Ninety years ago this very month—August 1929—most stock investors thought they'd never had it so good. By November, they thought they'd never had it so bad. They were pretty much right on both occasions, though things would get a lot worse before they got better. Amid today's gyrating stock market and increasing talk of recession, let's refresh ourselves on the momentous events of nine decades past.
What Caused the Crash?
Sparked by tax cuts from the Harding and Coolidge administrations (a good thing) and the Fed's low-interest rates/easy money policy (a bad thing), the curtain was about to come down on the Roaring '20s by August 1929. The Fed reversed itself months before and had been jacking up rates. The smartest investors were beginning to bail, sensing that a 180-degree shift in monetary policy might be the same as pricking an overblown balloon.