22-1 Critical Thinking #4

Judging from the events of the late 20's and early 30's, how important do you think public confidence is to the health of the economy?

The confidence of the public plays a major role in the economy. The public had two very different levels of confidence throughout this era. They had far too much confidence in the 20's, but as the depression came about in the 30's, they didn't have enough. During the "roaring twenties," people were buying all their luxurious goods on a new system called credit, which basically let a person "buy now and pay later." The problem with this was that the public had so much confidence that it didn't even occour to them that they couldnt afford the resulting bill. The public also had far too much confidence in the stock market.
Everyone was so confident they could make a profit by selling their stocks, that nobody was buying, thus, causing the stock market crash. Once the great depression hit, people not only lost every cent, but every bit of confidence they had. People lost the spirit to pick themselves back up from the beginning. The low amount of jobs available didn't help the cause either.