How does the current US market compare with the 1920s market crash?

Question

Is it as bad?

Answer 1

Not even close.  Bank deposits were not insured so as banks went under depositors lost everything.  This does not happen today.   1920

people struggled to put food on the table.  Today there is an uproar because you cannot afford to buy a new car or that big house.  Do some reading of history or search the web.  We have it good, very very good.

Answer 2

Not yet.

But the market crash was not the Great Depression. What caused the Great Depression was that so much money was loaned out to buy overpriced stocks that it brought down the banks. Once the banking system started to fail it wrecked the ability to borrow and do business so many businesses failed as well.

The troubles today do have a similar ring to it. What has scared people and promoted the comparison is that this time the overpriced asset was homes and not stocks. But the banks were still way over leveraged and the falling home prices have threatened the banks and credit now as well.

One thing that is different is that there is more value in the homes even after falling than there was in the stocks. And the leverage was generally lower.

In the 1920's you could buy stocks with 10% down and borrow the rest.

Now they were loaning against homes at 0% down. This created the risk and the bubble. But the majority of homes and mortgages are still good. It is still only a percentage going bad. Then again, the more prices fall, the more homes that go under water where they owe more than they are worth.