Recently, I have been pondering a question: when the Great Depression occurred, where did all the money go? Many people think that money disappeared into thin air, but that's not true. The real reason was overcapacity, with excessive consumption stimulating the market, leading companies to continue疯狂生产, ultimately陷入恶性循环, and finally崩盘。

Taking the Great Depression from 1929 to 1933 as an example, the entire economic crisis can be divided into three stages, which I call埋雷,踩雷, and爆雷.

First, let's talk about the埋雷 stage. At that time, a certain country advocated自由市场, and the government adopted a laissez-faire attitude towards enterprises, believing that the market would自我调节. As a result, small companies一批接一批倒闭,强势企业逐渐垄断市场, and the gap between rich and poor rapidly widened. Capitalists only cared about赚钱,拼命增加产能, completely ignoring普通人的购买力. Take the automobile industry as an example: Ford was the leading company, with assembly lines running day and night to produce cars. Although prices dropped, poor people still couldn’t afford them, and the wealthy had already saturated the market. Overcapacity became a ticking time bomb.

Who planted the bombs? The first was banks. They opened up loans to刺激消费, allowing people to buy cars on installment plans. The problem was, the borrowers themselves had no money, so what if they couldn’t repay? Banks thus埋下了第一颗雷. The second was enterprises. With loose bank loans and increased消费能力, companies saw opportunities and疯狂扩张生产, leading manufacturing and real estate to火爆, but this further加剧了产能过剩, planting another bomb. The third was the stock market. Companies developed rapidly, stock prices soared on rumors, and everything looked繁荣, but it was all surface-level, another hidden雷.

Then came the踩雷 moment. On that Thursday in October 1929, some people started selling stocks en masse. From that day, the stock market一泻千里, and the infamous Black Thursday was born. When this雷爆炸, the crisis彻底爆发. Many lost money, couldn’t repay loans, banks began破产, companies had no funds to continue operations and had to close, and消费能力 disappeared. Agriculture also suffered: farm products couldn’t be sold, and farmers宁愿把牛奶倒进河里也不愿降价给穷人. Large-scale unemployment ensued, and some even deliberately set fires to get firefighting jobs.

This is how the Great Depression happened. In essence, it was a vicious cycle of overcapacity, excessive信用扩张, and资产泡沫破裂. When you see markets过度繁荣, loans变得超级容易, and股市涨得离谱, it’s often a sign that a大萧条 is brewing. This period of history is worth deep reflection.