During the 1920s, the United States was leading the world in economic growth. However, during Herbert Hoover Presidency the United States experienced the largest and longest economic crisis in history, which was referred to as the Great Depression. There were many explanations and arguments to what caused the Great Depression to take place. Some economists argued that the fall back of the agricultural sector contributed to the Great Depression. Some blamed the decrease in taxes and absent of government regulations, which supported the belief that markets were self-regulating. Even though many factors contributed to cause the Great depression, many argue that the biggest contributor was the stock market crash in 1929. During the years, previous to the recession, real state became very popular market to invest in. People were borrowing a great deal of money from banks to invest on purchasing lands, fixing roads, building houses, and buying houses. Even though people did not have enough money to repay their loans, they continued to borrow more, because of low tax returns. People believed that if they waited longer to invest, prices and interest rates will increase. Investors believed that …show more content…
A market free of government regulations, means that the government cannot interfere with the way the market performs. This led to an increase in poorly planned economic investments, which encouraged people to start investing large amounts of money in real estate, and stock market purchase during the 1920s. Corporations were generating huge amounts of profits on stock purchase, because people did not care about the risks and the increase in prices. Even though interest rate stared increasing, which increased the risk on loans borrowed from the bank, investors only cared about purchasing more stock with borrowed money to generate higher returns on their