1. Purchase of consumer goods on credit/ installment plans in 1920's 2. Farmers expanded and overproducing even after WWI is over (debt/credit cycle), lower prices for goods, failing farms (bankrupt) 3. Slower spending in purchasing large consumer goods (cars, homes) 4. Stock Market Crash of 1929- stocks purchased on margin (buy on credit) --- Could this happen again? 5. Weak Banking system in US- bank failures, "Run on the Bank", credit freezes up (less money in circulation in US)- lead to deflation Deflation- prices drop, demand drops, people lose jobs, lower wages, lower house values, lower stock prices, etc. 6. Worldwide trade slow down- higher tariffs (high tax on imports- Hawley Smoot Tariff) 7. Gap widens between the rich and the poor 8. Drought and "Dust Bowl"
**** Note: Unemployment reached 25% during the Great Depression!