When an investor thinks he can make over one hundred percent per annum by borrowing at six percent, he will be tempted to borrow, and to invest or speculate with the borrowed moneyâ (338). The nation was investing money on the growing stock market, but when the stock market crashed on October 29, 1929, millions of dollars were vaporized due to sheer number of stocks being sold...
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Businesses collapsed along with the investors that had put forward life-savings and loaned money. The tightness of the money in the monetary system was primarily due to the overspeculation of citizens in investments and not the Federal Reserveâs mere 2.6 percent of money withdrawal.
Another point Stratton makes is that the Federal Reserve Bank should have been pumping money into the economy by lowering interest rates and loaning out more money to banks (22)...