Modern Econ & Business History of US Roaring Twenties Student Fall 2023 PDF

**Modern Econ & Business History of US; Roaring Twenties: Consumerism & Asset Bubble** US economy, 1920s - increases in real GDP - consumer spending boom - high income inequality some (very debatable) reasons for the economic growth of the US in the 1920s A. International - success in...

**Modern Econ & Business History of US; Roaring Twenties: Consumerism & Asset Bubble** US economy, 1920s - increases in real GDP - consumer spending boom - high income inequality some (very debatable) reasons for the economic growth of the US in the 1920s A. International - success in taking market share from countries damaged In First World War - insistence on repayment of loans to Allied Powers - recovery of European economies following Dawes Plan - disarmament B. Political - fiscal policies of Harding and Coolidge administrations - "laissez-faire" regulatory policy of Harding and Coolidge administrations C. Technological - high-pressure steam power - modern refrigeration D. Financial - development of new forms of consumer credit - consumer spending due to perception of household wealth rising home prices (through 1926) share price bubble (1926-1929) - involvement of many first-time stock investors - combination of retail banking and investment banking functions - investing depositors' money in shares - lending to people buying "on margin" - increased risk and return of leverage - shares in radio companies most commonly speculated - bursting of stock market bubble - myth of broker suicides and other forms of extreme immediate panic share price valuations - why are bubbles often hard to identify - stock price fundamentals - market expectations Tax Receipts and Share of Taxes Paid by Income Group http://conservapedia.com/images/thumb/0/03/Dawes.jpg/290px-Dawes.jpg GDP-economic-growth From from http://www.economicshelp.org/blog/76/economics/wall-street-crash-1929/ +-----------------------------------+-----------------------------------+ |  | | | | | | | GE had introduced the first | | | refrigerator in 1911, but at a | | | cost of \$1,000. This | | | advertisement says "prices start | | | as low as \$205 at the factory, | | | and most people buy on our easy | | | time payment plan." | +-----------------------------------+-----------------------------------+ http://voteview.com/images/Real\_Per\_Capita\_Income\_1920-1970.jpg  Above: Shiller PE ratio for the S&P 500, updated 10/10/23. (The Shiller PE Ratio is based on average inflation-adjusted earnings from the previous 10 years, and is also known as the Cyclically Adjusted PE Ratio, or CAPE ratio.) Data is from [multipl.com](https://www.multpl.com/shiller-pe) Mean: 17.04 --------- ------- ------------ Median: 15.95 Min: 4.78 (Dec 1920) Max: 44.19 (Dec 1999) Below: effects of margin loans in increasing returns and risk, from