debts when commodity prices dropped to normal levels. ○ Commodity: marketable item produced to satisfy wants or needs

So What? ! Overproduction of consumer goods and agricultural goods means… ● Supply was greater than demand. ● A surplus of goods in the market begins to drive prices down. ● Declining prices means declining profits ● Declining profits means stock values (for corporations) begin to fall.

Banking & Money Policies

Consumer Credit ● Businesses were investing profits in the stock market and not in workers wages. So…. ● The uneven distribution of wealth grows. 1922 1% of the population owns 36. 7% of the nations wealth by 1929 it has grown to 44. 2% ● The uneven distribution of wealth didn’t stop the poor and middle class from wanting to possess luxury items, such as cars and radios… ● But, wages were not keeping up with the prices …and that created problems!

Consumer Credit ● One solution was to let products be purchased on credit. ● The concept of “buying now and paying later” caught on quickly. ● By the end of the 1920 s, 60% of the cars and 80% of the radios were bought on installment credit. ● Consumerism in the New Era saw a change in US buying behavior. Thrift, saving, and frugality were replaced with consumption and “keeping up with the Jones’”

The Federal Reserve Board ● The Federal Reserve Board (the Fed) was created by Congress in 1917 in response to the Banking Crisis of 1907. ● The Fed was created as the US central bank with two primary functions: ○ 1) Regulate and inspect the nations commercial banks, by assuring banks had sufficient cash reserves ○ 2) Regulate the amount of money circulating in the economy. Known as Monetary Policy ● To stimulate growth the Fed increases money in circulation by lowering interest rates for member banks, and decrease in the amount of money banks are required to keep in reserve

Fed Monetary Policy ● The Federal Reserve was suppose to serve as a ● ● protective “watchdog” of the nation’s economy. It had the power to set the interest rate for loans issued by banks. In the 1920’s, the Fed encouraged buying on credit by lowering interest rates (discount rate) Eventually so many people were buying on credit that inflation increased. In its regulatory role, the Federal Reserve was also established to prevent bank closings.

So What? ! ● By 1929 the Fed decided to slow the rapid (runaway? ) growth by increasing interest rates. ● Raising interest rates means that it cost more to borrow and raises the price of existing debt. ○ ○ People borrowed less and purchased fewer goods. They also started using available cash to pay off debt and therefore purchased fewer goods. ● Less demand = surplus goods = deflation = declining profits = declining stock prices = rising unemployment

The Stock Market

The Stock Market ● The Stock Market is seen as an indicator of the nation’s ● ● economy. In reality it is only an index of the value of corporate stocks based primarily on the market demand for a particular stock As an investment the goal is to buy low and sell high. The value of stocks soared in the 1920’s as corporate profits rose, fueled by mass consumption Once a rich man’s game, everyone was “in the market” in the 1920’s

SEEDS OF TROUBLE ● By the late 1920 s, problems with the economy emerged ● Speculation: Too many Americans were engaged in speculation – buying stocks & bonds hoping for a quick profit ● Margin: Americans were buying The Stock Market’s bubble was about to break “on margin” – paying a small percentage of a stock’s price as a down payment and borrowing the rest

Stock Market: Banks & Margins ● In 1927 banks did two stupid, greedy things: ○ 1) Banks began letting customers borrow money to buy stocks and used the customers stock holdings as collateral for the loan. They gave money to people with no money to gamble ○ 2) Banks started to use depositors money to speculate in the stock market. Normally banks pay you interest for savings. Then they loan it to businesses or families that were good risks to buy homes or start companies etc. Not speculate in the market! ● By 1929, banks had made billions of dollars in risky loans with little collateral to back them up if borrowers defaulted.

So What Went Wrong? ● In September the Stock Market had some unusual up & down movements ○ Wealthy investors stepped in a bought up shares at bargain prices. ● On October 24, the market took a plunge. . . the worst was yet to come ○ Those who bought on margin panicked

The 1929 CRASH ● On October 29, now known as Black Tuesday, the bottom fell out ● 16. 4 million shares were sold that day – prices plummeted ○ Investors lose 26 billion dollars (367 billion in 2017 dollars) ● People who had bought on margin (credit) were stuck with huge debts

By mid-November, investors had lost about $30 billion

So What? ! ● Banks made risky loans to borrowers to buy stocks on the margin. ● Banks used depositors money to speculate in the market ● When panic shook the market, the banks were left holding the bag

Political Decisions

Political Decisions ● The severity of the Depression could have been lessened if policy makers would have been open to new ideas ● Conservative economic policy ○ ○ Laissez faire, let the market right itself without government intervention Balance the budget, do not spend more than collected in tax revenue ● Prevailing belief that private charities, churches, state and local governments provide relief and assistance to the poor, not the Federal Government ○ Most of these were ill equipped to deal with the number of people in need

HAWLEY-SMOOT TARIFF ● The U. S. was not the only country gripped by the Great Depression (Much of Europe suffered throughout the 1920 s post-WWI) ● In 1930, Congress passed the toughest tariff in U. S. history called the Hawley- Smoot Tariff ○ raised tariffs by 50% ● It was meant to protect U. S. industry yet had the opposite effect ● Other countries enacted their own tariffs and soon world trade fell 40%

So What? ! ● Hoover supported government actions to ease the crisis BUT they were not enough ● The Hawley-Smoot Tariff ● Shantytowns would later be nicknamed Hoovervilles and he would inherit a bad reputation

https: //www. youtube. com/watch? v=z. Sfz. FWU 5 Lb. Y Time: beginning-12: 05

Effects of the Crash Great Crash World Payments Investors lose millions. Businesses lose profits. Businesses and Workers Consumer spending drops. Workers are laid off. Businesses cut investment and production Some fail. Banks Businesses and workers cannot repay bank loans. Overall U. S. production plummets. Allies cannot pay debts to United States. Savings Banks accounts run out are of money wiped and fail. Europeans cannot out. afford Bank American runs goods. occur. U. S. investors have little or no money to invest. U. S. investments in Germany decline. German war payments to Allies fall off.

Bubbles and the 2008 Recession Copy the diagram below into your notebook. Write a definition of speculative bubble. Then list at least four examples of speculative bubbles from the past and at least one way a speculative bubble might affect your life today. Take notes on the video of the 2008 recession and write a paragraph that includes responses to these questions: ● How did the 2008 financial crisis happen? ● How did the government respond? ● Some say the government should not have intervened and others say without the bailout it could have gotten much worse and there could have been a worldwide depression. What do you think, should the government intervene? ● Can you make any predictions about the our economy and what may happen next?