Re: Depression: Part 2!
Some key events that lead up and entail the depression might give you an idea as well. Some keys points to keep in mind:
GOLD! We all love it, it is worth a bunch, but did you know the value of our dollar depends on the gold we have (as a country)? And we aren't the only country either. Almost every country needs to be backed up by ingots, or gold bars. Simply put, the more gold you have, the more your currency is worth. The price of gold jumped $30 a few weeks ago, and in the course of a day. Gold is one of the most consistent forms of currency, so when gold prices start to rise and drop so much within a day, something is going on. The same day gold jumped $30 higher in value, some of the biggest companies' shares fell -300 points in our Stock Market. In short, it started to crash.
Also, don't forget, we are in debt with a lot of countries in the world; this also plays a big part, but what does that mean? Back to gold! Countries are buying out our gold since the value jumped. If they have more gold, then their currency has more value. In essence, they are buying themselves back the money we owe. But let's go back to gold for a minute: The more gold you have, the more your dollar is worth. If we are losing our gold and selling it to other countries, then our dollar is losing value very quickly, yet at the same time, their currency is gaining more value.
Subprime lending is also to blame here. With lending credit being abused and set free into the "free-market" (aka being deregulated), banks' have gotten themselves into heaps of trouble. They let others borrow money, and they didn't get money in return, especially for real estate. What's happening here is what happened back in the "Great Depression" when banks had loaned "on the margin" and no one had the money to reimburse either the buyers, sellers, or common bank users. Something to keep in mind, a bank isn't just holding your money, it is using it "behind the scenes" usually knowing that is has enough money to back up what it's doing. Hence, why savings account usually have interest growth; the bank is paying you back for letting you use your money, if you will. In the great depression, the banks were using everyones money, and lost it all. Now, the FDIC is inclined (in most bank branches) to protect up to $100,000 of your money in your bank account. That way we have a little assurance that our money isn't going anywhere.
So what does this all mean?
tl;dr?
Gold value went up, US started selling it's gold to other countries, "selling" itself out of debt while countries are "buying" themselves into surplus. Meanwhile, banks were lending money they shouldn't have been due to deregulation. Stocks started to crash with the depreciation of our dollar, including national bank shares and lending companies. So now you have a dollar worth less, and other countries having more value which in turn leads to the selling and "buying-out" of the US's major companies and shares in the stock market, and now we can't buy ourselves out of it so easily since our dollar isn't worth as much now as it was at the time of lending. The US is in debt: with our banks, with ourselves, and with the world. The end.
Some key events that lead up and entail the depression might give you an idea as well. Some keys points to keep in mind:
GOLD! We all love it, it is worth a bunch, but did you know the value of our dollar depends on the gold we have (as a country)? And we aren't the only country either. Almost every country needs to be backed up by ingots, or gold bars. Simply put, the more gold you have, the more your currency is worth. The price of gold jumped $30 a few weeks ago, and in the course of a day. Gold is one of the most consistent forms of currency, so when gold prices start to rise and drop so much within a day, something is going on. The same day gold jumped $30 higher in value, some of the biggest companies' shares fell -300 points in our Stock Market. In short, it started to crash.
Also, don't forget, we are in debt with a lot of countries in the world; this also plays a big part, but what does that mean? Back to gold! Countries are buying out our gold since the value jumped. If they have more gold, then their currency has more value. In essence, they are buying themselves back the money we owe. But let's go back to gold for a minute: The more gold you have, the more your dollar is worth. If we are losing our gold and selling it to other countries, then our dollar is losing value very quickly, yet at the same time, their currency is gaining more value.
Subprime lending is also to blame here. With lending credit being abused and set free into the "free-market" (aka being deregulated), banks' have gotten themselves into heaps of trouble. They let others borrow money, and they didn't get money in return, especially for real estate. What's happening here is what happened back in the "Great Depression" when banks had loaned "on the margin" and no one had the money to reimburse either the buyers, sellers, or common bank users. Something to keep in mind, a bank isn't just holding your money, it is using it "behind the scenes" usually knowing that is has enough money to back up what it's doing. Hence, why savings account usually have interest growth; the bank is paying you back for letting you use your money, if you will. In the great depression, the banks were using everyones money, and lost it all. Now, the FDIC is inclined (in most bank branches) to protect up to $100,000 of your money in your bank account. That way we have a little assurance that our money isn't going anywhere.
So what does this all mean?
tl;dr?
Gold value went up, US started selling it's gold to other countries, "selling" itself out of debt while countries are "buying" themselves into surplus. Meanwhile, banks were lending money they shouldn't have been due to deregulation. Stocks started to crash with the depreciation of our dollar, including national bank shares and lending companies. So now you have a dollar worth less, and other countries having more value which in turn leads to the selling and "buying-out" of the US's major companies and shares in the stock market, and now we can't buy ourselves out of it so easily since our dollar isn't worth as much now as it was at the time of lending. The US is in debt: with our banks, with ourselves, and with the world. The end.
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